House of Commons

Tuesday 25th February 2014 Commons Chamber

Tuesday 25 February 2014

The House met at half-past Eleven o’clock

Prayers

Tuesday 25th February 2014 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Tuesday 25th February 2014 Commons Chamber

The Secretary of State was asked—

[David Rutley (Macclesfield) (Con)]

1. What progress he has made on improving out-of-hospital care for the frail and elderly.

[The Secretary of State for Health (Mr Jeremy Hunt)]

We will ensure that everyone over the age of 75 has a named GP, responsible for delivering proactive care for our most vulnerable older people in the best traditions of family doctors. Through our £3.8 billion better care fund, we are also merging the health and social care systems to provide more joined-up health and social care.

[David Rutley]

I welcome the steps that my right hon. Friend is taking to improve and enhance the quality of care for the elderly. Given that east Cheshire has one of the fastest-growing ageing populations in the UK, will he tell the House what specific steps he is taking to improve out-of-hospital care in and around Macclesfield? Furthermore, does he agree that it is vital that appropriate funding is in place to take care of the elderly and most vulnerable patients?

[Mr Hunt]

May I congratulate my hon. Friend on the campaigning work he does in his constituency on health matters? I commend the Eastern Cheshire clinical commissioning group for its “Caring Together” programme and for the fact that Cheshire was selected as one of the 14 integrated care pioneers. I hope that it will blaze a trail in joining up the barriers that have bedevilled our health and social care system for too long, so that his constituents are not pushed from pillar to post because of arguments about budgets and people can be discharged on time. I think his area is blazing a trail.

[Hazel Blears (Salford and Eccles) (Lab)]

The national dementia strategy has been fundamental in improving care for many frail and elderly people with dementia living in the community. The strategy is due to expire in April—in two months’ time. Will the Secretary of State give a commitment to the House now that the national dementia strategy will be renewed? I understand that we have the Prime Minister’s dementia challenge, but, like many of us, Prime Ministers come and go. We need a strategy and not simply the Prime Minister’s challenge.

[Mr Hunt]

I can assure the right hon. Lady that this Prime Minister is here to stay. Indeed, I can also reassure her that the national dementia strategy is here to stay. As she has announced that she is stepping down at the end of this Parliament, may I thank her for her campaigning on dementia, which, I think, came from a family connection with the issue? She has attended many of my dementia meetings and the G8 dementia summit. She has made a really important contribution, and I thank her for that.

[Paul Burstow (Sutton and Cheam) (LD)]

May I follow up on the question that the right hon. Lady has just asked? The Secretary of State has said that the national strategy is here to stay and that is very welcome, but the national strategy was drafted with the intention that it would expire this year. It would be useful if he now indicated the intention to refresh and update it so that we have a clear road map for at least the next decade.

[Mr Hunt]

I know that my right hon. Friend showed great interest in this issue when he was in my Department. When I say that the strategy is here to stay, I mean that it is here to be refreshed and updated. We are subscribing to some big new ambitions, including that by the time of the next election two thirds of people with dementia will be diagnosed and have a proper care plan and support for them and their families. That is a big improvement on the 39% of people who were diagnosed when we came to office. There is much work to do, but I assure him that we are absolutely committed to delivering.

[Lyn Brown (West Ham) (Lab)]

Some hospitals are making a virtue out of quick discharge for their stroke victims. Is the Secretary of State convinced that elderly stroke victims, perhaps those without people to advocate on their behalf, are getting appropriate care and that their care and rehabilitation are not being scrimped on or rationed?

[Mr Hunt]

No, I am not convinced. We need to do much better when it comes to the discharge of vulnerable older people, especially when they leave hospital not cured and still with a long-term condition. They may be recovering from a stroke or dementia or any other condition. We need to have much better links between hospitals and GPs and to have named accountable GPs in the communities looking after those very people.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I was disappointed with the allocation of funding by NHS England for care around the country because it did not reflect the demands of the elderly population. People in my constituency have to do a 200-mile round trip to receive support such as cardiac care. Will the Secretary of State ask it to think again for future years?

[Mr Hunt]

My hon. Friend is right to campaign hard on that issue. I agree that the funding formula does not always do justice to people, especially those in sparsely populated rural areas. I know that NHS England is trying to do what it can to move to a more equitable funding formula, but it is not something that can be done overnight. I encourage her to keep pressing on that issue.

[Mr Jamie Reed (Copeland) (Lab)]

Welcome back, Mr Speaker. Easy access to GPs is a key part of out-of-hospital care for elderly and frail people. Days after the election, the Prime Minister scrapped Labour’s guarantee that gave patients a GP appointment within two working days, and took away funding that kept thousands of surgeries open in the evenings and at weekends. Now the Royal College of General Practitioners is warning that 34 million patients will fail to get an appointment. Will the Secretary of State listen to the Patients Association, bring back the 48-hour appointment guarantee and help older people to see their doctor when needed?

[Mr Hunt]

The reason that we got rid of that guarantee was that the number of people who were able to see a GP within 48 hours was falling in the last year in which the target was in place. It was not working, and that is why the British Medical Association and the Royal College of General Practitioners were against it. In the same survey that the hon. Gentleman quoted, the RCGP said it estimated that there had been a 10% increase in the number of GP appointments compared with when his Government were in office.

[Steve Brine (Winchester) (Con)]

2. What recent steps he has taken to improve maternity care.

[The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)]

We have made improving maternity services—so that women have a named midwife responsible for ensuring personalised care—a key objective in our mandate to NHS England. Since May 2010, the number of midwives has increased by more than 1,500 and a record number—in excess of 5,000—are now in training. Over the past two years I have set up a £35 million capital investment fund, which has already seen improvements to over 100 maternity units.

[Steve Brine]

My local foundation trust is currently exploring a major service change which would see the creation of a new acute care hospital to handle the sickest and most complex patients. It would leave midwife-led units only in Winchester and Basingstoke, and centre consultant-led services on the new site. Does the Minister feel confident that the clinical case for this kind of centralisation has been made? Would he be comfortable to see it rolled out across the NHS?

[Dr Poulter]

My hon. Friend is right to highlight the fact that such decisions are clinical decisions and need to be made at a local level to ensure safe care, both with appropriate numbers of obstetricians in obstetric-led units and to give women the choice to deliver in midwifery-led units where appropriate. I am pleased that we, as part of the fund that I outlined earlier, have been able to give Hampshire Hospitals NHS Foundation Trust £50,000 to provide enhanced facilities in birthing rooms at Florence Portal house.

[Kate Green (Stretford and Urmston) (Lab)]

In 2012 representatives of Group B Strep Support met the Minister and received a commitment that the gold standard of enriched culture medium testing would be introduced, which can facilitate preventive treatment for women in labour. Just before Christmas, Public Health England announced that the testing would not go ahead from 1 January. Can the Minister say why not and when the test will be introduced?

[Dr Poulter]

Group B strep is an important issue. I have seen in my clinical practice the devastating effect that the disease can have on newborn babies and on families, so we are doing all that we can to support work on it and ultimately to develop a vaccine to prevent the condition. I would like to correct the hon. Lady on the record. I met Group B Strep Support with the Chief Medical Officer and we undertook to investigate the applicability of the test. The clinical evidence unfortunately does not support its introduction, and we have to be guided by clinical evidence.

[Guy Opperman (Hexham) (Con)]

17. My hon. Friend has visited the Hexham midwife-led maternity unit, which provides exemplary care. Can he update the House on what steps the Department of Health is taking to prevent excessive screening of pregnant women away from midwife-led units? Surely health care is about choice, not diktat.

[Dr Poulter]

My hon. Friend is right. It was a pleasure to visit and open the new facilities at his local birthing unit. He has been a tremendous champion for the midwifery-led unit in his constituency, and I pay tribute to him for that. He is right that it is important that women have choice. These are local decisions by local health care commissioners, but I hope that it will give him some reassurance that the number of midwifery-led units has increased from 87 in 2007 to 152 in 2013 precisely because of the investment that the Government are making.

[Keith Vaz (Leicester East) (Lab)]

During pregnancy, two out of 10 women become diabetic. What additional funding is being given to train nurses to deal with this very difficult situation?

[Dr Poulter]

The right hon. Gentleman makes an important point. We need to provide additional personalised one-to-one support for all pregnant women, in particular those who have or who develop medical problems. That is why we are investing in more midwives—we have 1,500 more than in 2010—and why the Royal College of Midwives and the Royal College of Obstetricians and Gynaecologists have developed guidelines and protocols to support front-line professionals in making sure that those women get extra support and have a safe delivery.

[Karen Lumley (Redditch) (Con)]

21. As my hon. Friend is aware, we have been in a two-year battle to secure services at the Alexandra hospital in Redditch, including maternity. Will he meet me to discuss the best way forward to secure safe maternity care for all the mums-to-be in Redditch?

[Dr Poulter]

My hon. Friend has a distinguished record of more than four years of campaigning hard for local health care services in Redditch, and her constituents should be proud of what she has done on their behalf, fighting for Redditch hospital and local services. I shall be delighted to meet her to talk further about the local challenges for maternity care.

[Mark Durkan (Foyle) (SDLP)]

In the Minister’s earlier answer, was he saying that enriched culture medium testing is not a safe, simple and effective test for group B strep carriage?

[Dr Poulter]

We have had many debates in this House about group B strep and the effects of the disease. The point about enriched culture medium testing is that it takes time for bacteria to grow in culture, and the fact is that there is also evidence from the Royal College of Obstetricians and Gynaecologists. Public Health England has looked at that evidence and it has decided that it is not a test that is effective to be introduced during pregnancy. That is the medical evidence and we have to be guided by it. There are many other things that we need to do about group B strep, not least supporting the development of a vaccine, which is ultimately the best way forward.

[Mr John Leech (Manchester, Withington) (LD)]

Will the Minister tell the House what assessment he has made of the impact of the Immigration Bill on the maternity care of vulnerable women who would be expected to pay for their care?

[Dr Poulter]

Of course we need to have a health service in this country that is self-sufficient, and we have a national health service, not an international health service. However, it is right that we ensure that we look at all areas of the health service when we are applying new policies and directives, and make sure that we protect vulnerable patient groups. That is exactly what the Government are doing and we are working with the NHS to ensure that women always receive high-quality maternity care at the point of need.

[Laura Sandys (South Thanet) (Con)]

3. What progress has been made on introducing a cap on care costs.

[The Minister of State, Department of Health (Norman Lamb)]

Everyone will be protected against catastrophic costs by the insurance that the cap will provide from April 2016, in line with the Dilnot commission’s recommendations. We are currently putting the legislative framework for the cap in place, and will consult on draft regulations and guidance to implement the cap in autumn of this year.

[Laura Sandys]

Best behaviour, Mr Speaker.

Does the Minister agree that greater investment in pre-emptive and preventive measures, such as GP annual assessment for those who are getting older, might keep the new old just a little younger?

[Norman Lamb]

I start by paying tribute to my hon. Friend for the work that she has done while she has been a Member of Parliament. I know that she has announced her decision to stand down, and she has done excellent work campaigning for elderly people and others in her constituency and beyond. She is absolutely right. The cap will, first of all, help people to prepare and plan for old age, which is an incredible advance. Also, the £3.8 billion better care fund is the biggest ever shift towards preventive health care and GPs will play a critical role in that.

[Mr Jim Cunningham (Coventry South) (Lab)]

What is the Minister doing to encourage local authorities to provide more places for care, particularly with the reduction in costs? Is he aware that local authorities are finding it difficult, because of Government cuts, to fund those places?

[Norman Lamb]

I am conscious that finances in local government are tight, but the better care fund, which I mentioned just now, has been widely welcomed. I was with a director of adult social care last Friday, who told me that his authority was planning to pool not just its share of the better care fund but the whole of its social care budget with the local health budget. That sort of radical, innovative thinking is exactly what we want and it will ensure that we protect services for vulnerable people.

[Mr Stephen Dorrell (Charnwood) (Con)]

Does the Minister agree that the steps that the Government are taking to reform the funding of care for the elderly represent long overdue action to deal with an issue that has bedevilled this world for more than 20 years? Tony Blair promised the Labour conference in 1997 that he would deal with it, and he did precisely nothing about it.

[Norman Lamb]

I remember the quote from Tony Blair well—he did not want to live in a country where people have to sell their homes to pay for care. However, over 13 years of the last Labour Government nothing happened. There were lots of commitments—manifesto commitments and so on. However, I am proud of the fact that this coalition Government are implementing reform, and it is long overdue.

[Nic Dakin (Scunthorpe) (Lab)]

4. What assessment he has made of the role of dispensing doctors in the NHS.

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

Patients can take their prescriptions to any pharmacy where they wish to have their prescriptions dispensed, but we know that in remote and rural areas, where pharmacies may not be viable, NHS England may authorise GPs to dispense to patients, provided that certain criteria set out in regulations are met.

[Nic Dakin]

Dispensing doctors play an important part in rural areas, as the Minister said, but they face particular challenges at the moment. Will she meet me and representatives of the Dispensing Doctors’ Association to discuss these challenges?

[Jane Ellison]

I am always happy to meet colleagues. I think that Earl Howe leads on the matter in the Department, and I shall draw the hon. Gentleman’s concerns to his attention. It is for NHS England to ensure that everyone has a pharmacy available to them, and I am aware that the CCG allocation formula includes allowances for rurality, but we know that this is a particular challenge.

[Mr Geoffrey Robinson (Coventry North West) (Lab)]

5. Whether patients are able to opt out of the general practice extraction service by telephone or online.

[The Secretary of State for Health (Mr Jeremy Hunt)]

People can opt out of the care.data programme through their GP surgery. Depending on the surgery, that may well be done online or by telephone.

[Mr Robinson]

Is the Secretary of State aware that the Government’s handling of the scheme has been shambolic from the very start and that their failure to communicate is nowhere better illustrated than in Pulse, the GP’s magazine, in which an article states that only 15% of members of the public surveyed knew that they had the right to opt out? What will he do to restore public confidence in a scheme that could be very beneficial?

[Mr Hunt]

It is a pleasure—I think for the first time—to take a question from someone who might be one of my constituents in Godalming. However, I do not agree with the hon. Gentleman that the process has been shambolic. The programme has been in place for 25 years, so it is important to understand that this big public debate is happening because this Government did something that the previous Government did not do: we said that if we are going to use anonymised data for the benefit of scientific discovery in the NHS, people should have the right to opt out. We introduced that right and sent a leaflet to every house in the country, and it is important that we have the debate—[Interruption.] The right hon. Member for Leigh (Andy Burnham) complains, but he did not want to give people the right to opt out when he was Health Secretary.

[Dr Sarah Wollaston (Totnes) (Con)]

The Secretary of State will be aware of the report in The Daily Telegraph setting out how hospital episode statistics data were sold to insurance companies, which were able to match that information with credit ratings data. Nothing will undermine this valuable project more than a belief that data will be sold to insurance companies, so will he set out the way in which he will investigate how that sale was allowed to happen and categorically reassure the House that there will be no sale of care data to insurance companies?

[Mr Hunt]

My hon. Friend is absolutely right to raise that issue and I am happy to give that assurance. That incident is one of the reasons why we set up the Health and Social Care Information Centre through the Health and Social Care Act 2012, in the teeth of opposition from the Labour party. Following the establishment of the centre, the guidelines in place mean that such a thing could not happen. She is also right that it is important that we reassure the public because, let us not forget, it was this important programme that identified the link between thalidomide and birth defects, that identified that there was no link between MMR and autism, and that helped to identify the link between smoking and cancer, so it is vital that we get this right.

[Mr David Crausby (Bolton North East) (Lab)]

20. Virtually everyone wants to improve patient care in the NHS, so why not scrap the underhand way in which the care.data programme has progressed so far, and instead provide a diverse choice of ways to opt in, limit the use of medical data to the NHS and keep the public’s personal information out of the hands of the private sector?

[Mr Hunt]

May I gently tell the hon. Gentleman that the reason why we are having the debate is that this Government decided that people should be able to opt out from having their anonymised data used for the purposes of scientific research, which the previous Labour Government refused to do? When they extended the programme to out-patient data in 2003 and to A and E data in 2008, at no point did they give people the right to opt out. We have introduced that right, which is why we are having the debate.

[Dr Julian Huppert (Cambridge) (LD)]

There are of course huge benefits from using properly anonymised data for research, but it is difficult to anonymise the data properly and, given how the scheme has progressed so far, there is a huge risk to public confidence. Will the Secretary of State use the current pause to work with the Information Commissioner to ensure that the data are properly anonymised and that people can have confidence in how their data will be used and how they can opt out?

[Mr Hunt]

I will do that, and NHS England was absolutely right to have a pause so that we ensure that we give people such reassurance—[Interruption.] When we had a pause before, the result was the very good Health and Social Care Act, which is doing good things for patients throughout the NHS. This programme is too important to get wrong, and while I think that there is understanding on both sides of the House about the benefits of using anonymised data properly, the process must be carried out in a way that reassures the public.

[Andy Burnham (Leigh) (Lab)]

When he was appointed, the Health Secretary declared it his personal mission to have a “data revolution” in the NHS, but what he has presided over is a spectacular collapse in public confidence in the use of patient data. The only revolution he has created is a growing public revolt against his care.data scheme. Coming after his NHS 111 shambles and the court humiliation over Lewisham hospital, it cements a reputation for incompetence. When was he first warned about problems with care.data and what action did he take?

[Mr Hunt]

The shadow Secretary of State searches for NHS crises with about as much success as George Bush searching for weapons of mass destruction. My first contact with that programme, when I was told about it, was to decide to do something that he never did as Health Secretary: to say that every single NHS patient should have a right to opt out of having their data used in anonymised scientific research. I think that was the right thing to do. Of course we are having a difficult debate, but its purpose is to carry the public with us so that we can go on to make important scientific discoveries.

[Andy Burnham]

Again, the right hon. Gentleman never takes responsibility—it is always somebody else’s fault. Even by this Government’s standards, this is a master-class in incompetence. First, we have this useless glossy leaflet. He said that it has gone to every home, but that is not true, because homes that have opted out of junk mail have not received it. Many people report that they still have not had it through their letterbox. Secondly, when people cannot even get through to their GP practice on the phone, as we heard earlier, or get an appointment, he has made it almost impossible to opt out of the scheme. Has this cavalier approach not built an impression that the Government are taking patient confidentiality for granted in trying to force through the scheme, increasing public mistrust and putting the important scheme at risk?

[Mr Hunt]

It is intriguing that the shadow Secretary of State has chosen not to talk about a winter crisis, because it has not happened, despite the fact that he predicted it time after time. Let me tell him what was cavalier: the previous Labour Government’s refusal to give patients a right to opt out of giving their data to this programme, even though it was going on for their whole time in office. We believe that we should have a data revolution, but to do that we need to carry the public with us, which is why we need to have this important debate and give people the reassurance they deserve.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

6. What recent assessment he has made of the number of available mental health crisis beds for young people in England.

[Ms Karen Buck (Westminster North) (Lab)]

14. What recent assessment he has made of the number of available mental health crisis beds for young people in England.

[The Minister of State, Department of Health (Norman Lamb)]

NHS England has a rapid review under way to identify commissioning solutions to pressures on specialist beds for children and young people. It inherited varied provision across regions and a lack of capacity in some parts of the country for particular need. For the first time, available beds are monitored weekly, and small increases in capacity have already been secured.

[Rushanara Ali]

I thank the Minister for that answer, but 1,500 mental health beds have closed since 2011, which is causing a wider crisis, and a recent Care Quality Commission report found that, in one area over the previous year, 41 children had been detained in police cells because health-based places of safety were either not available or not staffed—and one of those children was 11 years old. How can that be acceptable?

[Norman Lamb]

The reduction in the number of mental health beds has been a long-term trend—it happened under the previous Labour Government—and rightly so, because we have to move away from institutional care. However, crisis beds must always be available. I completely agree that it is intolerable for children to end up in police cells, but that is not new; it has happened for many years and did not start in 2010. When we talk about parity of esteem, we mean it. There must be absolute equality between the ways in which mental and physical health are treated. Last week we launched a crisis care concordat to ensure that children do not end up in police cells.

[Ms Buck]

The clinical director of child and adolescent mental health services in my mental health trust recently said:

“Sometimes we have to make 50 to 100 phone calls around the country looking for a bed… young people shouldn’t be shunted around the country into inappropriate facilities.”

Another psychologist dealing with a case in my constituency told me:

“It is very difficult to get young people into in-patient services at present due to the high number of cases and reductions in funding from NHS England.”

Is that not an intolerable situation in which to leave traumatised young people? How quickly will the Minister’s review be completed so that we can end that tragedy?

[Norman Lamb]

The review being undertaken by NHS England will report in March. I agree that that situation is intolerable, but I have made it very clear on many occasions that there is an institutional bias against mental health in the NHS. Interestingly, the Health Committee report on deficits in 2006-07 specifically made the point that mental health was particularly targeted, so that always happens when NHS finances are tight. However, it cannot happen, because there has to be parity of esteem, including in the way in which money is distributed in the NHS.

[Jeremy Lefroy (Stafford) (Con)]

In Stafford hospital, many young people with mental health problems are extremely well treated in normal in-patient wards. That should not be the case, but no other facility is available. What will happen if those in-patient beds are no longer there?

[Norman Lamb]

As far as possible, we should be trying to ensure that children with mental health crises can remain at home; it does not make sense, in very many cases, to put them into in-patient care. However, we have made it clear, as has NHS England and as was confirmed in the crisis care concordat last week, that beds should be locally available whenever they are needed.

[Sarah Champion (Rotherham) (Lab)]

19. Will the Minister indicate when a clear strategy for the commissioning of tier 4 mental health beds will be determined and what additional resources will be made available to support the mental health needs of children and young people? The current situation is intolerable.

[Norman Lamb]

I mentioned earlier that the rapid review that is being undertaken by NHS England will report in March. It is essential that we have sufficient beds available, as close to home as possible, for children and young people. As I also said earlier, as far as possible children should be cared for at home, and only as a last resort should they go into in-patient care.

[Liz Kendall (Leicester West) (Lab)]

The pressure on children’s mental health beds is now intolerable. Earlier this month, the 14-year-old daughter of one of my constituents desperately needed a bed but the local trust’s chief executive told me that not a single bed was available anywhere in the country in the NHS or the independent sector. The Minister has said that this is unacceptable as though it is nothing to do with him, but he voted for an NHS reorganisation that is wasting time and money as vulnerable children are forced on to adult wards or transported hundreds of miles across the country. When the review reports, what action will he take and by when will it be implemented?

[Norman Lamb]

For a start, we now have 15,000 more clinicians working on the front line than when this Government came into office in 2010. Also, in the reforms that the hon. Lady mentions, we legislated for parity of esteem so that mental health is treated equally with physical health. However, I have accepted her case and agree that the situation is intolerable. We have to make sure that beds for children and young people are available when they are needed.

[Mr Andrew Turner (Isle of Wight) (Con)]

7. What proportion of medicines prescribed in the NHS are alternative medicines; and what the annual cost is of dispensing such prescriptions.

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

The net ingredient cost to the NHS of homeopathic preparations dispensed in the community in England was £143,000 in 2012, which represents 0.002% of the overall NHS prescription cost in the community for the same period. The prescription cost analysis data from which we extract this information do not separately identify other alternative medicines.

[Mr Turner]

I thank the Minister for that answer. At the urging of Councillor John Nicholson, Isle of Wight council has asked the health and wellbeing board to recognise the value of alternative and complementary therapies and elect a representative to the board. Will the Minister and her Department work with that representative to evaluate the cost-effectiveness of such treatments?

[Jane Ellison]

I am aware that there has been interest in this matter in my hon. Friend’s clinical commissioning group. The provision of alternative and complementary therapies is decided by CCGs, which have to take into account National Institute for Health and Clinical Excellence guidance and local health needs and priorities. The responsibility is with CCGs to achieve value for money and to make sure that they are delivering improvements in the quality of care and patient outcomes, and it is against those standards that we would expect them to measure those therapies.

[Jim Shannon (Strangford) (DUP)]

In the past 12 months there has been great advancement in new medications and alternative medicines, with new drugs for multiple sclerosis, for type 2 diabetes and for hepatitis C, and advancements in heart operations, rare diseases, and so on. Will the Minister indicate the time scale for the announcement of new medications and their availability on the NHS?

[Jane Ellison]

The hon. Gentleman, who follows these matters closely, is aware that medicines go through a process by which they are approved and recommended. Once they are in that position, it is, as I say, down to CCGs to make decisions about which treatments are appropriate for their patients and to measure them against the standards that I laid out.

[David Tredinnick (Bosworth) (Con)]

I congratulate right hon. Friends on setting up the herbal working group to improve regulation of herbal medicine and its practitioners. Is the Minister aware that there is a problem of supply, in that most people have to pay for their herbal medicine and it is not necessarily available from clinical commissioning groups? Will she issue guidance? Perhaps we should have a mapping exercise in order to understand where the demand is in this country.

[Jane Ellison]

As I have just said, there is guidance for CCGs on how to operate in the area of alternative and complementary therapies and we have no current plans to add to that guidance.

[Margot James (Stourbridge) (Con)]

8. What steps his Department is taking to tackle female genital mutilation.

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

We recently announced that all NHS acute hospitals must provide information on patients who have undergone female genital mutilation, but that is just one element of a wider-ranging programme of work that is under way in order, most importantly, to improve the way in which we care for girls and women who have undergone FGM and to follow up on, respond to and prevent FGM. I will make further announcements in due course.

[Margot James]

I congratulate my hon. Friend on all the work she has done to combat this abhorrent crime since she entered Parliament. Will she confirm that the data reported to her Department will be used to mount educational campaigns to stamp out FGM in the vicinity of hospitals reporting patients who have been abused in this way?

[Jane Ellison]

We anticipate that we will be able to share the data collected with all appropriate Government Departments and partner organisations. On local education campaigns, I see no reason why requests to access the data would not be approved. We want to build a proper national picture of what is going on with FGM so that we can do all we can both to care for victims and to stamp out this abuse.

[John Cryer (Leyton and Wanstead) (Lab)]

On the issue of widening education, could the Minister encourage her colleagues at the Department for Education to write to schools to raise awareness of this abhorrent practice?

[Jane Ellison]

Fahma Mohamed, the brilliant young woman who has led the campaign on this, will meet the Education Secretary today and there is a lot of work under way across all Government Departments. There was recently a cross-Government declaration on the things that are going on to stamp out FGM and to care for its victims. The hon. Gentleman’s question is a matter for the Department for Education, but I assure him that the Government as a whole are hugely committed to wiping out FGM within a generation and to caring for its victims.

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

9. What steps his Department is taking to improve the health of veterans.

[Chloe Smith (Norwich North) (Con)]

13. What steps his Department is taking to improve the health of veterans.

[The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)]

We are rightly proud of the courage and dedication of our armed forces and it is our duty to ensure that veterans receive the best possible care. We continue to improve the health care of our veterans. The Government have invested £22 million in providing enhanced mental health and prosthetic services over the past few years.

[Julian Smith]

Alex Bentley, who chairs the Royal British Legion in Skipton and is the most incredible, passionate campaigner for our armed forces, has serious concerns about how the armed forces covenant is being applied by hospitals and local councils. Is there anything the Minister can do to champion the cause of this excellent Government scheme at local level?

[Dr Poulter]

Aside from the cash investment of £22 million directly in veterans services, we have made it a clear priority in the NHS mandate to make sure that the armed forces covenant becomes a reality in the NHS. We have now identified nine specialist prosthetic centres for veterans who have lost limbs and been injured in combat, and a massive amount of investment is going into services for veterans with mental health problems, including a 24-hour helpline. A lot of investment is being made at the national level and locally, and there will also shortly be dedicated resource for training local professionals on the ground.

[Chloe Smith]

I welcome that response. Will the Minister reassure me that he will properly join up his work with that of the Department for Work and Pensions and the Ministry of Defence? Like many other Members, I know of at least two veteran constituents who clearly need joined-up health and welfare. The voluntary sector helps—including the Matthew Project’s new “Outside the Wire” service in Norfolk—and I expect the same of the Government, who have rightly signed the armed forces covenant.

[Dr Poulter]

My hon. Friend makes an important point. This is not just about providing good health care services, but doing so in a joined-up way. We now have a seriously injured leavers protocol to help the transition of servicemen and women who leave the armed forces and return to civilian life. That is about taking a holistic view of their health and care needs, and any other needs that they may have, in providing the right support when they return to civilian life. It is being rolled out very effectively across the country.

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

10. What assessment his Department has made of the availability of mental health services.

[The Minister of State, Department of Health (Norman Lamb)]

Our mandate to NHS England makes it clear that everyone who needs it should have timely access to the best available treatment. NHS England is currently gathering information about access to and waiting times for mental health services. We will use this information to set new national access standards for the first time, to be introduced from 2015.

[Andy Sawford]

The Safe Haven in Corby provided crisis out-of-hours support to 1,300 people with mental health problems last year. For the first time ever, it has been asked to tender for its future funding. It was eight minutes late with its tender, and the service is going to be cut. What will happen to the people who need that service in the future? Will the Minister meet me to discuss it?

[Norman Lamb]

I am very happy to talk to the hon. Gentleman about that. My understanding is that the local CCG undertook a retendering exercise with a view to maintaining and, indeed, improving mental health services locally. As he says, Safe Haven did not submit its tender in time. It had a right to appeal, and it chose not to appeal. The CCG is absolutely committed to ensuring that it improves mental health services locally.

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

Not only do mental health services not get the attention that they sometimes deserve, but the condition of individuals is often exacerbated by the inability of the benefits system to recognise episodic illness and by the insensitivity and incompetence of Atos in work capability assessments. Will the Minister talk to his colleagues in the Department for Work and Pensions so that we can have a system that is suitable and fit for people with mental illness?

[Norman Lamb]

I thank my hon. Friend for his question. Indeed, I share the concerns that he raises, and I have recently met my hon. Friend the Minister responsible for benefits specifically because I have those concerns. There needs to be much closer working between mental health services and the benefits system locally.

[Mr Kevan Jones (North Durham) (Lab)]

The Minister knows that early intervention therapy or talking therapies can relieve pressure not only in access to beds, but in helping individuals. He has just told the House that he will look at assessments of waiting times. Will he tell the House exactly what force or lever he will have to ensure that local trusts implement such targets?

[Norman Lamb]

I think it was a big mistake to leave out mental health when the 18-week maximum waiting time limit was introduced for physical health services. To me, that is inexplicable, so I am determined to correct it: from next year, there will be waiting times standards for mental health. Indeed, when the Care Quality Commission inspects and regulates providers, it will ensure that those access standards are met, in the same way as applies for physical health.

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

11. What reports he has received on the possible reclassification of ME/CFS by the World Health Organisation.

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

The World Health Organisation is currently developing the 11th version of the international classification of diseases, which it aims to publish in 2017. No discussions have taken place between the Department and the WHO on the reclassification of ME/CFS, but the WHO has publicly stated that there is no proposal to reclassify ME/CFS in ICD-11.

[Annette Brooke]

I thank the Minister for her answer. Many people will be greatly relieved about that. As chair of the all-party group on myalgic encephalomyelitis, I receive many representations about GPs in this country still not necessarily recognising the condition. Will she look into that, and will she work with her counterparts in the DWP on the benefits side as well?

[Jane Ellison]

I am aware that this is a very difficult, complex and emotive area. I have heard before the point that the hon. Lady makes about GPs. I am very happy to take up her points and discuss them with her.

[Ian Lavery (Wansbeck) (Lab)]

12. What recent meetings he has had with representatives of the private health care sector.

[The Secretary of State for Health (Mr Jeremy Hunt)]

In the past three months, I have had two meetings with private sector health care providers, both in China, helping them to win export orders. In the same period, I have had 20 meetings with traditional NHS providers.

[Ian Lavery]

Private health companies with strong links to the Conservative party have been awarded contracts to run NHS services worth about £1.5 billion, which surely raises serious questions about the level of influence of Conservative donors on health policy. In the interests of transparency, will the Secretary of State commit to publishing a list of private health care companies that have made donations to the Conservative party?

[Mr Hunt]

The difference between donors to the Conservative party and donors to the Labour party is that our donors do not write our policies. While we are talking about private sector health care providers, I remind the hon. Gentleman of what an unnamed shadow Cabinet Minister told The Independent last week:

“We all remember when Andy was Health Secretary and happily contracting out bits of the NHS to the private sector… You have to ask yourself what’s changed.”

[Steve Baker (Wycombe) (Con)]

The NHS diagnostic centre in Wycombe, which is operated by the private sector, does a fantastic job. Will the Secretary of State join me in congratulating and thanking Opposition Members for all that they did to extend private and independent provision in the NHS?

[Mr Hunt]

I am happy to do that. My hon. Friend may be interested to know that in the last four years of the last Government, private sector contracts in the NHS doubled—something that this Government have not been able to match. It is important to look at the facts before we start any hares running with respect to privatisation.

[Fiona Bruce (Congleton) (Con)]

15. When he plans to publish his Department’s new guidelines on sex-selective abortion.

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

The Government will publish more detailed guidance on compliance with the Abortion Act 1967 shortly. That will include guidance on sex-selection abortions and restate our view that abortion on the grounds of gender alone is unlawful.

[Fiona Bruce]

Britain’s biggest abortion provider, the British Pregnancy Advisory Service, has advice on its website claiming that the law is “silent on the matter” of gender-selective abortion. In a leaflet, it actually states that it is not illegal. How does the Minister propose to address that, and to send out the clear message that strong legal action will be taken against anyone who is involved in that wholly unacceptable practice?

[Jane Ellison]

Although the Abortion Act does not mention gender specifically, the Government are clear that abortion on the grounds of gender alone does not meet the criteria set out in the Act. If evidence comes to light that doctors or organisations are sanctioning abortions for that reason alone, we will refer it to the police.

[Nadine Dorries (Mid Bedfordshire) (Con)]

The Minister is quite right that the Abortion Act does not state that the practice is illegal. Organisations such as Marie Stopes International operate under an ethical and professional framework in which they state that they will not perform abortions on the basis of sex selection. However, the chief executive of BPAS has said that

“there is no legal requirement to deny a woman an abortion”

if she wants to abort a female. The Government commission abortion services from BPAS and Marie Stopes. Does the Minister not think it is about time to have a closer look at BPAS, which is headed by a chief executive who condones sex-selection abortions?

[Jane Ellison]

That is exactly why we want to reissue the guidance on this matter. I cannot add to what I have said. I say with complete clarity that the Government’s view is that sex-selection abortion—abortion on the grounds of gender alone—is illegal and we will report it to the police if we are given evidence of it.

[Mr Virendra Sharma (Ealing, Southall) (Lab)]

16. What assessment he has made of trends in the number of attendances at type 1 accident and emergency departments since 2009-10.

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

We have debated the hon. Gentleman’s concerns about the A and E services in his area in the past. I want to reassure him that, despite the overall growth in attendances at A and E—we know that there is pressure on A and E—the changes that are recommended for his area have enormous clinical support across all the local CCGs and trusts.

[Mr Sharma]

I thank the Minister for her response. Will she explain why attendances at hospital A and E departments increased by 16,000 in the last three years of the Labour Government, but by 633,000 in the first three years of this Government?

[Jane Ellison]

As the hon. Gentleman knows, we have often debated in this House the many reasons for the increased pressure on A and E. However, the rate of growth in the first three years of this Government has been lower than the rate of growth in the last three years of the last Government. We are responding to the pressures. That is why the Secretary of State has addressed issues such as named GPs for older patients and the integration of social care. We acknowledge that there is pressure on A and E; it is the action that the Government are taking to respond to it that really counts.

[Andrew Gwynne (Denton and Reddish) (Lab)]

Ministers again deny that England’s A and E departments are in crisis. The Secretary of State did so in response to my right hon. Friend the Member for Leigh (Andy Burnham) earlier. It just will not wash any more. In the past two weeks, 10,743 patients waited on trolleys for up to 12 hours because no hospital beds were available and 52 patients waited for even longer. Does the Minister really think that it is acceptable that patients are experiencing the worst fortnight in A and E this winter while she is complacently sitting on her hands?[Official Report, 27 February 2014, Vol. 576, c. 10MC.]

[Jane Ellison]

There is no complacency on the Government Benches, and attendances are half what they were under Labour. Week after week we have heard those on the Opposition Front Bench come to the House to talk up a crisis in our NHS, but the NHS has responded incredibly well throughout the winter. I pay huge tribute to the staff of the NHS for what they have done in responding to this. The Government are taking long-term action to reduce pressure on A and E; even the College of Emergency Medicine rebuts the Opposition line that there is a crisis in A and E this winter.

[Julian Sturdy (York Outer) (Con)]

T1. If he will make a statement on his departmental responsibilities.

[The Secretary of State for Health (Mr Jeremy Hunt)]

I would like to thank Public Health England and the NHS emergency services for their extraordinary work during the recent floods, and say that this House is proud of their dedication and commitment to help those in great need. Since the previous Health questions, we have also had the first anniversary of the Francis report on Mid Staffs. As a result, I am proud that the Government have taken significant steps to restore compassionate care to all parts of our NHS, with a regulator now free from political interference, failing hospitals being turned round, and more nurses, midwives and health visitors in our NHS than at any time since 1948.

[Julian Sturdy]

The family of my eight-year-old constituent Ben Foy have been fighting for more than two years for the funding of sodium oxybate—a drug that his doctors feel could help him cope with narcolepsy and cataplexy. This is a particularly distressing condition for Ben and his family, but sadly, after all this time there is still complete confusion as to who has responsibility for Ben’s commissioning request. Will the Secretary of State look into the matter and clear up that confusion?

[Mr Hunt]

I reassure my hon. Friend that I have looked into Ben Foy’s case, and NHS England has confirmed that it is responsible for commissioning his care. The particular drug that my hon. Friend mentioned is not recommended by the manufacturer for use by children and adolescents, but I am happy to arrange for him to meet NHS England and get to the bottom of the issue.

[Andy Burnham (Leigh) (Lab)]

I want to return to care.data—an important scheme that needs to be saved from the incompetence of this clownish coalition. The Secretary of State said earlier that I was in search of a crisis, but now I will offer him a solution. If the Government work with us to introduce a series of tough new safeguards to protect patients, we will work with the Secretary of State to help rescue this failing plan. Those safeguards include tougher penalties for the misuse of data, Secretary of State sign-off on any application to access data, full transparency on organisations granted access, and new opt-out arrangements by phone or online. Will he meet me to discuss changes to the Care Bill to put that important scheme back on track?

[Mr Hunt]

The right hon. Gentleman has still not addressed the fundamental question of why he did not introduce an opt-out for the use of personal data, which this Government are doing. We have taken more steps than his Government ever did, and we will continue to work hard to ensure that this important scheme goes ahead. The right hon. Gentleman should know better.

[Penny Mordaunt (Portsmouth North) (Con)]

T2. There is great unmet need among older people in our communities, particularly for dementia care and support. In Portsmouth we are holding a community summit to join up local agencies to meet that unmet need. Will the Minister meet me to discuss what central Government can do to ensure that advice on additional funding streams is clearly and readily available?

[The Minister of State, Department of Health (Norman Lamb)]

I thank my hon. Friend for that question and pay tribute to the agencies in Portsmouth that are coming together to hold the summit and discuss that critical issue. The Prime Minister’s challenge on dementia has made real progress in improving diagnosis rates and the way that society treats dementia, and I would be happy to meet my hon. Friend to discuss the issue further.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

T4. Further to the answer given earlier to my hon. Friend the Member for Wansbeck (Ian Lavery), the lobbyist John Murray and an organisation funded by large pharmaceutical companies led a consultation and co-wrote a report for NHS England on the future of commissioning for £12 billion of NHS services. Will the Secretary of State tell the House whether it is now Government policy to have lobbyists and big drug companies drafting reports that directly influence the commissioning of NHS services?

[Mr Jeremy Hunt]

Let me say this to the hon. Lady: we have very clear rules, and for people who are involved in industry and have a self-interest we have important protections to ensure there is no conflict of interest. Let us be clear: the private sector has an important role to play in the NHS, but it grew far faster under the previous Government than it has done under this one. We are not going to take any lessons about being in hock to the private sector.

[Lorraine Fullbrook (South Ribble) (Con)]

T3. As the NHS comes through another winter, when it has delivered an outstanding service to more patients than ever before, how does my right hon. Friend assess the damage done by the unfounded scaremongering talk of crisis by the Opposition and some parts of the media?

[Mr Hunt]

My hon. Friend is absolutely right. I encourage those on the Opposition Front Bench in particular to talk to a few people in A and E and ask whether they think they have been supportive, in a very difficult winter, by whipping up all these scare stories when, in fact, because of their hard work, we are seeing 2,000 more people every single day in less than four hours than when the shadow Secretary of State was Health Secretary. A and E is performing better than ever.

[Ms Margaret Ritchie (South Down) (SDLP)]

T5. There are nearly 500 UK-trained medical practitioners now working in Australia, of whom 6% never return owing to the better conditions available there. What steps will the Secretary of State and his ministerial team take to ensure that we retain those qualifying in emergency medicine this year, to keep local A and E departments open in Britain and Northern Ireland?

[The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)]

I would like to point out to the hon. Lady that it is not unusual for doctors in training to work overseas to improve their medical experience. Many of my contemporaries did that, and every one I know has returned to work in the NHS in the UK. It is a common phenomenon that benefits doctors’ experience. What we have done, unlike the previous Government, is ensure that we now have a 100% fill rate for people entering A and E common stem training.

[Pauline Latham (Mid Derbyshire) (Con)]

T6. What assessment have the Government made of the decision by the National Institute for Health and Clinical Excellence not to recommend ipilimumab as a first-line treatment for advanced melanoma, except in clinical trials? Will the Minister join me in calling on NICE to reverse this decision and ensure that patients receive earlier access to this treatment to improve their chances of survival?

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

I know that my hon. Friend is really concerned about this, but NICE is an independent body so it would not be appropriate for me to interfere in an ongoing appraisal. NICE has recommended a number of other treatments for advanced melanoma, and NHS commissioners are required to fund them where clinicians want to use them. I want to give her some encouragement: this spring a trial will begin of an awareness programme on melanoma in the south-west of England, working with Cancer Research UK.

[Gavin Shuker (Luton South) (Lab/Co-op)]

T7. I am grateful to the Minister for her previous answer on female genital mutilation. With that in mind, what action will she take regarding the three Tory MEPs Nirj Deva, Sajjad Karim and Timothy Kirkhope who voted against the motion, in the European Parliament on 11 December, strongly condemning the disgraceful practice of FGM?

[Jane Ellison]

I am aware of this case. The point made is rather unfair. My colleague Marina Yannakoudakis MEP has dealt with this issue in correspondence with other Members. The motion was a composite motion. All Conservative MEPs completely condemn FGM, but there was a technical reason why they voted in that way. It is clear that the Conservative party—along, I think, with all Members—absolutely condemns this practice. I am happy to give the hon. Gentleman the detail on that vote afterwards.

[Dr Julian Huppert (Cambridge) (LD)]

T8. Papworth hospital is a world-renowned heart and lung hospital. For years, it has wanted to move to Cambridge, supported by Addenbrooke’s hospital, Cambridge university, the British Heart Foundation, AstraZeneca and many more, but it has been put on hold yet again. Will the Secretary of State make sure that this move, which will help patients, help to develop new treatments and save money, will happen?

[Dr Poulter]

My hon. Friend will be aware that local commissioners take decisions on local services. I will be happy to meet him to discuss this matter further, so we can talk through his concerns and ensure that local health care services are as strong as possible.

[Bill Esterson (Sefton Central) (Lab)]

T10. The village of Melling has grown in recent years, yet its surgery hours have been cut drastically. Elderly and disabled residents now face a four-hour round trip by public transport to see their doctor. How can cuts in surgery hours, like those in my constituency, be justified if the Government are serious about having a first-class NHS?

[Mr Jeremy Hunt]

We absolutely want to make primary care more accessible and that is why we are introducing named GPs for everyone aged 75 or more from April. This is a significant and important reversal of, I think, a mistake that everyone now agrees was made in 2004 when named GPs were abolished. Its purpose is to make GPs more accessible to the people who need them the most.

[Jason McCartney (Colne Valley) (Con)]

T9. The father of one of my constituents passed away at the weekend, one of 8,700 people who are diagnosed with pancreatic cancer each year in the UK, of whom only 3% will survive beyond five years. That survival rate has not changed in over 40 years. Will my right hon. Friend update the House as to what the Government are doing to improve patient outcomes for those with pancreatic cancer?

[Jane Ellison]

I thank my hon. Friend, and I know that many hon. Members have raised this issue because pancreatic cancer outcomes remain extremely difficult. We want to see the best outcomes for all cancer patients. There has been a big investment by the Government in diagnosis and screening—£450 million—and last year we were involved in piloting a tool to support GPs in diagnosing cancer earlier, including pancreatic cancer, in over 500 GP practices. That pilot is currently being evaluated.

[Mike Kane (Wythenshawe and Sale East) (Lab)]

The Manchester Evening News recently highlighted the enormous pressures faced by Wythenshawe accident and emergency after the downgrading of Trafford accident and emergency. Will the Secretary of State meet me to discuss this and to tell me when Wythenshawe will receive the extra funds that it has been promised?

[Mr Jeremy Hunt]

I welcome the hon. Gentleman to the House and congratulate him on representing in his constituency a fantastic hospital; I have been to Wythenshawe hospital and it is superb. Some big changes are happening in the Greater Manchester area that will lead to that part of the country having some of the best NHS care in the country. Obviously there is a difficult transition in A and E services between Trafford and Wythenshawe, and I am happy to meet him to discuss it further.

[Nicholas Soames (Mid Sussex) (Con)]

Does my right hon. Friend agree that it is unacceptable that investigations into failures in hospital services take so very long? There has recently been one in my constituency: a very sad and badly handled case connected with mental health. Does my right hon. Friend agree that the authorities need to provide answers very promptly to families who are left completely beleaguered by such behaviour?

[Mr Hunt]

I absolutely agree with my right hon. Friend. One of the tragedies that the Francis report helped us to uncover was that so many failings had been allowed to persist for so long: in the case of Mid Staffs, between 2005 and 2009. We owe it to families to be much quicker, which is why there is now a time limit on the failure regime: hospitals must be turned around within a fixed period of time or go into administration. Otherwise, we will not have safe hospitals in our areas.

[Barry Gardiner (Brent North) (Lab)]

The Minister earlier told the House that 1,500 new midwives had come on stream since the Government started, but, of course, the Government promised that there would be 3,000 delivered by 2015. Midwives are very good at delivery; how good is the Department?

[Dr Poulter]

We have trained more midwives. To go back to a previous question, it was under the previous Government that trained midwives from this country were having to go and work overseas. That is no longer the case. We now have 5,000 more in training—a record number—to make sure that we provide more midwives. I would also like to welcome the hon. Gentleman back to this country.

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

Last year I spent a busy and informative day with the East Midlands ambulance service on the road. It was clear speaking to those professionals that a large proportion of individuals taken to A and E would be better served by going to their GP or by accessing other services. However, the ambulance service felt completely disempowered to advise or even to refuse to take anyone to A and E who requested it.

[Mr Jeremy Hunt]

That is one of the things we need to be much better at—linking up the services offered by ambulance services. I would add that pharmacies have a big role to play in this, as one in 11 or 12 A and E appointments could be dealt with at a pharmacy. My hon. Friend is absolutely right that this is something we need to do better.

[David Wright (Telford) (Lab)]

A hugely expensive review of A and E services is going on in Telford, the Wrekin and Shropshire. The Secretary of State was in Telford a couple of weeks ago but did not have the courtesy to let me know. Will he say whether we will retain full 24-hour, seven-day-a-week services at Telford and whether there will be downgrade of our A and E?

[Mr Hunt]

First, I apologise to the hon. Gentleman if my office did not let him know that I was visiting, an oversight for which I take responsibility. I had a good visit to the Redwoods, a superb mental health in-patient unit where I learned a great deal. I am not aware of any plans to change or downgrade his A and E.

[Several hon. Members]

rose—

[Mr Speaker]

Order. Time is up. As usual, demand has exceeded supply. Before we come to the ten-minute rule motion, we have a point of order.

Point of Order

Tuesday 25th February 2014 Commons Chamber

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

On a point of order, Mr Speaker. I wonder whether you can advise me on how we can secure a statement from the Chancellor of the Exchequer, or another Treasury Minister, about the substantial extra sums that are being given to the leading bank executives, the most senior people: the chief executives and their colleagues. For example, the chief executive of HSBC is to receive an extra £32,000 a week on top of his salary of more than £1 million a year.

May I point out, Sir, that the annual salary in my borough is about £22,000? The sheer greed of the bankers involved is quite disgraceful. A Treasury Minister is in the Chamber now; I wonder whether he will respond.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

indicated dissent.

[Mr Winnick]

The Minister shakes his head. I can well understand his embarrassment, because we are constantly told that we are all in it together. Why can we not have a statement about what is happening in the banking industry? If the Minister is not willing to respond to my point of order, may I suggest that we should have some opportunity to raise the issue in the Chamber?

[Mr Speaker]

I am grateful to the hon. Gentleman for his point of order. I understand that Ministers from the Department for Business, Innovation and Skills, who may be thought to have some interest in the matter, will be answering questions in the Chamber next week, and that the tabling of Treasury questions will take place next Wednesday. I know that the hon. Gentleman will agree with me that it is always useful to have a bit of information, and I therefore proffer that to him and to the House.

The hon. Gentleman has made his point, and the Exchequer Secretary has certainly heard it—

[Mr Winnick]

But has remained silent.

[Mr Speaker]

He has not chosen to respond. We do not always have debates by means of point-of-order exchanges. However, the point has been registered very forcefully, and Ministers will be conscious of what the hon. Gentleman has said.

The hon. Gentleman is an extremely ingenious character. I feel sure that he will be present at business questions, and—I say this in the friendliest possible spirit—I know that when he has a bone in his mouth, he is inclined to chew on it, and to chew on it relentlessly. I feel sure that that is what he will do in this instance.

If there are no further points of order, we will come now to the ten-minute rule motion, and to the ever-patient Mr Benedict Gummer.

National Insurance (Renaming)

Tuesday 25th February 2014 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

12:36

[Ben Gummer (Ipswich) (Con)]

I beg to move,

That leave be given to bring in a Bill to make provision for National Insurance to be known as Earnings Tax; and for connected purposes.

About 102 years ago, in this Chamber’s predecessor, David Lloyd George rose to introduce national insurance. Starting just before four o’clock in the afternoon, he began one of the most detailed and complicated of speeches given from the Treasury Bench: one that would, I imagine, have tested even the stamina of those excellent Minsters— my brother from Ipswich, the Exchequer Secretary to the Treasury, my hon. Friend the Member for South West Hertfordshire (Mr Gauke), and my brother from Suffolk, the Minister for Skills and Enterprise, my hon. Friend the Member for West Suffolk (Matthew Hancock)—who are sitting there now.

Lloyd George explained the need: the harsh conditions experienced by working people around the country, and the dangers that they faced if they fell sick or could not find work. He described the insurance systems that were provided by insurance companies, employers, friendly societies and trade unions. He measured their efficacy and worth, identifying where coverage was greatest and where it was most sparse. He then set out the solution: a national insurance fund into which workers, employers and the state would pay, to provide for medical aid for sick workers, maternity cover for workmen, their wives and women workers, benefits for limited periods of unemployment, and payments in time of sickness. The provisions would be managed through the existing private institutions, except for unemployment payments, which would be provided by the labour exchanges.

All that took the Chancellor more than two hours to describe. It was after 6 pm when he concluded:

“something like 15,000,000 of people will be insured, at any rate against the acute distress which now darkens the homes of the workmen wherever there is sickness and unemployment. I do not pretend that this is a complete remedy. Before you get a complete remedy for these social evils you will have to cut in deeper. But I think it is partly a remedy. I think it does more. It lays bare a good many of those social evils, and forces the State, as a State, to pay attention to them. It does more than that. Meantime, till the advent of a complete remedy, this scheme does alleviate an immense mass of human suffering”.—[Official Report, 4 May 1911; Vol. 25, c. 644.]

Thus was made the first substantial plantation of the welfare state.

I am giving this account because I think it important to explain why national insurance was called national insurance. There was indeed a fund, one that was intended to be in surplus within 15 years of its creation, at which point Lloyd George anticipated that additional benefits would be made available, most likely to the families and dependants of workers. Well, the fund did not work out quite like that, but the scope of the scheme was expanded as he had predicted, with a major reform by the post-war Attlee Government. Further changes in the 1970s and 1980s continued the mutation of this great piece of legislation, expanding its scope, scrapping the “stamp” and complicating the rates at which insurance was paid.

At every turn, the link between contributions and benefit, which from the beginning was not entirely true, was eroded, to the point where it now barely exists. That link will become nugatory with the introduction of universal credit and the single state pension, both considerable reforms of this coalition Government. What remains of national insurance is not really a contributions-based system, but a system of entitlement whereby a certain number of years of payment entitles the recipient to additional benefits.

Let us be straight. National insurance is now a tax. It has all the features of a tax. Money paid in this financial year in national insurance contributions is used to pay this year’s costs of pensions, health care and much else besides. The surplus in the national insurance fund is transferred to other Government spending. The more robust commentators have explained that it is not an insurance system but a giant Ponzi scheme.

That is not, however, how national insurance is universally perceived. The reaction of members of the public to news of this ten-minute rule Bill illustrates well the confusion. One person e-mailed me saying:

“we have earned our pension. It is by its very own definition entitlement paid for by a total lifetime of our contributions, not a benefit paid for by someone else’s income tax.”

But that is precisely what it is. However, the fiction of contributions persists. Someone commenting on a report in the Daily Mail said:

“I’ve paid a full stamp for 44 years and never taken out of the system now they say the insurance I’ve paid all my working life is no longer valid. If this was a business they’d be sued.”

That’s as may be and therein lies the reason why so many of Lloyd George’s successors have been reluctant to come clean about what national insurance really is. As one person on Twitter said:

“Nobody likes a ‘tax’ and to call a tax ‘insurance’ is a spin coup in itself.”

Were national insurance a much smaller tax, we would call it a stealth tax. That was certainly how the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) used it, when he increased NI contributions having promised not to increase income tax. That is the principal reason why I wish to see reform. We know the struggle we have, in this place, to improve the conversation our voters have with the people sent here to represent them. I firmly believe that, if we are clearer about the amount of money we take from people in tax—if that figure were more simply presented—and if we explain equally clearly how it is spent on their behalf, we will have done something important to reconnect voters with their democracy.

A small but important part of that is coming clean about national insurance. I propose we call it earnings tax, because it is a tax on earnings, but we could equally call it additional income tax, or employment tax. Such a change would have no impact on people’s current entitlement or on the rates at which NI is currently charged. It would, however, be an important first step in the merging of income and earnings taxes, as proposed most recently by the TaxPayers Alliance, the Institute of Directors and the Chartered Institute for Payroll and Pensions Professionals. I believe that such a merger would have far wider benefits; it would not just benefit the people those organisations represent. But that discussion is for another time. All I propose at this stage is a twofold reform: first, a simple change of name, which would cost next to nothing; and secondly, the merger of the national insurance fund into general Government funds, which would save administration costs that would far more profitably be spent elsewhere. The result would be that we would have made an important move in being clearer, simpler and more transparent about how our constituents are taxed, on what and where it is spent.

I must admit to feeling some trepidation and regret at treading on ground laid so splendidly by the Welsh wizard. His presentation had the desired effect. It made less controversial a scheme that might otherwise have been opposed, as indeed it was in any case—not least by some of the trade unions. Most importantly, it did, as he thought it would, lay

“bare a good many…social evils”

and force

“the State, as a State, to pay attention to them.”—[Official Report, 4 May 1911; Vol. 25, c. 644.]

Over a century, the state has paid attention to them. The provisions were not by any means remedies, as he had hoped, but life for the millions and generations of the least privileged and the less unfortunate is much better as a result. That is a giant achievement, but we must not let romance get in the way of honesty. National insurance is no longer what it was designed to be. We now pay for the welfare state of Lloyd George’s creation out of general taxation. We should therefore get rid of the fiction of national insurance contributions and call it what it is: an earnings tax.

Question put and agreed to.

Ordered,

That Ben Gummer, Steve Baker, Mr Graham Brady, Mr Robert Buckland, George Freeman, Nicholas Soames, Mr Brooks Newmark, Priti Patel, Mr Dominic Raab, Jacob Rees-Mogg, Justin Tomlinson and Mr Andrew Turner present the Bill.

Ben Gummer accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 20 June; and to be printed (Bill 175).

Pensions and Benefits Uprating

Tuesday 25th February 2014 Commons Chamber

[Mr Speaker]

With the permission of the House, the motions on the draft Guaranteed Minimum Pensions Increase Order 2014 and on the draft Social Security Benefits Up-rating Order 2014 will be debated together.

12:46

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I beg to move,

That the draft Guaranteed Minimum Pensions Increase Order 2014, which was laid before this House on 27 January, be approved.

[Mr Speaker]

With this we shall discuss the following motion, on the draft Social Security Benefits Up-rating Order 2014:

That draft Social Security Benefits Up-rating Order 2014, which was laid before this House on 27 January, be approved.

[Steve Webb]

Let me deal first with what is an entirely technical matter that we attend to each year, and not one that I imagine we shall need to dwell on today. The Guaranteed Minimum Pensions Increase Order 2014 provides for contracted-out defined benefit schemes to increase their members’ guaranteed minimum pensions that accrued between 1988 and 1997 by 2.7%, in line with the increase in the consumer prices index to the previous September.

I should like to turn now to the Social Security Benefits Up-rating Order 2014. As part of his autumn statement, my right hon. Friend the Chancellor of the Exchequer announced the rates of tax credits for 2014-15, and today we are debating the order that will uprate those social security pensions and benefits for which my Department is responsible. As the House will be aware, we are not here to discuss the Welfare Benefits Up-rating 2014 Order, which was made on 24 January. Those rates increased by 1% under that order, and were debated in Parliament during the passage of the Welfare Benefits Up-rating Act 2013.

Turning to the benefits and pensions in the Social Security Benefits Up-rating Order 2014, I shall deal first with the basic state pension. Despite the current tough fiscal context, this Government remain committed to protecting those who have worked hard all their lives, which is why we have stood by our triple-lock commitment to uprate the basic state pension by whichever is the highest of earnings, prices or 2.5%. This year, as prices were greater than average earnings and greater than 2.5%, the basic state pension will increase by CPI at 2.7%. The new rate of basic state pension will therefore be £113.10 a week for a single person, an increase of £2.95 from last year. That means that the basic state pension is forecast to be around 18% of average earnings from April 2014, a higher share of average earnings than at any time since 1992. Our triple-lock commitment means that someone on a full basic state pension can expect to receive £440 a year more than if it had been uprated by earnings since the start of this Parliament.

On pension credit, we have continued to take steps to ensure that the poorest pensioners will benefit in full from the effect of our triple lock. Each year, the standard minimum guarantee must, by law, be increased at least in line with earnings. That means that the minimum increase this year would be 1.2%. However, to ensure that the poorest pensioners benefit from the full cash value of the increase in the basic state pension, we decided again to increase the value of the standard minimum guarantee credit, in this case by 2%, so that single people will receive an increase of £2.95 a week and couples will receive an increase of £4.45 a week. Again, consistent with our approach last year, the resources needed to pay this above-earnings increase to the standard minimum guarantee have been found by increasing the savings credit threshold, which means those with higher levels of income will see less of an increase.

Let me now deal with additional state pensions. This year, the state earnings-related pension scheme—SERPS—and the other second pensions will rise by 2.7%, which means that the total state pension increase for someone with a full basic state pension and average additional pension will be about £3.75 a week, or just under £200 a year. Unlike under the Labour party, which froze SERPS in 2010, this will be the fourth year in a row that the coalition has uprated SERPS by the full value of CPI.

In these debates, we discuss the most appropriate measure of inflation by which to uprate benefits. I have had the pleasure of such exchanges with the right hon. Member for East Ham (Stephen Timms) several times, and I want to refer him back to something he said three years ago in the corresponding debate. We were using CPI rather than RPI—the retail prices index—and it is CPI which underlies these motions. He described the move to CPI as “ideological”; that is an interesting description of a choice of price index, but he regarded it as an ideological shift. He went further in expressing his distaste for this measure, saying:

“As for the view of my party, I simply refer the Secretary of State to what the leader of my party has said, which is that the suggestion that the change should be made for a period—perhaps up to three years—would be something that we could consider. If that proposition were on the table, we would be happy to consider it.”—[Official Report, 17 February 2011; Vol. 523, c. 1187.]

So his position three years ago was that, perhaps for three years, we might use CPI because it saves a bit of dosh but that the Labour party was committed to RPI.

I therefore hope that when the right hon. Gentleman responds and gives his party’s position on these motions he will clarify whether that is still his position. He will realise, first, that RPI has now been dropped by the Office for National Statistics as an official statistic because of methodological concerns. So I would be surprised if he remained committed to going back to RPI. Perhaps he thinks we should use CPIH, as he complained that we did not have owner-occupier housing costs in the measure that we are using. If that is his position, he would obviously be arguing for a lower increase in benefits this year, because at the moment the level of CPI is above that of CPIH. Given that he was opposed to a permanent switch to CPI, given that RPI has been dropped as an official statistic and given that some of the other measures are lower than the one we are using, I am slightly puzzled by his position—I am sure that by the time we have heard his speech we will no longer be puzzled.

On disability benefits, this year the coalition will ensure that those who face additional costs because of their disability, and who perhaps have less opportunity to increase their income through paid employment, will see their benefits increase by the full value of CPI. So disability living allowance, attendance allowance, carer’s allowance, incapacity benefit and personal independence payment will all rise by the statutory minimum of 2.7% from April 2014. In addition, those disability-related and carer premiums paid with pension credit and working-age benefits will also increase by 2.7%, as will the employment and support allowance support group, and the limited capability for work and work-related activity element of universal credit. Pensioner premiums paid with working-age benefits will increase in line with pension credit.

At a time when the nation’s finances remain under real pressure, this Government will be spending an extra £3.3 billion under these orders, and related orders, in 2014-15. We will thus continue to help support those who are not currently in work, first, by increasing the main rates of working-age benefits by 1%, and by ensuring that pensions, and benefits that are designed to help with the additional costs of disability, are protected against the cost of living. Of that, we will be spending about £2.7 billion extra on state pensions, including an above-inflation increase, and more than £600 million on people of working age. Nearly £600 million will be going to disabled people and their carers. Our decisive action to limit to 1% the increases in the main rates of most working-age benefits is part of our overall economic strategy, which has substantially brought down the deficit.

In this order, we continue: first, to maintain our commitment to the triple lock, meaning that the basic state pension will reach its highest level as a percentage of average earnings for two decades; secondly, to protect our poorest pensioners with an over-indexation of the standard minimum guarantee, so they too will feel the benefit of our triple lock; and, thirdly, to protect the benefits that reflect the additional costs that disabled people face as a result of their disability, through increases to disability living allowance and attendance allowance, carer’s allowance and the main rate of other disability benefits in line with CPI. I have set out our ongoing commitment to ensure that no one is left behind, and I commend these orders to the House.

12:54

[Stephen Timms (East Ham) (Lab)]

I thank the Minister for his explanation and confirm that I do not intend to express concerns about the draft Guaranteed Minimum Pensions Increase Order 2014. However, I do wish to make some comments about the draft Social Security Benefits Up-rating Order 2014. As he has said, this is a rather thinner debate than the corresponding ones he and I have enjoyed in previous years, because a big chunk of what we have debated previously is now covered by the Welfare Benefits Up-rating Act 2013, which imposed a 1% uprating this year and next, and so is outside the scope of these orders.

One thing I have not entirely understood—the Minister touched on this and I would be grateful if he explained it—is how the corresponding order for tax credits will be dealt with. Some elements of tax credits uprating are not covered by the 1% constraint. Clearly, with so few people in receipt of universal credit, he is not the Minister responsible for in-work benefits—that responsibility remains with the Treasury—but I wonder whether he could explain how the parliamentary process dealing with those tax credits is to be handled.

This is the fourth year since the announcement of the triple lock for the basic state pension. In rhetorical terms the triple lock has, no doubt, been successful, but, unfortunately, the reality has been rather different, because, once again, the increase in the state pension is less this year than it would have been if the uprating method previously used was still in place. In RPI terms, this is a real-terms cut for the third year in a row in the value of the basic state pension. The RPI last September was 3.2%, whereas the pension uprating delivered by this order is 2.7%. So in RPI terms, this is quite a big cut of 0.5%—a full half percentage point—in the value of the state pension, which is a bigger real-terms cut than last year. If the basic state pension had been uprated in line with RPI since 2010, the weekly rate for a single person would be more than a pound higher than the figure we are debating today, at £114.21.

[Steve Webb]

Clearly RPI is bigger than CPI—that is a statement of fact—but does the right hon. Gentleman think that RPI is a good measure of inflation?

[Stephen Timms]

I will come on to deal with that. The point I wish to make is that the triple lock is frequently presented to us, as the Minister did again today, as being extraordinarily generous to pensioners. It is presented as some great superlative, whereas in fact it has delivered a lower uprating than the previous formula—the one in place before the last election—in every one of the three years when it has been used, and in the first year it was due to be used it would have delivered such a low uprating that the Minister chose to override it. He was sensible to do so, but if he had used the triple lock in that first year, the gap between his uprating and the value of the basic state pension under the old method would now be almost £3 per week. So it is important in this debate to put on the record the extent to which the triple lock has delivered less than the long-established formula that was in place until the general election.

It is worth examining the history of the triple lock. In its first year, it was announced but not actually implemented, because it would have delivered a very small increase. So at its first outing, it failed.

[Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)]

Was it not, however, the long-established formula, over the long run, that had put pensioners so far behind those earning?

[Stephen Timms]

I think the hon. Gentleman is referring to the change made by Mrs Thatcher when she was Prime Minister, and he makes an entirely fair point. However, the point I am putting to him is that he and his party, particularly the Minister, frequently present the triple lock to us as somehow being extraordinarily generous, whereas in practice it has provided less than the formula he has just criticised—the one introduced by the former Conservative Prime Minister. If that formula had continued after the 2010 general election, the state pension amount we would be debating today would be more than £1 a week more than the figure in this order.

[Mr Alan Reid (Argyll and Bute) (LD)]

The right hon. Gentleman will accept that the formula introduced by Mrs Thatcher was continued throughout the whole term of the previous Labour Government. As the economy is recovering, thanks to the coalition’s successful economic policies, will he not accept that linking pensions to earnings will mean higher pensions for people in the long run?

[Stephen Timms]

I certainly hope that that is the case, but in the short run, in the period since the general election, we are seeing a lower value for the basic state pension than if Mrs Thatcher’s formula had stayed in place. That point is not widely understood. I am sure that the hon. Gentleman understands it, but I want to put it on the record so that people are aware of the fact that the method that is currently in place has in fact delivered a lower value for the basic state pension than if Mrs Thatcher’s formula had continued to be used.

[Mr Reid]

Had the right hon. Gentleman’s party been in power, would the pension increases over the past three years have been at CPI or RPI?

[Stephen Timms]

If the arrangements in place before the last election had been maintained, the increases would have been at RPI. If they had been at RPI, we would be debating today a higher value for the basic state pension than the one in the order in front of us.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

When we have debated such issues in the past, I have been quick to highlight the fact that both CPI and RPI are not particularly good methods of measuring inflation, especially its impact on low-income groups, including pensioners. Does the right hon. Gentleman agree that the real issue at stake here is that energy prices have increased by 37% in the past 10 years and that food inflation has grown ahead of inflation every year for the past eight years? We should be talking about the impact of inflation on low-income groups and not the technical measure. We should be finding technical measures that reflect that impact of inflation.

[Stephen Timms]

The hon. Lady makes an important point. I hope she will support Labour’s energy price freeze, which will have an important benefit for people on low incomes. She is also right to draw attention to the particular difficulties of pensioners on low incomes. It is for that reason that pension credit is so important. Pension credit, which is in the order in front of us—I believe that my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) will say more about that when he responds to the debate later—is being uprated at a significantly lower rate in percentage terms than the basic state pension.

I was talking about the history of the triple lock. In the first year, it was overridden, so it failed. In its second year, it was implemented and delivered an increase in line with CPI, along with working age benefits. Last year, it was applied again and, for the first time, it delivered something better than CPI, but that was only by 0.3 percentage points. This year, the Government propose to uprate the basic state pension by CPI, which, as of September last year, was 2.7%. That is only a 0.2 percentage point increase on the absolute bare minimum that would be possible under the triple lock. Had the previous uprating RPI mechanism been in place, there would have been a larger pension increase this year, and in the last two years, than has been delivered.

It was in 2011 that the Government first uprated pensions by CPI rather than RPI. In the debate then I pointed out that this was a direct hit on the income of pensioners, and it still is. In 2011, a contributory deal, understood and signed up to by pensioners, was broken. That was compounded last year, and the Government want to do it again this year. On the other side of the coin, it is worth noting that RPI will continue to be used for the uprating of a great many other things. The Minister has correctly quoted my comments on that in the past. There could well have been a case to uprate by CPI as a deficit reducing measure for a period. However, we do not accept that Ministers should have tied themselves to CPI indefinitely, and that remains our view.

As announced in 2010, the Government have also made a permanent switch to CPI uprating. Thanks to the Welfare Benefits Up-rating Act 2013, most working age benefits were capped at 1%, with provisions for them also to be capped at 1% for the following two years, and so are outside the scope of this order. As we have said in previous years, there would have been a reasonable case for the Government to make a temporary change to the methodology, but unfortunately they went further.

[Steve Webb]

Sometimes we ask for a one-word answer. I want a three or possibly four-letter answer. Were the right hon. Gentleman introducing these motions today, which index would he use?

[Stephen Timms]

Sadly, I am not in the happy position that the Minister describes. I hope that I will be before very long, in which case I will gladly give him the answer that he seeks. However, I am not in that position today.

[Mr Reid]

If the right hon. Gentleman hopes to be in power some time in the future, will he tell us the formula that he would use for the long term?

[Stephen Timms]

I can well understand why the hon. Gentleman wants to know the answer to that question. If, as we have heard, he and his party are to be involved in the next Government, it will be in coalition with a party other than the one that they are in coalition with at the moment. I am afraid that he will have to be a little patient to get an answer to his question. None the less, I well understand why he wants to know the answer.

The Chancellor proudly told us in his autumn statement last year that the increase formula for regulated train fares was changing from RPI plus 1% to RPI plus 0%, which means that regulated rail fares would increase by no more than July 2013’s RPI of 3.1% . What is not clear is why the Government apply RPI in that case and CPI in this. The answer, as far as one can make sense of all this, is that the Government use CPI when it is useful to have a small number and RPI when they want a big number. That appears to be the principle that has been adopted. The result is that pensioners will see their state pension increased in line with CPI, but their train fares by RPI.

Part 7 of the order in front of us relates to universal credit. As the House well knows, this is becoming an appalling fiasco. The Secretary of State told us yesterday that he expected 6,000 people to be in receipt of universal credit during the current pathfinder. It was not clear by what date he expected that figure to be achieved. Will the Minister let us know? He will recall that I have been warning since November 2010 that the time scale announced by Ministers for universal credit was unachievable. Unfortunately I have been proved right. Indeed, the position is now a good deal worse than I feared when I wrote to the Secretary of State in November 2010. There is now a real danger that the entire project could collapse.

As I pointed out at the time, the time scale for the IT was always unachievable. That goes back to the July 2010 Green Paper, which included the absurd claim that the IT for universal credit would not amount to a major IT system. Replacing the whole of the benefit information technology can hardly amount to anything other than a major IT system. Ministers have failed to deliver any IT system. It now appears that, while they continue to develop late the IT system they started out with, they are also going to develop a second universal credit IT system, in the hope that they can get it right second time around. Goodness knows how many hundreds of millions of pounds that is going to end up costing. It is clear that the next Government will have a major job on their hands to salvage universal credit after May next year if, as all of us must hope, it can be salvaged.

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

Is the right hon. Gentleman at all reassured by the Secretary of State’s statement some time ago that universal credit would succeed because he believed that it would?

[Stephen Timms]

The hon. Gentleman correctly quotes the Secretary of State. He told us for a long time that universal credit was on track, then latterly he started to say that it was “essentially on track”. So one can be forgiven for not being entirely reassured.

I wonder whether the Minister can help us on another matter that has just come to light in connection with part 6 of the order on employment and support allowance. A freedom of information request by the advice service Benefits and Work revealed yesterday that the Department for Work and Pensions had issued an internal memo to staff on 20 January advising that, owing to a growing backlog at the assessment company Atos, all current ESA claimants would be left on the benefit without further medical checks until another company could be found to carry out repeat work capability assessments. The Minister of State, Department for Work and Pensions, the hon. Member for Hemel Hempstead (Mike Penning), frankly acknowledged in oral questions yesterday pressures and capacity problems at Atos and indicated that negotiations were taking place to find an alternative provider, but he made no mention of the suspension of repeat assessments in the meantime, which appears to have been introduced. The memo obtained by Benefits and Work suggests that DWP has deliberately chosen not to inform Members of the House or claimants about this change. Why has that been done? Can the Minister provide reassurances to the public about the scale of the difficulties—yet another emerging mess in his Department?

The decision by Ministers to take this action will confirm widespread scepticism about whether the system is fit for purpose. It certainly leaves an operational vacuum, apparently pending the appointment of a new provider. At this stage there is no indication of when such an appointment might be made. In the circumstances, it is surprising that the Minister did not take the opportunity to inform the House of the situation yesterday, when there was an extensive discussion on the matter and a number of questions were asked about the process for replacing Atos and the operation of the work capability assessment in the meantime. It appears that the operation has been significantly scaled back. Given that ESA is part of the order before us, I wonder whether the Minister can take this opportunity to provide us with the explanation that we were not provided with yesterday.

There is growing dismay in the country about the impact of the Government’s changes on growing numbers of people—with an extraordinary 750,000 people forced to go to food banks last year because they were unable to afford enough food for themselves and their families. The Cardinal Archbishop of Westminster expressed it powerfully last week when he said:

“Something is going seriously wrong when, in a country as affluent as ours people are left in that destitute situation and depend solely on the handouts of the charity of food banks”.

He is surely right. Something is going very badly wrong indeed, and it needs to be put right.

The increase of the state pension in line with the triple lock is worth having—I put it no stronger than that—but the Government have chosen to uprate state benefits and pensions permanently in a way that is meaner than the method used before. For that reason, we are unable to support the Government in the Lobby on the orders today.

13:14

[Katy Clark (North Ayrshire and Arran) (Lab)]

Thank you, Mr Speaker, for giving me the opportunity to say a few words. I will be speaking against the orders, but I am not suggesting that we should vote against them because of course, if we were to do so, the pitiful increases that some people will receive as a result of them would not be paid. I shall be arguing that the orders should be different.

The changes that the Government have introduced, some of which are in these orders, have huge significance for millions of the poorest in our country. Both motions are of vital importance, as restricting the uprating of benefits to these pitiful amounts, which in many cases represent a real-term cut, is one of the ways in which the coalition Government have attempted to balance the books on the back of the poor. The focus today is on the change from RPI to CPI and, as the Minister has said, other legislative methods have been used in relation to some of the other changes which yet again the Government are proceeding with this year.

Under the last Labour Government, most benefits were uprated every April in line with the RPI measure of inflation and based on the RPI of the previous September. Shortly after taking office, the coalition announced that it would be changing to CPI, which of course does not take into account housing costs and is almost always a lower measure than RPI. That is why I oppose it. The hon. Member for Banff and Buchan (Dr Whiteford) has already commented that another method of uprating should be found because neither CPI nor RPI is a good way of capturing the real cost of living for some of the groups affected by the orders. However, we do know that RPI is a more generous system than CPI and the Government should return to that way of looking at things unless a better way can be found.

[Steve Webb]

I am listening with care to the hon. Lady. Just to set the record straight, one of her objections to the use of CPI is that it does not include housing costs. In fact, it does. It includes rents. Were we also to include owner-occupiers’ housing costs—the CPIH measure—we would have a lower measure than the one we are using.

[Katy Clark]

Obviously the Minister is aware that the range of factors taken into account has been smaller every year since the change was brought in. I oppose the orders not necessarily because they do or do not include housing costs—I understand the point he makes; he has made it before and we have debated it previously—but because the method does not reflect the real cost of living that people who rely on these benefits experience.

Every year since 2010 RPI has been higher than CPI and the gap between those figures has made a real difference to pensions and benefits. The danger with the change is the cumulative impact over many years. In 2010 the RPI figure was 4.6%. That went up to 5.6% in 2011, down to 2.6% in 2012, and was 3.2% last year. But the equivalent CPI figures were 3.1%, 5.2%, 2.2% and 2.7%. Every year there has been a gap, which has meant that some of the poorest and most vulnerable in our society have ended up with less money in their pocket.

The Prime Minister has made much of his decision to introduce a triple lock guarantee for the basic state pension. He has already pledged to retain it throughout the next Parliament should he have any success at the next general election. The guarantee ensures that the basic state pension will always rise in line with whatever is the greatest as between inflation, wages or 2.5%. The uncomfortable truth, however, as the Minister must accept, is that the triple lock was introduced alongside the change from RPI to CPI, so the basic state pension increases in 2012 and 2013 were lower than they would have been if the previous system had been used. By 2015, the basic state pension will therefore be £1.11 a week lower than it would have been if it had risen in line with RPI, so pensioners will be £106.60 worse off as a result.

That is how just one group is affected. If we look at other groups, such as carers, the situation is even worse. Next year, carer’s allowance will be £1.69 per week lower than it would have been under RPI, with carers £255.84 worse off by April 2015 as a result. Those receiving both the higher rate mobility and care components of disability living allowance will be £571.48 worse off by the same date.

[Mr Reid]

Does the hon. Lady accept that, with the triple lock, pensioners will benefit from an economic recovery by their pension going up in line with earnings, whereas when the economy was doing well in the early years of the Labour Government, pensioners did not share in the increased benefits, because their pension only went up in line with inflation and not in line with earnings?

[Katy Clark]

As the hon. Gentleman will appreciate, I am focusing on the change from RPI to CPI. He will be aware that in the last Parliament I strongly advocated a return to the link with earnings. However the reality, as he well knows, was that even though Labour did not reinstate that link, the increases every year were far higher than they would have been if that reinstatement had taken place. Therefore, I frankly did not understand why my Front Bench at the time would not make that change.

I support the return to the link with earnings, but as I have said, the point I am making is about the change from RPI to CPI, which I understand is a long-term policy of this Government. Some of the poorest people in the hon. Gentleman’s constituency and mine will experience a cumulative long-term reduction in their incomes as a result of that change.

From April 2013, the coalition slashed the annual uplifts to a range of benefits to 1%; I appreciate that that issue is being dealt with in other legislation. Some of the disability benefits, such as carer’s allowance and disability living allowance, are exempt from that 1% cap, but employment and support allowance, which is the primary income replacement benefit for disabled people, is not. The Government have exempted from the cap the higher rate care component paid to the most severely disabled people, supposedly shielding the vulnerable from it. Unfortunately, however, this is a sleight of hand. ESA is paid in two parts—a basic rate, plus an additional component—and although the additional component of £35.75 is exempt from the 1% cap, the basic rate of £72.40 is not. Therefore, over-25s in receipt of the care component of ESA will receive £5.11 a week less than they would have received if it had increased in line with RPI. These cuts matter, because they are having a real impact on some of the poorest and most vulnerable people in our society.

Between 1997 and 2010, the Labour Government reduced the percentage of people living in absolute poverty from 28% of the population to 15%. During that time, 2.3 million children and 2 million pensioners were lifted out of poverty. Research from the Institute for Fiscal Studies suggests that investment in the social security system was the primary factor behind that reduction in poverty. By slashing social security benefits with these orders and the other legislation that we have considered previously, the Government risk putting some of the most vulnerable people in society back below the poverty line, and that is on top of the large number of people whose incomes have already been cut as a direct result of this Government’s policy. These orders are completely inadequate and the Government should come forward with something that protects the most vulnerable in our society.

13:24

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

I do not intend to detain the House for too long. I begin by thanking my hon. Friend the Member for North Ayrshire and Arran (Katy Clark) for a powerful speech. The final point that she made is an important one, and it is worth the House’s reflecting on it, because often when we discuss these kinds of issues there is a tendency to caricature the record of the last Labour Government, but anyone who looks closely at their changes to and improvements in social security will see a record of quite substantial progress. Of course, social progress often comes slowly; it is measured in inches as well as feet, and in centimetres as well as metres. However, there was significant social progress and that is part of the context within which this debate should be understood.

[Mr Reid]

The hon. Gentleman referred to enormous social progress, but why did the last Labour Government not increase pensions in line with earnings, as will now happen over the long term thanks to the triple lock?

[Gregg McClymont]

I am pleased that the hon. Gentleman made that point, because to some degree it illuminates the difference between him and Labour; because what he discounts entirely by asking that question is the impact of pension credit. I do not know how aware he is of pension credit, but it took 1.3 million pensioners out of poverty. Is that not something that he welcomes? It reduced pensioner poverty in Scotland by two thirds, taking 200,000 pensioners out of poverty.

[Mr Reid]

rose—

[Gregg McClymont]

I will give way to the hon. Gentleman again, but I hope he will recognise that achievement.

[Mr Reid]

The defect of the pension credit arrangements, when compared with the new pension arrangements that my hon. Friend the Minister has introduced, was that people had to apply for pension credit, and a lot of people were unaware that they had to do that, whereas under the new pension arrangements everyone will get the single-tier pension.

[Gregg McClymont]

I am afraid to say to the hon. Gentleman that, although I understand where he is coming from, it is not the case that everyone will receive the single-tier pension; people must have made contributions for 35 years. He should speak to his colleague, the Minister, who everyone recognises is an expert on the state pension. There will be poor pensioners who will not receive the new pension, and they will depend on pension credit.

I asked the hon. Member for Argyll and Bute (Mr Reid) to reflect on the reality of the difference that pension credit made, particularly in a period after 1997 when there was genuine absolute pensioner poverty.

[Sheila Gilmore (Edinburgh East) (Lab)]

Is it not the case that if it had not been for the framework that was set up by the last Labour Government—particularly the introduction of pension credit, which is clearly already accounted for in budgets—it would have been far more difficult to move to the form of pension that the Minister has proposed?

[Gregg McClymont]

My hon. Friend makes an important point. The level at which the Minister appears set to place the new flat-rate state pension is just above pension credit. It is that framework, which was set for the poorest pensioners to ensure they would no longer live in poverty, that is so important. My argument is not that the hon. Member for Argyll and Bute is entirely wrong; it is that he must take account of the difference that pension credit made to the poorest pensioners in his constituency, my constituency and around the country.

That brings me to the question that I wanted to ask the Minister, which is about pension credit. Of course it is welcome that the basic state pension is rising by £2.95, and he was very clear that pension credit will also rise by £2.95, but of course as a percentage rise, the rise for pension credit is less. The danger is that those on pension credit will fall behind relative to those on the basic state pension.

The term that the Minister used was over-indexation. A little alarm goes off in my head when Ministers resort to using such terms. A more straightforward way to put things is to say that pension credit, which the poorest pensioners rely on, is not being uprated by the same percentage as the basic state pension. There may be an excellent reason for that, but I would like to hear it.

There is also a more fundamental point about the new pension system that the Minister and the Government are introducing, which relates to the point that my hon. Friend the Member for Edinburgh East (Sheila Gilmore) made. It is that, as the Pensions Bill proceeds, the new flat-rate state pension—as I understand it—is being set just above pension credit. If pension credit loses its value relative to the basic state pension in the run-up to the introduction of the new system, there is a danger that the flat-rate state pension will be pegged at a lower rate than would otherwise be the case. We must be clear not only about the implications for the poorest pensioners of a lag in the uprating of pension credit, but about the implications for the flat-rate state pension system for which the hon. Member for Argyll and Bute is such an enthusiast. We must ask these legitimate questions. If we are to have a reasonable debate, we need to recognise the progress that was made over the past decade—certainly until 2010—and consider how that will interact with the flat-rate state pension system that the Minister is so keen on creating.

[Dame Anne Begg (Aberdeen South) (Lab)]

Following its pre-legislative scrutiny of the draft Pensions Bill, my Work and Pensions Committee thought that there should be a larger gap between the flat-rate state pension and pension credit to ensure that there would be a cut in means-testing, which the Government claim will be the effect of the flat-rate pension’s introduction. However, that will not happen if the two are kept together, or if one is lower than the other.

[Gregg McClymont]

My hon. Friend is widely acknowledged as an expert in this area, and questions arise when pension credit is not uprated by the same percentage as the basic state pension. As I said, I start to get worried when I hear the phrase “over-indexation” because the Minister is actually saying, “We have decided that pension credit will be uprated by earnings unless we decide otherwise, and we have decided otherwise, so it will be uprated by the cash equivalent of the uprating to the basic state pension.” However, that represents a smaller percentage increase, so we need to be aware of the wider implications of that.

I made it clear that I would not detain the House for too long. My right hon. Friend the Member for East Ham (Stephen Timms) asked the Minister a number of important questions, to which I shall add my own. First, does the Minister agree that pension credit made a real difference to millions of poor pensioners in this country? Secondly, does he agree that it provides the basis on which the flat-rate state pension will be pegged under his new system? If that is the case, it is important that we debate the lesser uprating of pension credit, and I hope that the Minister accepts that I ask my questions in the spirit of co-operation and inquiry.

13:32

[Steve Webb]

With the leave of the House, I shall be grateful for the chance to respond to the three speeches that we have heard. I cannot help reflecting on the fact that we cannot manage to talk for even an hour about spending £3.3 billion, but I take it from that that the House thinks that we are doing a good job.

Before I respond to the detailed points that have been raised, I want to be clear about what we mean by above inflation, real terms and all the rest of it. The April increase in the basic state pension will be in line with inflation at 2.7%. Of course, we now know that CPI is below 2%, so despite the population experiencing inflation at that rate, we are putting up the pension by 2.7%—

[Sheila Gilmore]

Will the Minister give way?

[Steve Webb]

In a second.

That explains the reference at the end of my speech to an above-inflation increase although, as we have discussed, there will be years in which the trend goes in the opposite direction.

[Sheila Gilmore]

The Minister anticipates the point I was about to make. The situation to which he refers could apply in any year. People suffered greatly in previous years because the uprating was set at a low point for inflation, yet they experienced real rising prices, so the increase is hardly a great virtue on the part of the Government.

[Steve Webb]

It is interesting to look at what has happened to benefit rates over the long run. In the seven years since the 2008 crash, the rate of jobseeker’s allowance has increased by more than the growth in earnings. While people with jobs—people would obviously far rather have jobs than not—have seen their wages grow over that period, the rate of JSA, which I still quaintly think of as unemployment benefit, has risen by more than that growth.

The hon. Member for North Ayrshire and Arran (Katy Clark) talked about pitiful increases and slashing benefits, but I can tell her that the Labour Government spent £181 billion on tax credits, benefits and pensions in their final year in office, yet in the first year of the next Parliament, we envisage spending not £181 billion, but £211 billion. Spending £30 billion more than six years previously is an odd definition of “slashing”, so we need to keep a bit of perspective in the debate. I respect the hon. Lady’s sincerity and clearly she wishes that the increases were greater but, as she well knows, her Front-Bench colleagues will not vote against the orders, and that is not because of a technicality, but because they would not allocate money for larger increases. I know that she disagrees with her Front Benchers. If she ruled the world, she would put in place greater increases—she would tax people more and spend more—but that is not her party’s position.

[Stephen Timms]

What is the Minister’s response to last week’s comments by the Cardinal Archbishop of Westminster about the significant number of people who find themselves in destitution as a result of the changes that have been made?

[Steve Webb]

I have great respect for the Cardinal Archbishop, whom I met some years ago, and I do not doubt his compassion for those in need, which is shared by Members on both sides of the House. However, I do not think that anyone believes that people were not in severe and urgent financial crisis before we saw the current network of food banks; they simply went somewhere else. The idea of urgent financial need has not suddenly arisen. As the right hon. Gentleman will know, people turned to charitable sources and churches. It was not uncommon for people to knock on a vicarage door to ask for a sandwich, and that is not very different from a food bank—it is a precursor to that. There were always people in urgent financial need, and we can debate the impact of a global economic downturn on the level of need. Church leaders who comment on such matters are sometimes briefed with partial information. It is sometimes suggested to them that there is a mad slash and burn on the welfare state, but I think that they would be surprised to learn that, at the start of the next Parliament, we will be spending £30 billion a year more on benefits, pensions and tax credits than in the final year of the previous Labour Government.

[Stephen Timms]

Surely the Minister accepts that comments such as those made by the Cardinal Archbishop of Westminster and in last week’s letter signed by 27 bishops are based on actual experience of what is happening in communities. Surely he cannot maintain, as he appeared to do, that nothing has changed and that things are carrying on as they were before—clearly that is not true.

[Steve Webb]

No one is suggesting that nothing has changed. The global economic downturn was far deeper than was originally thought, and we have had to recover from that. We had to make changes to the benefits system to try to balance the books, which the previous Government failed to do.

The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) said that he felt uncomfortable when I talked about over-indexation. Let me make it clear that under the pensions legislation that the Labour Government put in force, there is a legal duty to uprate pension credit by earnings, but we are doing more than that. The hon. Gentleman implied that we were doing less and that we were somehow putting in place a worse increase, but we are paying a £2.95 increase on the basic state pension, and we do not want to follow Labour’s approach of making an earnings increase to the guarantee credit because that would give the poorest pensioners less than £2.95. In our jargon, we are passing through the full £2.95. Far from paying less than the law requires, we are paying more, because we put the biggest priority on the poorest pensioners.

[Gregg McClymont]

The Minister is well aware that earnings have been in decline, so setting out the Government’s approach as some sort of virtue is a bit like the argument that was made when he had to override the triple lock on its first day because it would have produced so little. However, does the Minister not accept that the situation has implications for the level at which the flat-rate state pension will be set?

[Steve Webb]

I would like to suggest that the colleague who just whispered in my ear was saying how much he was enjoying our debate on welfare and urging me to keep it going, but that may not have been the tenor of his remarks. What we are trying to do is ensure that we do the right thing by the poorest pensioners. Had we simply done what Labour required us to do by law, which was to index in line with the growth in average earnings—it was Labour’s law, not ours—the poorest pensioners would now be getting less. I assume that the hon. Gentleman is not suggesting that we should do that. We have therefore overridden Labour’s law and been more generous to the poorest pensioners. I do not know whether that is socialist enough for him, but it is what I think is the right thing to do.

[Gregg McClymont]

Let us be very clear that pension credit has been uprated by less than the basic state pension. That is a judgment the Minister can make, but let us be clear about what it means for the poorest pensioners: they are not getting the same increase as other pensioners. That is a judgment the Government can make, but they should at least be clear about what is happening.

[Steve Webb]

The hon. Gentleman is completely wrong, because they are getting exactly the same increase—£2.95—as in the basic state pension. He seems to want it both ways. If he is saying that the increase in pension credit should have been the 2.7% on the basic state pension, can he tell us where he would get the money from?

[Gregg McClymont]

The Minister is an intelligent man, and my point is a simple one: an increase of 2% is less than an increase of 2.7%. I think that we can all agree on that.

[Steve Webb]

I did not hear the hon. Gentleman say where the extra cash would come from—the bankers’ bonus tax, perhaps? Is he saying that it should be 2.7% or not? As a debating point he is saying that it should, but he has no idea where the money would come from. [Interruption.] He says from a sedentary position that he wants me to be straight about this. Being straight with the electorate means that if he stands up in Parliament and says that the increase should be bigger, which he has every right to do, he must say where the money would come from. That is the nature of choice in government.

The right hon. Member for East Ham (Stephen Timms) asked about tax credit. Tax credit rates will be set out in affirmative statutory instruments in the usual way and debated in the usual way, so there is no difference there. He talked about the triple lock, which we are very proud of. In fact, we understand that the Opposition are going to copy it. On one level he was mocking and deriding it, but when the Prime Minister said that he would continue it in the next Parliament if re-elected, the leader of the Labour party said that

“nobody should be in any doubt about our commitment to the triple lock”.

The right hon. Gentleman ought to have a word with his leader, who thinks that the triple lock is really a rather good thing.

I want to respond to the right hon. Gentleman’s attempted demolition job on the triple lock that is now his policy. He implied that had Labour been in office, pensions would have gone up by more. There are two possible ways that could have happened. One is if Labour had continued the RPI link. We all know that the statisticians do not think that RPI is a particularly good measure of inflation, and I refer to what the hon. Member for North Ayrshire and Arran said earlier. I entirely accept that RPI is generally, although not always, bigger than CPI, but we are not trying simply to pick a bigger or smaller number. In having these annual debates, we are trying to compensate for average inflation. If society thinks that benefit rates are too low, we can do something about benefit rates. What we do not do is just pick an inflation measure because it is bigger or smaller.

We chose CPI because it is a robust and internationally standard definition. The statisticians have dropped RPI as a national statistic because they do not think that it is a good measure of inflation. When the Secretary of State looked at the increase in the general price level this year, CPI was the only number he could realistically have used because RPI is no longer regarded as an official statistic and the other new measures have not even been properly implemented yet. It is entirely open to the hon. Member for North Ayrshire and Arran to persuade her Front Benchers that we should tax people more and increase benefits, but that should be done by making a decision, not by using a measure of inflation that even the statisticians no longer think works.

[Sheila Gilmore]

I suspect that the Minister will therefore be disappointed to learn that landlords appear to think that RPI is an appropriate measure for calculating their tenants’ rent increases.

[Steve Webb]

Clearly a whole raft of decisions are made about increases. The right hon. Member for East Ham mentioned rail fares, for example, and the train operators’ revenues and some of their costs are determined by RPI. The task that the Department for Work and Pensions has once a year is to look at what has happened to the general price level, and I have not heard a single argument in this debate that CPI is not the best single measure to use for that purpose.

[Katy Clark]

Surely the Minister accepts that benefit increases are at least in part about social justice. Since 2010 we have seen this Government take a range of steps that have increased inequality in this country. Surely he must accept that choosing CPI simply because it seems to be a smaller amount will push the poorest people even further below the poverty line.

[Steve Webb]

I fundamentally do not accept that. The hon. Lady says that we chose CPI simply because it is lower. As of the year to last September, we had only two possible measures to choose from—CPI and RPI—because the other variants of CPI and RPI were not established at that point. RPI has been discontinued as an official statistic, so how could we use it as the measure for the general increase in the price level? CPI is the target of the Bank of England and an internationally standard and accepted measure. If she thinks from a social justice point of view that benefits should be higher, which is an entirely legitimate thing to think, she should do that by setting them at whatever level she thinks is right, not by trying to pretend that inflation is something other than what the statisticians tell us it is. Those are two separate questions.

[Katy Clark]

Does the Minister not accept the point that has been made in a number of debates in recent years, which is that the inflation that the poorest experience, and indeed that pensioners experience, is far higher than CPI?

[Steve Webb]

There are clearly differences in inflation over time and between different groups. We use one number across the board. There will be years when pensioner inflation is higher than the figure we use and years when it is lower. At the moment, there are particular pensioner price indices, but they do not include all pensioners. We simply use one number that, on average and over time, captures inflation, but spending patterns differ. This Government have clearly taken steps to help people at the bottom of the pile. To counter what the hon. Lady said, inequality rose under the previous Labour Government and has fallen under this Government. [Interruption.] She shakes her head because the statistics and the evidence do not fit her presumptions, but the fact is that Labour presided over growing inequality in this country.

The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East seemed to imply that pensions would be higher if Labour had remained in government, but he knows perfectly well that before the general election the previous Government mooted moving to earnings indexation from 2012. Had they done so, we would now have a lower state pension than we have now. Would they have carried on with a prices index that nobody really thinks is a good measure of inflation? Where would they have found the billions of pounds to do that? He has implied that they would not have done that and that they would have accepted use of CPI for three years, in which case the state pension would not now be higher. There are lots of “what ifs”, but it is fairly clear.

My right hon. Friend the Deputy Prime Minister has suggested that Labour has started to get it on the public finances, but I am afraid that the right hon. Member for East Ham is still in the Brownite mode from when he was in charge of the nation’s spending. People always ask me whether the triple lock is affordable, but it is just not good enough for him. He wants something more generous. I think that we need a dose of realism in this debate. He asked some specific questions, and my right hon. Friend the Secretary of State responded to his questions on universal credit yesterday. Practically every benefit that exists is listed in these orders and we could debate them all, but that is not the focus of this debate. Suffice it to say, universal credit will lift people out of poverty, which is why I am proud to support my right hon. Friend’s plans.

The right hon. Gentleman asked about ESA. I will not comment on documents that he said have been leaked, but I can say that we are taking action to tackle the backlog in the system. I would have thought that he, when wearing his constituency hat, would want us to do that, but he is welcome to table questions to the Minister of State, my hon. Friend the Member for Wirral West (Esther McVey), for further information.

The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East asked about the role of pension credit. He hails pensions credit as some sort of salvation. Let us be clear that pension credit was, primarily, a rebranding. We had national assistance, then we had supplementary benefit, then we had income support, then we had the minimum income guarantee, and then we had guarantee credit. They were all basically the same thing—a line below which people were not meant to fall. Therefore, the guarantee credit bit was, in essence, a Brownite rebranding. The new bit of pension credit was savings credit—one of the most tortuous, complicated and obscure benefits ever created.

[Gregg McClymont]

Will the Minister give way?

[Steve Webb]

In a second; I have not finished my rant yet.

Savings credit is such a lottery that of those entitled to savings credit only, half get it and half do not. I am afraid that I do not regard a system where one tosses a coin and half the people get it and half do not as a firm foundation for security and dignity in retirement. That is why we have introduced the single-tier state pension.

[Gregg McClymont]

I have a simple question for the Minister: is it or is it not the case that pension credit took 1.3 million pensioners out of poverty?

[Steve Webb]

I do not believe that for a minute, because at the same time as pension credit was implemented, other changes were happening. For example, SERPS—the state earnings-related pension scheme—was maturing, so each successive generation of retiring pensioners was getting higher levels of state pension, thereby reducing pensioner poverty, and people had longer service in final-salary pension schemes. A whole raft of long-term trends will lead to a reduction in pensioner poverty, so to say that it was due to pension credit on its own, one would need to know what else would have happened even without it.

Clearly, savings credit is extra money, and I am sure it is very welcome to those who receive it. We have gone on indexing—in fact, as I have said, rebalancing—pension credit to give more to guaranteed credit and less to savings credit, because people claim guaranteed credit. That is why we have focused on the very poorest pensioners.

[Gregg McClymont]

Let me reframe my question. Does the Minister agree that 1.3 million pensioners were taken out of poverty during the time of the previous Labour Government?

[Steve Webb]

The hon. Gentleman will know that the level of pensioner poverty has fallen in the long run because of the factors that I have described. [Interruption.] He says that it has happened since 1997. Had the previous Labour Government done precisely nothing, the level of pensioner poverty might well have fallen anyway because SERPS was maturing. SERPS came in in 1978 and had been running for only 19 years by ’97. In each succeeding year, more and more people have got more and more state pension under SERPS as it matures, so as the oldest pensioners with no SERPS die off, the newly retired pensioners come in with bigger and bigger SERPS. That would be a long-term reason for the change, and real earnings growth would have been another factor. It is complete nonsense to say that it was due solely to pension credit, and he ought to know that.

[Gregg McClymont]

Will the Minister give way?

[Steve Webb]

One last time, because I need to conclude shortly.

[Gregg McClymont]

The Minister appears to get tense under questioning and uses the words “complete nonsense”. Is he really standing at the Dispatch Box and saying that pension credit did not make a significant difference to pensioner poverty in the UK?

[Steve Webb]

As ever, the hon. Gentleman tries to misrepresent what the record will show that I said. I am not saying that pension credit was irrelevant; I am saying that his claim that pension credit reduced the level of pensioner poverty by 1.3 million is patently false.

Where does that leave us at the end of this debate? We have a set of orders that spend an extra £3.3 billion on benefits and pensions, overwhelmingly on pensioners. This Government will deliver a state pension that represents a bigger share of average earnings than in any year under the previous Labour Government. The point of pensions is to replace lost earnings, so they cannot do their job if they have fallen relative to earnings, as they did in almost every year of the previous Labour Government, most notoriously when they thought that 75p was enough for pensioners. We do not; we think that a £2.95 increase this year is fair and appropriate. We are proud of our record in protecting the most vulnerable and, in particular, in focusing additional spending on pensioners. I commend the orders to the House.

Question put and agreed to.

Resolved,

That the draft Guaranteed Minimum Pensions Increase Order 2014, which was laid before this House on 27 January, be approved.

Social Security

Resolved,

That the draft Social Security Benefits Up-rating Order 2014, which was laid before this House on 27 January, be approved.—(Steve Webb.)

Backbench Business

Tuesday 25th February 2014 Commons Chamber

Transatlantic Trade and Investment Partnership

Tuesday 25th February 2014 Commons Chamber

13:54

[John Healey (Wentworth and Dearne) (Lab)]

I beg to move,

That this House has considered the Transatlantic Trade and Investment Partnership.

I am pleased to have secured this debate on behalf of the all-party group on European Union-United States trade and investment, which I chair, and to have done so with support from the hon. Members for Aberconwy (Guto Bebb), for Carmarthen East and Dinefwr (Jonathan Edwards), and for Ceredigion (Mr Williams). I am also pleased to see that the Minister without Portfolio, the right hon. and learned Member for Rushcliffe (Mr Clarke), is on the Government Front Bench and will respond to the debate. It must be rare, if not the first time, for a Cabinet Minister to respond to a debate such as this. I take that as a good sign that the Government are at last starting to put some serious political weight behind the debate about securing a very good deal for Britain in the trade negotiations between the EU and the US.

It is seven months since the House last debated the transatlantic trade and investment partnership. That debate was also secured and led from the Back Benches by members of the all-party group. It took place in July, just a week before the first round of negotiations began. Since then, there has been very strong progress, with three rounds of negotiations and a fourth round set for next month. The European Commission has taken the unprecedented step of setting up an advisory panel of business, trade union and consumer interests, and of freezing any discussion on dispute resolution while it conducts a consultation. We have seen a level of political and media attention on both sides of the Atlantic that is markedly and unprecedentedly up on that for these sorts of deals in the past. Last week, we had a top-level political stock-take led by Commissioner de Gucht and US trade representative Michael Froman on progress so far.

[Alok Sharma (Reading West) (Con)]

Like everyone in the House, I want this partnership to succeed and for us to get to an end point. On the stock-take, the EU Commissioner noted that the areas of difference between the parties are still larger than the common ground they share. Does the right hon. Gentleman share my concern that there may be slippage in the timetable?

[John Healey]

There may indeed; the hon. Gentleman raises an interesting point. He has been part of the cross-party efforts in this House in taking the debate about the potential for this deal out more widely into the country, and he spoke at a business debate in Reading in his constituency.

What I fear more than slippage in the timetable is that we are entering a period in the life cycle of any trade negotiations when the uncertainty and the risks are greatest. It is still unclear what exactly is on the table, those with specific concerns are voicing them fiercely, those with general support for the deal are still muted, and the specific tangible benefits that may come to Britain are still not really clear. This is a period of significant risk, when elections to Congress and to the European Parliament during the course of the year may detract from some of the political momentum and support. The onus on Parliaments and Governments such as ours to maintain that political support and momentum during the months ahead is therefore greater than ever.

[Steve Baker (Wycombe) (Con)]

rose—

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

rose—

[John Healey]

I give way to the hon. Member for Skipton and Ripon (Julian Smith).

[Julian Smith]

Does the right hon. Gentleman agree that we in the all-party group have been somewhat helped by George Monbiot, who wrote a barking mad article in The Guardian, to which the Minister responded in his usual robust manner, and that we require George Monbiot to keep writing these barking mad articles so that we can resist them every step of the way?

[John Healey]

The hon. Gentleman may be slightly disappointed by my response, because I do not necessarily agree with his arguments. However, I draw the same conclusion about the particular focus of the article: the case for investor-state dispute systems as part of a deal between the EU and the US. In fact, I have written my own piece in which I say that I cannot see the case for that in a deal such as that under negotiation. The case has still to be made—I will come on to this later—by those Governments who may favour it and, indeed, by the Commission, whose role it would greatly enhance.

[Julian Smith]

rose—

[John Healey]

I was going to give way to the hon. Member for Wycombe (Steve Baker), but he has left the Chamber, so I will, of course, give way to the hon. Member for Skipton and Ripon again.

[Julian Smith]

Will the right hon. Gentleman clarify how on earth Britain will be able to persuade inward investors to come here and how we will be able to do a deal with China if we cannot sign this agreement?

[John Healey]

The answer is simply because a deal with China is very different from a deal with the US. The US and the EU both have long traditions of due legal process. If the hon. Gentleman looks at the representations being made by business and investors, he will see that there is very little call for the arrangements. The strongest advocate to date has been the European Commission, which is why I think the pause it has put on further discussions is so significant, although it did so only because it was put under significant pressure by those who had concerns, perhaps including Mr Monbiot in The Guardian.

These trade negotiations are about a potential trade deal like no other. They are the biggest ever bilateral trade talks, because together the EU and the US account for 30% of global trade and almost 50% of the world’s output. They are also the best prepared talks ever, because the serious work was going on for almost two years before the talks were formally launched, and they are the most ambitious negotiations ever, because for the first time in history this would be an agreement between economic equals, without any significant imbalance in power and wealth.

This is, therefore, a deal like no other, but it is being conducted at a time like no other, because since the 2008 global financial crisis and world downturn, faith in politicians, established civil servants and big business is at an all-time low and mistrust at an all-time high. I think that heightens the sense that past trade talks have been unjustifiably conducted in secret, controlled by a few big countries and often dominated by the interests of multinational companies.

A symptom of that current suspicion led War on Want to assert in a well-written report last week:

“TTIP is…correctly understood not as a negotiation between two competing trading partners, but as an attempt by transnational corporations to prise open and deregulate markets on both sides of the Atlantic.”

I quote that not because I agree with it, but because it is a sign of the degree of opposition and hostility to—and to some extent the lack of understanding of what is really at the heart of—the negotiations, which is fashioning the debate at present.

[Lisa Nandy (Wigan) (Lab)]

I am grateful to my right hon. Friend and colleagues from across the House for initiating this debate. Does he share my concern that many of the people we represent who are on zero-hours contracts and dealing with insecurity in the labour market will look at the United States, which is among those countries to have ratified the fewest International Labour Organisation conventions in the world, and be really concerned that this agreement, which could be very good for all of us, may actually make the situation worse for them? Would my right hon. Friend welcome a response from the Minister to that?

[John Healey]

I would indeed. My hon. Friend is right: the US has failed to sign six central ILO conventions on labour standards, including freedom of association and other workplace concerns. It may be that a deal such as this could have damaging consequences for already insecure workers in the European Union and the UK, but on the other hand it might not lower standards and it might bring an economic and jobs boost that would benefit many in Britain. That is what we have to secure and we have to make sure that my hon. Friend’s concerns are set to one side and not realised.

[Ian Paisley (North Antrim) (DUP)]

We currently export more agricultural products than we import in trade with the United States, and maintaining that balance would, of course, be beneficial to primary producers across the United Kingdom, principally our farmers. Does the right hon. Gentleman agree that United States produce should meet our exacting standards in the traceability of foods?

[John Healey]

I do agree. What is interesting about the way in which the debate has progressed in the seven months since the House last discussed the issue is that the Commission has become much clearer in saying that the stance of its negotiating team will be not to lower consumer, environmental or labour standards. I will suggest later that that should be one of four central tests that we or anyone else should be able to level at the quality of the negotiations and the agreement struck.

My central point at this stage is to say that, for the first time—because of the level of interest and the level of mistrust in the establishment, politicians and big business—this cannot be a traditional backroom trade deal done by the elites in Brussels and Washington. Like justice, good trade policy must not only be done but must now be seen to be done. Any legitimate agreement must command the broadly based confidence that it will bring benefits to British consumers and workers, as well as to British business. It must be subject to the scrutiny of open debate; otherwise, there will be a risk that bad policy will remain unchanged and that fears will flourish unchallenged.

My argument to the Minister in particular is that those involved in securing and ratifying an agreement—Government Ministers, negotiators and elected politicians—will have to work much harder and more openly for a deal, and those of us across all parties who are for a deal will have to work much harder to provide support to enable that to happen.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I thank the right hon. Gentleman for securing such an important debate. While Ministers seem keen to keep the public in the dark, the banking lobby is so happy with the financial services proposals that it has said that the text could have come straight from its own brochure. Does that ring the same alarm bells for the right hon. Gentleman as it does for me, and does he agree that the TTIP must not allow banks to undo the crucial EU agreement limiting harmful commodity speculation in particular?

[John Healey]

I had not heard that statement and I am surprised that the financial services industry has the detailed text of what is on the table, because we are not yet at that stage of the negotiations.

I want to do two things: first, I want to spell out a progressive economic case for trade and for the TTIP, and secondly, I want to set out four tests that I think a good TTIP deal and the Governments and negotiators involved must meet. On the economic case and why it is so important to the UK at present, I think that the great depression of the 1930s was the last economic crisis that was in any way comparable to what we suffered in 2008 with the global financial crisis and downturn. The policies pursued by the UK and the US back in the ’30s are, I think, widely seen to have prolonged that slump and held back any recovery. Not only were there deep cuts in public spending; there was also a sharp rise in protectionism and a decline in multilateral trade. Therefore, part of the reason why deals such as the TTIP and, indeed, the EU’s recent agreements with Canada and Korea are so important is that they avoid that default to beggar-my-neighbour economic policies and instead look to increase global trade through international co-operation. The UK has a particular need for the economic benefits and boost of trade.

[Mr Robert Walter (North Dorset) (Con)]

The right hon. Gentleman has talked about the benefits for the Untied Kingdom of the TTIP negotiations. Has his all-party group considered how the UK would fare if it had to negotiate a similar deal with the United States outside the European Union?

[John Healey]

Quite simply, there would be no negotiations. Interestingly, our all-party group recently had the Canadian ambassador in to talk to us about the Canadian deal and what lessons it might have for the TTIP negotiations. When the question was put to him, “Look, we’ve got long-standing British-Canadian relations, so why haven’t we had a British-Canadian deal like this before?” in effect, he said, in his own diplomatic way, “You’re not big enough: it’s not worth our effort.” This sort of potential boost to our economy and jobs is available to us through these negotiations only by our being part of a European Union that is capable of conducting such talks and of reaching such a deal with the US as an economic equal.

[Ian Paisley]

Does the right hon. Gentleman accept that, strictly speaking, he is not entirely right? As I have said, we export more agri-food products to the United States than we import from it. In fact, we export more minced meat to the USA than we consume in this country. Along with other food products, that means we are very valuable to the US as a trading partner, and we could reach our own deal on that basis.

[John Healey]

We are, indeed, such a trading partner, but I have to say that we are not big or significant enough to be in that position. Obama has made that clear and his staff have been even blunter—this sort of negotiation would not be available to Britain if it tried on its own to reach such a deal with the US.

Let me come back to the case for why the UK needs the economic boost and benefits of trade at this time. The size of our UK economy is still 1.3% smaller than it was before the peak prior to the 2008 global financial crisis and recession. The production component of our GDP is still about 10% smaller than it was before the downturn. We also have a high trade deficit—£30 billion in 2013—which has remained high despite the large fall in the value of the pound compared with the euro or the dollar during the downturn. At a time when we still have a domestic demand problem, trade deficits can lead to further weaknesses as income generated in the UK is spent overseas. In turn, that puts more pressure on factors such as household borrowing or inflated regional housing to fuel growth, which cannot produce a balanced or sustainable economic recovery. I must tell Government Members that, in his speech in Hong Kong earlier this month, the Chancellor of the Exchequer recognised that the economic recovery has not so far been put on a sustainable footing. He said:

“Britain is not exporting enough.”

The TTIP alone will not of course produce the kind of long-term recovery that we need. Public investment in infrastructure and new housing, an active industrial and regional policy, and a new deal jobs programme for young people are all needed, but an ambitious trade policy will be an important part of our future economic strength.

[Julian Smith]

Does the right hon. Gentleman accept that, as I understand it, there was no debate about trade or exports in this House under Labour for about 13 years, and that the number of trade trips by our Prime Minister in the past four years is more than the number undertaken by two Prime Ministers in 13 years? Government Members do not need to take lessons from Labour on exports.

[John Healey]

I remember a series of very high-profile international trade trips led by Prime Minister Blair and by my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) as Prime Minister, but I have no idea about the figures. My point is not to offer lessons, but to make the case for the importance of trade as a part of a strengthening UK economy and of our efforts to secure a more balanced economic recovery and more sustainable growth in the future, as well as therefore to make the case for the importance of the TTIP to the UK, not just the European Union.

I suppose people may say, “Look, you’re a Labour MP. Why on earth are you making this argument about international trade and capitalism?” I have to say that I am also part of a Labour movement, which stretches back to Keir Hardie, that has a great internationalist tradition of qualified optimism about the benefits of trade. Hardie described international trade as a way of fostering shared values:

“Despite the keenness of commercial struggle there comes a time when on each side there grows up a feeling that underneath the hard bargaining…there is a human element…the dykes that separate man from man are broken down, and the waters of their common humanity begin to intermix and commingle”.

I can tell the hon. Member for Skipton and Ripon that it was the pioneering 1945 Labour Government who signed the first incarnation of the general agreement on tariffs and trade, which was of course the forerunner of the World Trade Organisation.

I do not want to labour this point too strongly in a cross-party debate, but it was in the same progressive spirit that Franklin D. Roosevelt encouraged trade as a way of dragging the US out of the great depression after the protectionism of his Republican predecessor Herbert Hoover. As a pro-trade Democrat, Roosevelt wanted clear rules and clear standards—in other words, fair as well as free trade. He said:

“Goods produced under conditions which do not meet a rudimentary standard to decency should be regarded as contraband and not allowed to pollute the channels of international commerce.”

My argument is that that progressive pro-trade case is even more important with the TTIP than with other trade deals, because a deal between the US and the EU would, as I have said, cover a third of world trade and involve countries responsible for almost half the world’s output. The size of our combined economies and the scale of the potential deal mean that it could set standards for future agreements with other countries on consumer safeguards, workers’ rights, environmental protection, trade rules and legal process.

Finally, to bring this together—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I hope that for the right hon. Gentleman “finally” means finally. The recommended time limit is 10 to 15 minutes, and he has now been speaking for more than 20 minutes. The debate is limited to three hours, and many hon. Members have indicated that they want to speak. I hope that he will not say, “Finally”, “In conclusion” and then “Finally, finally”, but that he is starting his last few sentences.

[John Healey]

I am grateful for your guidance, Madam Deputy Speaker, because I had not appreciated that the debate is limited to three hours, rather than running until the Adjournment at 7 pm.

[Madam Deputy Speaker]

Order. For clarification for all hon. Members, the debate is a timed one. It will last only three hours. It will not run any longer. That means that there may be more time for the Adjournment debate, but this one cannot last for more than three hours.

[John Healey]

Thank you, Madam Deputy Speaker. I shall resist any more interventions—I have taken plenty already—and I will rattle through my four suggested tests, about which I am happy to elaborate on other occasions.

First, any good fair trade deal must deliver on jobs and growth. There is good evidence to suggest that it could do so if we get it right. As we discussed seven months ago in the previous debate, we need from the Government a very clear area-by-area analysis of where potential benefits might come in the UK.

Secondly, we need a deal resulting from negotiations that are open and accountable to those that it will affect. The European Commission has taken significant steps on that, as has the Department for Business, Innovation and Skills.

Thirdly, we need to aim for the highest possible standards of consumer, environmental and labour protection. Commissioner de Gucht’s statement in London last week was very interesting and important. He said that

“no standard in Europe will be lowered because of this trade deal; not on food, not on the environment, not on social protection, not on data protection. I will make sure that TTIP does not become a ‘dumping’ agreement.”

He also said that

“we are happy to be scrutinised on this”.

I can tell him that he will be: that is part of our role in this Parliament and part of the role of the public.

Fourthly and finally, a good deal must allow sufficient leeway for Governments to act in their national interests. No trade deal should put at risk the vital democratic right of Governments to legislate in their national interests. Importantly, the Commission has stated:

“TTIP should explicitly state that legitimate government public policy decisions cannot be over-ridden.”

I say to the Minister that it is up to the UK Government to ensure that that means nothing less than an exemption for the NHS from any deal. We did that in the Canadian deal, which states:

“Health care, public education, other social services excluded”.

The NHS can and must be exempted in that way from the TTIP.

Finally, finally, Madam Deputy Speaker, those are the tests on which we all have a right to call negotiators, Governments and Parliaments to account. I hope that Ministers will accept them as measures of success, act to secure them in the negotiations, and account for them to the public and in Parliament at each stage of the negotiations ahead.

[Several hon. Members]

rose—

[Madam Deputy Speaker]

Order. Thirteen Members wish to participate in the debate. To clarify, the debate will end at 4.54 precisely. I ask Members to speak for 10 minutes or less. I am not setting a time limit—let us not panic. However, if speeches are long, it will be necessary to impose a time limit.

14:21

[Mark Field (Cities of London and Westminster) (Con)]

I congratulate the right hon. Member for Wentworth and Dearne (John Healey) on securing this debate.

As the right hon. Gentleman rightly pointed out, in the aftermath of the 2008 financial crisis, politicians the world over were at great pains to avoid the policy mistakes that followed the banking collapse of the 1930s. Conventional Keynesian pump-priming was continually invoked as the means of preventing a recession from turning into a depression. Depressingly, rather less interest seemed to be given to the equally important lessons that the 1929 to 1933 era taught us about protectionism. The right hon. Gentleman referred to the Smoot-Hawley Tariff Act of 1930, which raised tariffs drastically on goods that were imported into the United States in a bid to protect American jobs from foreign competition. That Act sparked a domino effect among America’s trading partners, who predictably imposed similar measures to protect their own economies. The result, as we all know, was a terrific slump in world trade that devastated economic growth and caused unemployment to soar. Only the ensuing second world war helped to get the global economy on its feet again.

In 2010, as growth remained elusive, I wrote and spoke in this House of my deep concern that we might see a new wave of protectionist measures being introduced by politicians who were under pressure to protect domestic markets. The House might recall the defensive, almost nationalistic tone of the debate as Kraft’s hostile takeover of Cadbury was going through, particularly from the Opposition Benches. I called at that time for political leadership to make the case strongly for the massive benefits of free trade and to break down the remaining barriers.

It is in that context that I am heartened, four years on, by the enthusiasm with which the transatlantic trade and investment partnership has been embraced by policy makers.

[Julian Smith]

Does my hon. Friend agree that, despite all the hassle Kraft got, its £70 million commitment to Cadbury and Bournville is another example of the great benefits that inward investment can bring to our country?

[Mark Field]

Very much so. I suspect that my hon. Friend knows more about the chocolate industry than I, particularly as he is a Yorkshire MP.

The enthusiasm that I mentioned has been seen predominantly on this side of the Atlantic. The main aims of the partnership, on which formal negotiations began last July, are to increase trade and investment between the US and the EU by reducing tariffs, particularly on agricultural products; to align regulations and standards; to improve the protection for overseas investors; and to increase access to services and government procurement markets for foreign providers.

There is no doubt that the prize is enormous and that the TTIP is highly ambitious. The US is and will remain the EU’s most important trading partner, with some $2.7 billion of trade daily in goods and services.

[Caroline Lucas]

I am sure that the hon. Gentleman is aware that the Department for Business, Innovation and Skills has commissioned a cost and impact assessment on the agreement. That research states that

“an EU-US investment treaty would impose costs on the UK to the extent that it prevents the UK government from regulating in the public interest.”

Why is the hon. Gentleman so gung-ho about such an agreement when the Government’s own impact assessment states that the investor state part of it will cause problems for us?

[Mark Field]

I look forward to the Minister destroying one or two of those arguments. I suspect that the hon. Lady has provided a selective reading of the BIS impact assessment.

Much of the media coverage of the TTIP has focused on the trade of manufactured goods. Rather less attention has been given to a sphere of commerce in which the UK economy excels globally: financial and professional services. I represent the City of London, which is a hub not only for banking, but for a range of related service businesses such as accountancy, insurance, consultancy, the law and pensions management. To put into perspective the importance of those industries to the UK, in 2012 the financial and associated professional services sector employed some 7% of the UK work force, produced some 13% of total economic output, contributed £65 billion in tax and generated a trade surplus of £55 billion.

The City of London is strongly supportive of the TTIP, but has been consistent in its belief that no industry should be excluded from the partnership’s scope, including financial and professional services. There would be benefits not only through boosted trade, but through a reduction in the potential for the kind of regulatory arbitrage that currently means that differences in the implementation of financial standards are exploited, thereby putting financial stability at risk. Some of the regulatory differences are unavoidable because of the variations in EU and US market structures and cultures. Others cannot be justified on prudential grounds.

As was demonstrated so painfully in 2008, we tend to get regulatory co-operation only in times of severe crisis, when deals are brokered at the eleventh hour to avoid market fracture. If financial services were within the TTIP’s scope, I believe that we could design a stable, long-term framework for the discussion and co-ordination of regulatory issues long before we hit the next crisis point. The other great prize is that we could create a larger, more efficient market place for EU and US financial institutions, thereby solidifying their leading role in global financial regulation—a market that will get much bigger in Asia as the emerging economies of China, India and the like strengthen.

It is for those reasons that the EU has been lobbying hard for such services to be included in the TTIP negotiations. However, there is still stiff opposition from the US Treasury, which suggests that the TTIP is primarily a trade pact, not a forum for regulatory co-operation. The fear seems to be that the US might lose its sovereignty over regulation. It must be made clear that that is not what the EU proposes. Nobody wants to undermine existing regulations, even the Dodd-Frank Act. Co-ordination is quite different from capitulation. We need sustained, high-level political engagement to bring financial services within the TTIP’s remit.

I am concerned that there is insufficient public awareness of the TTIP, including what is at stake, what the challenges and benefits are—I accept what the hon. Member for Brighton, Pavilion (Caroline Lucas) says—and what the potential benefits are. Quite understandably, given the systematic undermining of the world’s political and economic elite in recent years, which has been referred to, there is a wave of distrust at the tenor of the negotiations that are under way. There is a common perception that side deals are being brokered to benefit global corporations, posing a risk to national sovereignty that might see our independent courts being made subservient to outside arbitration. It would be helpful if the Minister clarified his position on those arguments this afternoon. I encourage the Government to run an even more visible campaign on the TTIP that allows us all to have an open, honest discussion about its potential benefits and drawbacks.

[Julian Smith]

Does my hon. Friend agree that it is not just the UK Government that should be carrying out that publicity, but the EU? Instead of focusing on Eurobarometer and the other daft publicity ideas that it has, the EU should be spending its money on promoting the benefits of this agreement to its population.

[Mark Field]

I accept that, but realistically we in the UK probably also need our Government to make clear some of the benefits of trade—some of us in the Conservative party are convinced that the best future lies within the European Union, hopefully with a certain amount of reform going on as well. None the less, it is important that our Government make that strong case.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Is the hon. Gentleman able to comment on earlier remarks by my right hon. Friend the Member for Wentworth and Dearne (John Healey) about exempting the NHS from the TTIP? Currently it is not exempt, although I have asked several questions of the Government to ensure that it is.

[Mark Field]

If the hon. Lady will allow me, I will not comment on that but will leave it to the Minister. I wanted to speak about financial services, and I appreciate that time is tight.

[David Mowat (Warrington South) (Con)]

Briefly, my hon. Friend mentions the need for an EU-US regulatory framework for financial services, which I have not heard of before. How does he square that with what, for example, the Basel agreements try to do globally at the moment? Is that really the way forward?

[Mark Field]

I say simply to my hon. Friend that given the potential huge benefits of the TTIP, it seems odd that important industries such as the financial and professional services are not included in it. Clearly we are in a state of flux about a lot of international and national regulation of financial services, but it seems that this would be a good place for us to make a robust case for open markets, particularly in an industry that will clearly develop in many other parts of the globe beyond the EU and US.

It is important that those who are proposing the TTIP show just what it can add to people’s lives in terms of trading opportunities, jobs and a better variety of consumer products. If there is a perception that the deal is being engineered in an opaque way, it is likely to fall apart and we shall lose an enormous opportunity. Crucially, the United States must do the same. In that nation, protectionist sentiment and economic nationalism are now fast replacing the wave of enthusiasm on which the TTIP initially rode.

Needless to say, progress in this field of influence will resonate strongly in the UK Government’s negotiations for reforms within the European Union. It was, of course, the wily German statesman Bismarck who observed that

“politics is the art of the possible.”

Although I believe it is sensible that the UK Government do not raise excessive expectations as to what might be achieved in negotiations with our EU fellow members, it is at least worth observing that in the aftermath of last autumn’s EU budget settlement there appears to be a new mood towards some level of reform. One hopes that some of the UK’s traditional European allies such as Poland, Finland and the Czech Republic, will not feel encumbered by a resurgent Russia from making the case for some fundamental institutional reform in the EU. Time will tell, I think.

Thank you, Madam Deputy Speaker, for allowing me to say a few words. This debate on the TTIP shows once again that the UK Government’s goal should be that we remain the most outward-looking trading nation. We have every reason to have been proud of that in centuries gone by, and hopefully we will be in the years and decades to come.

14:33

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I welcome this debate and I am honoured to have put my name to the motion before the House. I am also pleased to be a member of the all-party parliamentary group on European Union-United States trade and investment, and I pay tribute to the hon. Member for Aberconwy (Guto Bebb) and the right hon. Member for Wentworth and Dearne (John Healey) for guiding our work. I apologise to the right hon. Gentleman for missing his opening remarks. I was at a hospital appointment and I thought the debate would start slightly later in the day.

I must be honest and admit that when I was approached to join the all-party group, I had little knowledge of the transatlantic trade and investment partnership, but I quickly gained an understanding of the potential economic significance of the deal if it goes ahead. Wales is an exporting nation and outperforms the other component parts of the UK. We have a trade in goods balance of £4.9 billion based on 2012 figures; by contrast, England has a deficit of £122 billion. Despite recent setbacks in Welsh exporting figures, this potential trade deal is hugely significant.

It is right and proper that the House of Commons debates this issue, such is the potential far-reaching impact of the trade deal for the economy and public services. If I was a Member of the Welsh Parliament, knowing what I know now I would also be demanding a debate and Welsh Government attention. I read today in the Western Mail that the First Minister is visiting the United States, and I would like to know whether he has raised the TTIP with the authorities there and the Westminster Government.

The UK Government have published a swish pamphlet promoting the positive potential of the TTIP, and we will hear many speeches in favour of it today. To add balance therefore, I will concentrate on some of the issues that I believe policy makers at Welsh and UK level, and the EU negotiating team, should focus on during negotiations.

Enthusiasm in Wales for the European Union values of the single market—one of the largest trading blocs in the world—is high, as it is for the fact that Welsh citizens are allowed to travel unimpeded and without visas within its territories, with the rights and protections that affords us in workers’ rights and human rights. I have my concerns about the privatisation obsession of the EU, but I believe the Welsh economy benefits more from being a constituent part of the EU than from being outside it. That is why my party argues for a full and equal voice for my country as a member state.

Coming from that position, it is difficult to argue wholeheartedly against building on the EU single market by developing the TTIP. The EU single market essentially offers free movement of goods, services, capital and labour, and the TTIP would extend the same principles for goods, services and capital. However, putting a Marxist cap on for a minute, the TTIP would neglect labour—[Interruption.] I had to get it in. As I will explain later, that creates a potential imbalance that worries me and on which I need reassurance from those on the Government Front Benches.

It is a further irony that the Government are trumpeting an EU-US trade deal while edging closer towards withdrawal from the EU in all their thoughts and deeds. I suspect that some Tories secretly harbour the desire to withdraw from the EU while remaining in some future US free trade area. As President Obama recently alluded to, and as common sense would dictate, why would US companies—or for that matter any other major trading country—invest here if it did not afford access to the European Union?

[David Simpson (Upper Bann) (DUP)]

Although this is a good news story in that it can create about £10 billion for the UK economy, does the hon. Gentleman agree it is important that we help and encourage small businesses to take advantage of this, and of every help given to them that the Government can afford?

[Jonathan Edwards]

I am grateful for that intervention and I will go on to agree with some of the points the hon. Gentleman has just raised.

We in Plaid Cymru support the principle of affording exporters in Wales the opportunity to further their trade with the USA. It is the largest destination for Welsh exports outside the EU and involves 23.7% of all trade, which naturally leads to the question of whether there is actually a problem to solve with the proposed trade deal. Certainly, we would support any deal that was of mutual benefit and in the Welsh national interest, and we would want guarantees that SMEs are genuinely afforded entry into the market with the chance to create more jobs and grow the economy. For example, exports from local farmers in Carmarthenshire could benefit from a favourable deal. Indeed, the Farmers Union of Wales is very encouraged by the TTIP.

However, Plaid Cymru would be opposed to any deal that ended up favouring big corporations and allowed the further hollowing out of industrial sectors of the Welsh economy. We also have grave concerns about the proposed EU-US trade deal as it currently stands with regard to investor state dispute settlement—I will talk a little more about that later in my remarks.

Much needs to be done to increase transparency in these negotiations. I am an avid follower of the Twitter account launched by the EU negotiating team, but much greater effort needs to be made by the EU and member states to explain and inform people about the TTIP. Economists at the Munich-based Ifo Institute found that a trade deal would lead to a 13.4% increase in US income per head in real terms over the long term, but an average rise of only 5% among the EU 27, now 28—we in Wales welcome our friends in Croatia to the EU table.

The figures assume that the US and EU agree on a deal that would lower transatlantic tariffs, and harmonise and ease regulations in many sectors that are often referred to as non-tariff barriers to trade. Trust in any trading partner is essential. That is why last year I read with great concern the revelations that the National Security Agency surveillance programmes had been spying on Governments in Europe, with the help of intelligence services in the UK. The spying revelations had the potential to derail the proposed deal, given the understandable outrage in some European capitals. I am amazed that there has not been more public outrage here, given the level of intrusion into private lives. I imagine that had any other foreign Government pursued such blanket intrusion, the UK Government would have armed the nukes. Their deafening silence about the NSA revelations indicates a worrying collusion aimed at sidestepping UK civil liberty protections. That is why it is incredibly important that, at every stage of the negotiations on any deal, there is full transparency and accountability, and that all groups are allowed input. This is a matter for all EU nations and regions, not just the leaders of a few select large and economically powerful states within it.

EU Trade Ministers agreed on a mandate for the European Commission to conduct negotiations with the USA on the TTIP. A lack of transparency in future negotiations is a major cause for concern, yet EU Governments insist on keeping the mandate confidential. The trumped-up excuse—that it is necessary for negotiations —does not stand up to analysis, as it will be available for the US to access. The mandate on the terms of any deal should be freely debated in the European Parliament and in European Parliaments, and not arrogantly assumed by the European Commission and state Governments.

The French Government have apparently secured the exclusion of culture and audiovisual services from the mandate. There are still many risks that deserve the same attention. There are serious concerns that negotiations could lead to investor claims that threaten core EU standards and rules on the protection of public services— such as the NHS, which was raised earlier—intellectual property, food safety, GMO crops, and health and environmental standards.

[Caroline Lucas]

The hon. Gentleman is making a very powerful case. Does he agree that it is not enough simply to plead for special exemptions to one or two sectors, such as the NHS? Corporations should not be given new rights to sue the Government for legislating in the public interest, whatever the sector. That bit of the TTIP should simply be taken out.

[Jonathan Edwards]

I fully concur with the views of my hon. Friend. I will go on to talk on that specific issue in the remaining parts of my speech.

Concerns over data protection have been completely overshadowed by the US Prism spying programme. The US is much better organised in economic and industrial policy and will have no qualms about defending its narrow interests, making the need for transparency in the negotiations imperative. Most worrying about the TTIP as it stands are the proposals for investor-state dispute settlement. This would weigh law in favour of big business, allowing them to sue Governments that attempt to defend their citizens. Secretive panels of corporate lawyers could circumvent legal protections and override the will of Parliaments.

[David Mowat]

What proposals does the hon. Gentleman have to protect British investments overseas if he is so passionately against the current structure he mentions?

[Jonathan Edwards]

I am extremely interested in that point. I was going on to say that this is a deal between two advanced trading blocs with advanced legal systems. The hon. Gentleman’s argument would stand up only if he believes that the United States is a banana republic, and I am sure that that is not what he genuinely feels.

Clauses written into trade treaties are often used when dealing with developing countries with weak legal infrastructure, so that companies can protect their investments. However, they should not be necessary in developed economies with some of the best and most highly functioning legal systems anywhere in the world. The hearings are held in secret and would undoubtedly undermine the ability of societies, citizens and communities to contest decisions that affect them. The Democracy Centre has called it

“a privatised justice system for global corporations.”

Plaid Cymru completely opposes any proposals for investor-state dispute settlements within the TTIP, and believes that they are an affront to democracy and should be removed immediately.

Concerns over free trade agreements and the potential for an unequal relationship are not unfounded. The North American Free Trade Agreement between the USA, Canada and Mexico has undoubtedly been of greater benefit to the US and the larger corporations located within it, while US jobs are being outsourced to Mexico for lower wages. On the whole, this has been to the detriment of Mexican home-grown industry, as US corporations have moved in. It has also been detrimental to manufacturing and industrial blue collar jobs in the US, which have been outsourced, and to the small businesses in local communities that such jobs supported.

When out in the States in the summer, during a meeting between the all-party group on European Union-United States trade and investment and a member of President Obama’s inner circle, we were informed that future US economic strategy will be based on three pillars. One is to make the most of the fracking boom in the States, which means that it is now a net exporter of energy. The idea is to offer energy subsidies for heavy industry and manufacturing companies to reverse the flight to the Asia Pacific rim. This will mean that US companies will be at a huge advantage in being more competitive in any TTIP deal.

[David Mowat]

The hon. Gentleman makes the point that the Mexico-US agreement was principally of benefit to the US and multinationals within the US. My understanding, however, is that since that agreement was signed the Mexican economy has grown by an average of 8% or 9%—far more than it had been growing previously. How do those factors stack up?

[Jonathan Edwards]

I think the hon. Gentleman is trying to distract me from the point I was trying to make. I would go as far as to say that the TTIP advantage available to the US could lead to the stripping of my country’s manufacturing base.

To mitigate that potential threat, Wales must have control over its natural resources and energy production infrastructure, so that we can ensure that our manufacturing base is competitive and is not put at a disadvantage. We are a net exporter of electricity, which is why my party has called for the establishment of a not-for-profit Welsh energy company to build up an asset portfolio to protect domestic consumers and our economic base.

You, Madam Speaker, will appreciate that I, the son of a trade union shop steward, am concerned that the TTIP will not include the movement of labour, hence my Marxist critique of the current proposals. As Gary Younge wrote in The Guardian in 2001:

“Our governments are trapped in a morally warped and ideologically unsustainable paradigm. They applaud the free movement of capital; they abhor the free movement of labour.”

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

We will start with a time limit of eight minutes on all contributions from Back Benchers. That may have to be revised downwards.

14:45

[Mr Robert Walter (North Dorset) (Con)]

I congratulate the right hon. Member for Wentworth and Dearne (John Healey) and the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) on securing the debate.

I want to start by saying that I believe in free trade. I subscribe to the goal of global trade that is both free and fair. Achieving that goal, however, is a slow and grinding process. In my view, it will be many decades before there is any meaningful World Trade Organisation-led, top-down framework that we could call global free trade. Why? Because the parties range from the richest to the poorest nations on the planet, from the prairie farmers of north America to the subsistence agriculture of sub-Saharan Africa. If we truly believe in free trade, however, we should use the building blocks that we have today. The European Union is the world’s largest market and we are part of it. It is the biggest building block in this equation.

Consider these numbers: EU GDP is 19.4% of world GDP, and US GDP is 18.9% of world GDP. Together that is nearly 40% of the worlds productive wealth, but between us we still maintain some of the most stringent tariff and non-tariff barriers to trade. Below the wire, under the barrier, 30% of the EU’s stock of foreign direct investment is in the United States, and 29% of the US’s FDI is in the EU. This is, therefore, a no-brainer. If we can create free trade across the Atlantic, with Canada as well of course, and have the transatlantic trade and investment partnership, that has got to be good for world trade, good for the United States, good for Europe and good for Britain. There are, however, those who want us to turn our backs on all of this and leave the EU, and so leave a trade deal representing 40% of world GDP.

The TTIP negotiations will not be easy. There are too many vested interests and we have heard about some of them already: in agriculture, the public sector, transport and financial services, to name but a few. However, the prize is so great and the balance of power so favourable to a deal that I am optimistic we can achieve it. Outside the EU, the cards are stacked against us. Heaven knows, it would be difficult enough to get a deal with the EU if we had just left it. Of course, some Eurosceptics would argue, in spite of the hard facts, that we would still be better off out and better off negotiating our own free trade deal with the US alone. That is, frankly, a fantasy. Can the UK afford to squander such a strategic and economic opportunity? I believe we cannot, and I hope we make sure that we do not.

I want to reiterate my support for the Government’s commitment to keeping our country firmly within the European Union, as a sure-fire guarantee of the UK’s best interests. I hope they will continue to hit home the point that the two issues are intimately linked and mutually reinforcing. The promise of a trade deal highlights not only the material value that the UK derives from our membership of the EU, but the leverage and influence that we can only exercise by playing the lead role within it. This is a fact. The UK has accomplished so much within the EU over many decades. UK companies already enjoy unfettered access to a single market of 500 million people. The EU has helped to create around 3.5 million jobs, one in 10 jobs in our country.

I agree that the UK wants to trade with the whole world but so do the Germans, the French, the Italians and the Americans—but here we have the opportunity of securing free access on our terms to a stable market that will represent 40% of the world’s productive wealth.

[Mr William Cash (Stone) (Con)]

In the light of his remarks, will my hon. Friend explain why, in our trading with the other 27 states, we have run a deficit, according to the last figures, of £49 billion, whereas with the rest of the world we run a surplus of around £13 billion, which is likely to rise by the end of this year to about £25 billion on the same goods and services?

[Mr Walter]

As always my hon. Friend asks an incisive question that deserves an answer, which is that if we successfully negotiate this deal—which is with another 20% of the world—it can only be advantageous to open up those markets in the United States, Canada and other countries to UK businesses.

There are other deals under discussion and in place that would mean that we would be more than halfway towards achieving our goal of world free trade. Do not let us throw that away. Our membership of the EU is too good to throw away and, in my view, the transatlantic trade and investment partnership is too good a deal to reject.

14:52

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

I congratulate my right hon. Friend the Member for Wentworth and Dearne (John Healey) and others on securing this important debate. I also congratulate him on the measured way in which he presented his progressive arguments.

The TTIP could be a good deal. It has the potential for job creation, higher wages for workers and a better deal for consumers. Trade across the Atlantic between the US and the EU is a fact of life and the US is the UK’s biggest export market. If people want to buy and sell across the water, we should do all we can to make it convenient for them to do so. But here is the key: we should have an agreement that helps ordinary people, not big corporations and big businesses. As it stands at the moment I, along with a number of my colleagues both in this House and in the trade unions, are concerned that the TTIP will allow companies to wield control over national Governments and in the long run may not help those we are told it will. The negotiations for this agreement are lacking transparency and we need more information and some people championing ordinary people’s rights before we can accept what is on the table.

We are told by the European Commission that the agreement will give an extra €545 per year to a European family of four, but only one major study has been conducted—by the Centre for Economic Policy Research, two thirds funded by investment banks, asset managers and European central banks. We need better projections to identify the economic and social impact of the deal. An average figure is not good enough. We know, for example, that while the EU motor vehicles labour force could expand by up to 1.28%, other sectors, such as communications, electrical machinery and metals, are likely to contract.

[Julian Smith]

Will the hon. Gentleman give way?

[Jim Sheridan]

The hon. Gentleman has had a good run so far today. I am conscious of Madam Deputy Speaker’s instructions.

The sustainability and employment impact assessment will not be completed until the end of the year and so we are in the dark about what we are signing up to. A much fuller study needs to be conducted as well on social, environmental and labour rights. When I was a shop steward I would never have considered negotiating without all the facts that were available to me. This agreement is on a far bigger scale and our Governments, with all the experts they have to hand, are going into this agreement without the information.

[Mr Jim Cunningham (Coventry South) (Lab)]

I agree that this could lead to protection for employees and the environment being waived. We need stringent safeguards. It could also lead to further privatisations if we are not careful.

[Jim Sheridan]

I thank my hon. Friend and he raises the concerns of many of us. It is irresponsible and I believe negotiations should wait until we have a full understanding of the implications.

I spoke about labour rights, and I can certainly say more about this. As chair of the Unite the Union group in Parliament, I have spent my career fighting for the rights of workers here in the UK. Now I see an agreement that could undermine their rights and an opportunity lost to support our friends in the unions in the US. The US has ratified only 14 of the 190 International Labour Organisation conventions, unlike EU member states who have ratified them all. I understand that with this anti-union Government and the pull of the US Republicans we are unlikely to see the inclusion of rights to organise, rights to bargain collectively or as a last resort rights to strike, but there are some rights that are applicable across the EU, such as those on information and consultation, agency and temporary workers, and health and safety, which we could and should see included. If nothing else, the deal should not lead to a watering down of workers’ rights. I am pleased that the EU is consulting an advisory group of trade unionists, non-governmental organisations and employers, and that the Department for Business, Innovation and Skills is involved in a similar process. I hope that those in charge of negotiations listen to these groups, who I am sure will be keeping a close eye on labour rights, and act on their advice.

Many of my colleagues have raised the issue of the investor-state dispute settlement, which worries a good number of people. We already live in a world where certain global corporations seem to get away with breaking the rules and going over the heads of national Governments. The tax avoidance of global companies such as Amazon, Starbucks and Google, to name just a few, is unacceptable, but a stronger UK Government could hold them to account. The ISDS sets up a system where multinational corporations can challenge and sue Governments, but neither Governments nor individuals are granted rights to hold corporations accountable.

This is not just an empty concern: we see negative consequences in other countries. In Egypt, Veolia has attempted to use this system against the Government for raising the minimum wage. In Slovakia, the Government had to pay $22 million in fines after they reversed the liberalisation of health insurance. These decisions have been made for the good of these countries’ citizens and Governments should not be held accountable by business for making decisions that are for the good of society.

We can easily imagine this happening here. Energy companies are scaremongering about my party’s “freeze that bill” idea, and they might argue that it is a barrier to free trade. We see that we need to halt the market and make sure it is fair and competitive. We are protecting consumers and, in particular, the most vulnerable in our society who are paying through the nose for their energy. A 2015 Labour Government should not and will not bow down to pressures from these energy giants, and they should not be threatened by the existence of an ISDS. In recent history we need only look at what happened with the INEOS corporation at Grangemouth and the disgraceful way it treated its workers, with its attempts to blackmail the taxpayer for money.

Equally, Governments should be able to decide if and when industries should be returned to public control. As has been said, a key anxiety is that if the NHS is not exempt from the TTIP, corporations will use the agreement to force more large-scale privatisation following implementation of the Health and Social Care Act 2012 in England and Wales. What if a future Government or local authorities decided to return transport to public ownership? These measures could limit the ability of local or national authorities to use public money to achieve social and environmental outcomes through their supply chains. Decisions such as this should not be based on free trade. We need to retain our ability to run EU member states as we see fit, rather than as multinational corporations see fit.

A question was asked earlier about the possible impact of our leaving the EU on this potential deal. I would also ask about the impact of Scotland’s pulling out of the UK. Unfortunately, not for the first time, no representative of the Scottish National party is present. [Interruption.] I see that one has turned up at the last minute.

If we are to accept this deal, there must be three certainties. First, there must be realisable growth in jobs and incomes, particularly in manufacturing. Secondly, the ISDS must be dropped and regard paid to the exclusion of public services. Thirdly and most important, there must be improved labour rights that are binding on the signatory parties.

15:04

[Mr Robert Syms (Poole) (Con)]

I congratulate the right hon. Member for Wentworth and Dearne (John Healey) on introducing the debate, and on the manner in which he did so. I think it refreshing to have a debate about first principles and about how we might create future wealth, rather than about how we might spend it. We have learnt from history that trade—and free trade in particular—has enabled us all to make ourselves richer. We do not have to be convinced about how interdependent the world is when we observe that the tsunami in Japan caused shortages in one or two of our car factories. That demonstrates how important it is for our nation to undertake international trade.

We have been through a difficult economic time, comparable in many respects to the 1930s, but in terms of public policy, politicians in most western countries have acted in a very good way, and have kept their economies moving forward. On the whole, they have done a pretty good job of tackling what I think was a major difficulty in 2007-08. A few years ago, I should have said that the forces of protection would be far more on the march today than they have been. I think that that is because the vast majority of our fellow citizens and constituents now recognise the benefits of international trade. We have seen the success of Jaguar Land Rover, which has exported 80% of its output—£13.7 billion—much of it not only to the United States but to the far east. That shows how we are creating wealth and jobs, and how the British economy can benefit from trade.

[Julian Smith]

Will my hon. Friend give way?

[Mr Syms]

I will not, because we are short of time.

There is a debate to be had about the European Union, and clearly Members have different views about it, but the key point is that it contains a major market consisting of more than 500 million people. I personally am glad that the EU is seeking trade agreements with the United States. I see nothing but benefit if we can simplify regulation, reduce barriers and increase trade.

Commentators often write off the United States as though it had had its time, but again and again it reinvents itself, with its Apples, its Googles and the fracking boom, which has had a material effect on energy prices. We are also seeing the repatriation of manufacturing jobs to the United States. I still think that the US has a very good future, and I think it vital for us, as a nation with a long history of campaigning for free trade within the European Union, to press our partners and colleagues to secure an agreement with it.

We have already heard today about the size of the combined economies of the European Union and the United States, which constitute well over 40% of the world’s GDP. If we can establish rules which will mean an increase in trade, we shall have an advantage outside that particular trade area, because other countries will have to confirm to some of the norms. It does not make sense that firms sometimes have to obtain a huge amount of authorisation for products in Washington, and then do the same across the European Union. That increases costs, especially the costs of medicines and pharmaceuticals.

I agree with my hon. Friend the Member for Cities of London and Westminster (Mark Field) that this country is tremendously good at services. In respect of general agreements on trade, what we have not been so good at is opening up markets for services. What we need to do is persuade our Government, and the EU, to push for far more inclusion and far more trade between nations in this area, because it is an area in which we as a country can do particularly well.

It is understandable that Opposition Members have worries, but I think that there is a great prize to be won. If we can boost our economic growth, this will be not a win-lose situation, but a win-win situation. Our country can be richer, our partners in the European Union can be richer, and the United States can be richer. I believe that if the world’s major trading blocs do more trade, world trade will be increased, and we will all benefit from that.

15:05

[Ian Murray (Edinburgh South) (Lab)]

I thank the Backbench Business Committee for scheduling the debate. Let me also echo the tributes paid by many other Members to my right hon. Friend the Member for Wentworth and Dearne (John Healey) and the hon. Member for Aberconwy (Guto Bebb)—who is present—for taking such an interest in the issue, along with their colleagues in the all-party parliamentary group on European Union-United States trade and investment. If it had not been for them, we would probably not have had the two debates on this subject that have taken place in the House over the past seven or eight months. They have raised the issue to the top of the political agenda, and they should be applauded for that.

The TTIP has cross-party support in the House. Indeed, it is supported by a coalition of organisations including the CBI, the TUC and consumer groups. We should reflect on that, and ensure that we get things right. However, as we have already heard today, that is not to say that the TTIP does not involve significant problems.

[Julian Smith]

Will the hon. Gentleman give way?

[Ian Murray]

I will give way once to my—hon. Friend!

[Julian Smith]

I thank my hon. Friend. Following the point made by the right hon. Member for Wentworth and Dearne (John Healey), will he confirm that it is Labour policy not to oppose ISDS as it develops in relation to this agreement?

[Ian Murray]

I shall be unpicking some of the arguments during the short time available to me. I think that ISDS is the subject of one of the most important criticisms of this process, and I shall be interested to hear what the Minister has to say.

The TTIP has huge potential. The CBI has rightly described it as a “global economic game changer”. It can create more jobs here in the UK, improve the wages of British workers, and deliver a better deal for our consumers, but only if we get it right. As we have heard, according to some assessments the potential gain to British output is between £4 billion and £10 billion, equating to between 1% and 3% in exports. We must, however, be cautious about the overall figures, as they have been questioned by some leading academics. My right hon. Friend the Member for Wentworth and Dearne has been asking for an area-by-area assessment, and I think that such an assessment would allow Members to sell the deal to their constituents. Perhaps the Minister will reflect on that.

Given that the European Union and the United States account for 40% of global economic output and that their bilateral economic relationship is already the world’s largest, the opportunities are clear for all to see. Between them, they contain more than 800 million consumers, and the TTIP has significant potential for them as well. It is clear from the helpful briefing sent to all Members by Which? that there will be big prizes for them if we can get this right. Opposition Members strongly support the principles behind the negotiations, and hope that their objectives—job creation, better wages, higher standards and consumer benefits—can be realised. That, indeed, should be the focus of all EU activity.

With the fourth round of talks scheduled to take place next month, things are moving rather quickly, but we are worried about the potential for the talks becoming derailed. Legitimate concerns raised by Members in all parts of the House about some aspects are not being taken as seriously as we would like by the Government.

[Mr Jim Cunningham]

My hon. Friend has probably heard some of my colleagues say that the agreement will be all right provided that we have the necessary safeguards, such as employment rights. Multinationals should not be able to overrule an elected Government.

[Ian Murray]

My hon. Friend is absolutely right. I shall deal with some of those issues later in my speech, and I hope that the Minister will address them robustly.

The attempt to build momentum to get the deal through is understandable, given the political realities of the European elections in May, the fact that the European Commission is to be replaced this year and the very small issue of the US presidential election in 2016. Europe and the US are our most important markets. Indeed the US is the UK’s largest export market and the UK economy attracts a significant level of foreign direct investment from across the Atlantic, but we all recognise that more can be done to make it easier to tackle barriers and to improve market access. We hope that the trade agreement will do just that.

Crucially, the benefits of any trade deal must filter down to employees, SMEs and consumers. As my right hon. Friend the Member for Wentworth and Dearne has rightly said, the business case for the TTIP must be more than a case for business. He is absolutely right and in his speech he laid out in a measured way the issues that we should be looking at in assessing any final deal. I want to reflect on the four tests that he set. They are the thread that runs through the entire debate.

The first key test is the ability to deliver jobs and growth, with which I think we would all agree. Indeed, the EU should be focused solely on that issue. Secondly, the deal should be open and accountable. That reflects some of the other issues that have been raised by Labour Members. Thirdly, the aim should be to achieve the highest possible standards in respect of social and environmental concerns, data and wages. Fourthly, the agreement must allow leeway for national Governments to act in their own interests.

Through those four key tests, we will monitor closely the negotiations between the EU and the US, and the UK Government’s input into them. Likewise, we want the benefits that businesses experience to be passed on to consumers, whether through increased choice or reduced prices. It is rather puzzling that we have a Government who extol the virtues of the opportunities that the TTIP brings, yet ironically argue at the same time that we must leave Europe. Frankly, the TTIP is a shot across the bows for Tory Eurosceptics—a gang that the Minister has never been part of, for which he should be commended. The hon. Member for North Dorset (Mr Walter), who is no longer in his place, said clearly that it is in the UK’s interests to stay in the EU. I hope that the Minister will echo that when he responds to the debate. I firmly hope, however, that the UK is in the room for the negotiations and not carping from the room next door. This issue is far too important. That is why Labour will make the hard-headed, patriotic case, founded on the national interest, both for Britain in Europe and for change in Europe. To take up the benefits of an EU-US deal fully, we must be part of the EU.

Let me turn to some of the concerns that right hon. and hon. Friends have raised. First, they raised concerns about the ISDS aspects of the proposals, which have been well publicised and documented. Labour MEP colleagues and our sister parties in the socialists and democrats group in the European Parliament voted to scrap that mechanism, but they have faced an uphill battle in the EU Parliament dominated by Conservatives and a minority of MEPs. Therefore, we will continue to push for the need for effective and necessary transparency to be included in the final deal. As the BIS study conducted by the London School of Economics found, the ISDS would have little or no economic benefit and carries significant political risks. It is welcome, then, that the EU Trade Commissioner has decided to consult on that, which will give stakeholders an important opportunity to raise their concerns and increase the transparency of the deal. My right hon. Friend the Member for Wentworth and Dearne mentioned War on Want, which has rightly campaigned on the matter and I hope that the Minister will be robust in having the ISDS removed from the TTIP negotiations. Can he update the House on his current thinking on that and whether he will press strongly for that to be removed?

Secondly, as my right hon. Friend the Member for Leigh (Andy Burnham) has said, we are clear that the NHS must not be included in any agreement. In fact, all public services should be removed. In the UK, the demands of a 21st-century care system require integration. Markets are not the answer to the delivery of today’s health care. That would deliver something unwelcome in the form of fragmentation. The Government need to be clear on that, as they have sent out mixed messages to date. In response to my parliamentary question on 12 November last year, the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon), said:

“The Government has not sought to exclude health services from the scope of the Transatlantic Trade and Investment Partnership (TTIP) negotiations.” —[Official Report, 12 November 2013; Vol. 570, c. 598W.]

That is in contrast to the response from Lord Green to the British Medical Association. He has also called for health care to be explicitly ruled out of the negotiations. He said that

“national interests, including those of the NHS, are protected.”

Those statements appear to me to be contradictory. Therefore, can the Minister set the record straight on the Government’s position on the NHS, public services and the negotiations that are ongoing? As I said, those are the areas that could result in the derailing of any agreement. If the Government would rule out the NHS now, we could move forward with more confidence and transparency in the agreement.

I have a couple of additional questions to put to the Minister. First, does he believe that agreement before the end of 2014 is possible or likely? Secondly, what representations have he or his colleagues made to the EU and its consultation on ISDS? Thirdly, what engagement are the Government having with businesses, charities, consumer groups and trade unions on the issue to garner support and involvement? Lastly, what engagement strategy are the Government planning with the public, as it is not difficult to see why organisations such as Which? and War on Want think that this deal is being negotiated in secret?

The size of the prize embodied in the agreement is considerable. It is a prize that must be shared among all—business, employees and consumers—and not just corporate interests. I hope that the Government will be able to respond positively to our concerns. I want to make it clear to the Minister that Labour Members are very much looking to co-operate. However, he should be aware that we will hold him to account and ensure that he does not give negotiators a free rein. I urge him to push for transparency so that the benefits of this major deal are clear for all to see.

15:16

[The Minister without Portfolio (Mr Kenneth Clarke)]

I too congratulate the right hon. Member for Wentworth and Dearne (John Healey) and his colleagues in the all-party group on securing the debate on this important subject. I welcome the fact that the vast majority of Members have spoken out in favour of the prospects of a trade agreement between the EU and the US, which we believe will be of great benefit to this country. I hope that the debate might serve the purpose of publicising the virtues of trade agreements between the EU and the US, as several hon. Members have said. I can assure Members that it is not for want of trying. I am afraid that the media in this country probably find the virtual consensus that exists between the main spokesmen in this debate one of the things that makes it less newsworthy. However, an agreement could be of enormous importance to the future of our economy.

The economies of most of the western democracies need a considerable boost at the moment and few things could give a greater boost on both sides of the Atlantic than a comprehensive deal that leads to a stimulus of trade in both directions. The values have been underlined. The case has been made. The figures on the potential value are speculative but there is no doubt there will be a stimulus to growth on both sides of the Atlantic, as the history of trading relationships shows. We should not forget that.

People keep going on about the fact that the agreement should be for ordinary people and not just giant corporations. What we are expecting to flow from that will be good for employment, particularly in modern, competitive sectors of our economy. It will also be good for consumers in increasing choice and keeping down prices and costs. As my hon. Friend the Member for Cities of London and Westminster (Mark Field) said, the last several decades show that the benefits of open trade are of great advantage.

[Several hon. Members]

rose—

[Mr Clarke]

I will give way shortly. I will merely say that the fact that we have this near consensus in British politics helps to give the UK a leading role in the negotiations. It is one of those areas where, despite our, at times, slightly tricky relationships with the EU, the UK is acknowledged to be the member state most in favour of open trading relationships. It is known that the UK’s position is not dependent on the position of one political party but extends way across the political threshold. My role, at the request of my right hon. Friend the Prime Minister, is to ensure that British interests and influence are brought to bear both in Washington and Brussels as the agreement goes ahead. It will be of huge value to achieve this, but let no one be too complacent about the prospects of getting a comprehensive agreement. It will not be easy, but I believe that the prospects are better at the moment than they have been at any time during my political career.

[Ian Paisley]

I fully agree with the way in which the Minister has approached this debate and the TTIP, but will he give us an assurance that he will ensure that the rights and interests of farmers and consumers are the top priority for the Government?

[Mr Clarke]

I will certainly try to address all those concerns. That is the key reservation that is being expressed. A lot of Members say that they are in favour of a TTIP but are extremely worried that it will affect our ability to set standards, and it is important that we address those fears. I genuinely believe that they are unfounded, but it is feared that people are getting conspiratorial and somehow plotting to reduce farming, food safety, health and environmental standards on both sides of the Atlantic. The fact is that the British Government are convinced that a trade deal is not the place to raise or lower standards for the consumer, for the environment, for health and safety, for employment or for farming and food safety. Those are matters for the legislative authorities on both sides of the Atlantic to decide for themselves. On neither side of the Atlantic is anyone proposing to undermine those standards.

The hon. Member for Brighton, Pavilion (Caroline Lucas) drew our attention to the matter of financial services in the United States. When I go to the US, I find myself having to reassure people that we are not trying to reduce their standards in relation to Dodd-Frank. When I meet people in the Democrat party who are close to the labour unions, I have to reassure them that our labour market standards on this side of the Atlantic are as good as, if not dramatically better than, those in the United States, even if our pay rates are not so high. The issues are not the same between us as they are between, for example, the United States and some of the Pacific rim countries. On neither side of the Atlantic is there any weakness in the lobbying from NGOs and others on all these issues. The negotiators on both sides of the Atlantic and the Governments of the European Union—certainly the British Government—have no intention of allowing our own right to legislate in the appropriate spheres to be compromised. Nor are we choosing this particular instrument to enter into a conspiracy to get round or lower the standards that we in this House and the people of this country wish to see applied.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

Our delegation that was sent to the States saw at first hand the discussions on the time scale. As I see it, that is the main hurdle that we face in relation to any agreement. Has the Minister any up-to-date information on the likely time scale for the introduction of such a treaty?

[Mr Clarke]

The hon. Gentleman follows these matters closely, and he knows that, on both sides of the Atlantic, we broadly agree that we need to keep up the momentum and make progress. If we do not achieve this deal by the end of 2015 or early 2016, we will not get there at all because the politics will take over. That is the history of trade deals. We would all have preferred an arrangement like the Doha round, under the auspices of the World Trade Organisation, but since that has gone we have tried to move towards this kind of agreement. The pace will vary. We have made remarkable progress so far, and we are about to go into our fourth round. Some of the first offers have already been exchanged.

How quickly this goes will depend on events. The half-term elections in the United States might slow things down, for example. Also, the US is engaged in negotiations on the Pacific partnership, which is associated with our agreement and slightly ahead of it. In any event, we have to secure agreement within the present administrative term in the United States, and before the politics in any part of Europe start to go sour because a lobby group suddenly decides that vested interests can be protected by opposing the deal. We have every intention of pressing on and making progress as rapidly as possible.

[Mr Robert Buckland (South Swindon) (Con)]

In our negotiations with the US Government, is it not important that we should emphasise the distinction between the TTIP and deals such as the trans-Pacific partnership, on the basis that the risk of a sophisticated, regulated market such as the EU dumping inferior goods on the US is minimal, and that the fears that have accompanied other free trade deals need not exist in the TTIP?

[Mr Clarke]

I can assure my hon. Friend that I make that point, although we are not hostile to the Pacific partnership. It is perfectly reasonable for the American Administration to wish to conclude such an ambitious deal. However, people appreciate that the issues being discussed in Congress and among the American public are quite different from ours, and I think that that makes it easier for us to make progress. On the question of fast-track authority, which would determine when we eventually conclude, my hon. Friend has mentioned worries about the trans-Pacific partnership that are causing doubts in the United States. I think that we are waiting in the queue behind that agreement in that regard.

[Mr Buckland]

Is there not a danger that members of Congress who are hostile to the fast-track authority proposals could somehow bring the TTIP into the mix and withhold FTA for our deal, as opposed to the trans-Pacific partnership?

[Mr Clarke]

The answer to that is yes, there is a danger. I can assure my hon. Friend that we will do our best to minimise it, as will the commission in Washington. It would be most unfortunate if that were to happen.

That brings me to the question of transparency. No one is hostile to the idea of being transparent. The EU is a union of 28 nation states and Governments, all of whom have their own Parliament, and the desire to share information among Parliaments and the public is considerable. There is a dilemma, however, in that there is a conflict between that arrangement and the negotiating positions. There is no doubt that our American friends negotiate very hard indeed. They are pretty hard-nosed people when it comes to negotiating the detail, and we cannot send our negotiators into the chamber with all their bottom lines, their ambitions and the mandates they have received from their member states revealed. We need to get that balance right, but the instinct of Commissioner de Gucht and Commissioner Barnier—and certainly of the British Government—is to be as forthcoming as possible, so long as we are not simply feeding information to lobbies that want to try to put a spoke in the wheels. I entirely understand that getting public support—and, eventually, the smooth ratification of this deal—will depend on whether we have been sufficiently transparent with all the lobbies.

[Katy Clark (North Ayrshire and Arran) (Lab)]

Will the Minister give way?

[Mr Clarke]

Let me make some progress; otherwise, I will not be able to complete my speech in the appropriate time.

The question of investor-state dispute settlements—ISDS is the acronym—has given rise to fears that the proposed deal is a plot between multinational companies that are seeking to destroy our long-established standards in labour laws, environmental laws and so on. I really do not believe that that is the case. On the other hand, the concerns are being taken seriously. I realise that we have to have substance to my assertion that we are not raising or lowering standards on either side of the Atlantic and we are not usurping the role of legislatures, which is why the Commission has said that it is going to consult. I understand some of the fears that have been expressed, but I do think that people have got the wrong end of the stick and the fears are wholly exaggerated.

[Katy Clark]

rose—

[Mr Clarke]

Let me make my point and go through the argument, and then I will give way. First, let us remember that trade deals do benefit consumers, which is why consumer groups such as Which? are in favour of this trade deal. It is protectionist providers that resist such deals. Quality, choice and the price for consumers are improved where there is a good trade deal, and those with the best products and services tend to win out in trade deals. The ISDS clause is not a novelty; it is not some new threat that has emerged. Such clauses have been put into most trade deals for years and years. I have heard the familiar examples of odd claims that have been made in actions around the world, but these clauses have not had the effect that has been described.

Apparently, there are 3,400 of these clauses inserted in trade deals globally. The EU and its members have 1,400 ISDS clauses in various trade deals, and the UK has 94 ISDS clauses in our existing bilateral treaties. We have twice been challenged under ISDS for standards alleged to break our treaty obligations, but so far no British Government have ever lost a case under ISDS. What we have done is successfully brought claims against other countries; we have had slightly more success there, because the point of an ISDS is to underline the value of the total agreement by making sure that no individual investor or business can be disadvantaged by a Government or union of Governments breaking the obligations they have entered into.

The case was cited of Slovenia—somebody, perhaps the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), said Slovakia—and my understanding is that it was lost when, as a result of local lobbying, that country went back on the deal it had just done to open up its health insurance market. That cannot be done, but no ISDS takes away the right to legislate from a Parliament; an ISDS gives rise only to a quicker and cheaper means of resolving disputes if there is some suggestion that a Government are breaking the agreement. Some say, “No European Union Government or the USA would ever do that”, but one of the big ambitions of those on this side of the Atlantic is to open up the public procurement market in the US. In some states of the US it is open, but in others it is not; some states do not measure up to WTO standards at all. Far be it from me to express the faintest doubts about the approach of politicians in some smaller US states or some EU states, but public procurement sometimes takes on a pork barrel element when the contracts are being placed, as opposed to when the tenders are being issued.

I think there could be some advantage, some reassurance and some pressure against people cheating in public procurement contracts if it is known that there is an ISDS clause. Of course it is quicker and cheaper, and it is arbitration and not litigation, but again the argument of those against ISDS is, “Why don’t you just go to law? There is a perfectly good legal system in the European countries and in the US.” I can say only that the US does have a perfectly good legal system, but it is expensive and it can be extremely long, as one sails through either the state courts or the federal courts trying to resolve a dispute. People have said that the advantages in all this agreement are as much in the area of regulatory coherence —with far more regulatory coherence stopping unnecessary convergence in our recognition of regulatory standards—than they are in tariffs, but small and medium-sized countries are not going to go into these markets if they are taking on the risk of having to go in for expensive litigation against American authorities that are plainly not complying with their terms of the treaty. Similarly, there are states in the EU where American investors would be most reluctant to sail in if they were relying entirely on the fact that they can take to the legal process in some southern European countries to challenge the bona fides of local officials over whether they were complying with the agreement. I will go no further, but the British have always put these clauses in our trade deals and the US normally puts them in its trade deals; 3,400 of them are in place and they have made a reality of free trade where it would otherwise not have happened.

[Julian Smith]

I welcome the fact that my right hon. and learned Friend is standing up for small and micro-businesses, which will really benefit from this ISDS vehicle. Is he, like me, surprised that the Labour party, while claiming to be pro-enterprise, is so against this measure?

[Mr Clarke]

Obviously, I understand the doubts being expressed, because some extremely respectable lobbies and non-governmental organisations—some consumer groups, some aid lobbies and some sections of the trade union movement—are raising all these fears. I genuinely think that they are mistaken and that their arguments, if they are too successful, will not benefit employees, consumers or anybody else, which is why I am trying to rebut them. Those who have spoken—I do not think anyone would be offended if I described them as somewhat of the left of the broad political spectrum, which does not mean that they are unacceptably or extremely left—are getting the wrong end of the stick. The ordinary man and woman have a great deal to benefit from this TTIP. To make it less effective by excluding an ISDS would not help.

[Katy Clark]

Will the right hon. and learned Gentleman therefore give us an assurance that nothing in this trade agreement would undermine the democratic ability of this House and other parts of Government in these islands to take decisions on the commissioning and organisation of public services—whether those services are in the private or the public sector?

[Mr Clarke]

I realise that a broader issue underpins those fears, which is the extent to which there is scope for private sector involvement in our national health service, and that is part of a much bigger argument that I have taken part in for 30 years. I was not aware that a distinction was drawn between British, French and German private sector participation and American participation in our national health service. I can assure the hon. Lady that nothing in the agreement would open up access to the national health service beyond what is already permitted, and what was permitted under the previous Government. Overseas suppliers are already able to offer hospital services and health-related professional services through a commercial presence here. The important thing for anyone who engages in the provision of professional health services and health care companies in this country is that they have to comply with UK standards and regulations in just the same way as British health care providers, and, as I say, those standards will remain under the sovereignty of this country.

[Mr John Spellar (Warley) (Lab)]

The right hon. and learned Gentleman was asked a question regarding the involvement of micro-businesses, but the note from the Library states that the average cost of an arbitration case is $4 million per party, about 82% of which is legal fees. The panel members can claim a daily fee of $3,000 a day plus expenses, and billing rates for arbitration lawyers run up to $1,000 an hour. Only major corporations will therefore be able to participate in this. I am not detracting from the main thrust of his argument, but this really is for major companies, is it not?

[Mr Clarke]

I am not encouraging small companies to start engaging in arbitration in major commercial disputes. That is an average. It depends on the complexity of the issues. I think the right hon. Gentleman would agree that full-scale commercial litigation—probably on either side of the Atlantic—is more expensive. This is a quicker arbitration process to substitute for the enormous costs that would be involved in challenging a public body, on either side of the Atlantic, on a commercial dispute about a breach of treaty obligation.

[Mr Cash]

Before my right hon. and learned Friend concludes, will he elucidate on the point he made earlier?

[Mr Clarke]

Which point I made earlier?

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. Is the Minister giving way?

[Mr Clarke]

indicated assent.

[Mr Cash]

It was with respect to the question of transparency and the fast-track arrangements. As my right hon. and learned Friend knows, President Obama, in his State of the Union address, called for fast-track arrangements. The next day, the Democratic leader in the Senate turned down the idea. Indeed, Nancy Pelosi, the minority Democratic Leader in the House of Representatives, turned it down only last week. Was my right hon. and learned Friend being a little sanguine in his assessment of the position, and does he have any up-to-date information to give us today?

[Mr Clarke]

I said only that the timing of fast track authority would have an effect on the timing of any agreement. I follow these matters closely. Obviously, they are utterly beyond our control. This is a political issue in Congress. There is more support in both Houses of Congress for a trade agreement with the EU than I can remember in my political career, but people have reservations and of course many people in Congress would rather see all the details before they approve it than give too early authority. The problem is that no one will ever settle a negotiation with a US Administration on the basis that Congress might be able to suggest detailed amendments to it afterwards as a condition of approval. It would be improper for me to start offering opinions about how it is going to go with the United States, but the timing of fast-track authority is a little uncertain. The doubts are more provoked by the Pacific partnership agreement than the TTIP. As my hon. Friend the Member for South Swindon (Mr Buckland) said a few moments ago, the two are slightly linked when it comes to American debate.

[Mr Donohoe]

Will the Minister give way?

[Mr Clarke]

This will definitely be the last intervention I will take.

[Mr Donohoe]

On the basis of discussions on this matter with Senators from the United States, it seems that they are concerned, as we should be, about the growth in the Chinese marketplace.

[Mr Clarke]

Well, they are, but that is, as several people have said, part of the significance of this potential EU-US deal. It covers 47% of the world’s GDP and about 30% of world trade. If we can get a proper comprehensive agreement, we will set standards that will guide future trade agreements that will inevitably involve China. The Prime Minister recently began to talk about the prospect of moving on to the big challenge of deciding how China should be accommodated in these arrangements, which are now, I am glad to say, spreading throughout the world. If we can tackle this one, we will be in a better position to contemplate how to deal with China.

The negotiations are making good progress. It gives some cause for optimism at a time when it is foolish to be naively optimistic about how rapidly we are going to recover from the worst financial crisis in modern times and how rapidly the western European countries, including the United Kingdom, will return confidently to secure normal growth in better balanced economies that are able to compete in the modern world. This agreement is going in the right direction. Needless to say, I agree with my hon. Friend the Member for North Dorset (Mr Walter) that it particularly underlines the value to this country of its being a full member of the EU. It is an illusion to believe that we would sit at these tables if we suddenly decided to leave the EU. It is a complete delusion for any Scotsman to believe that Scotland would continue to play any significant role in this kind of problem if it suddenly decided to revive the mediaeval kingdom and start leaving the United Kingdom. We live in a world where politics has never been more intimate and we live in a globalised economy where our aim must be to have a United Kingdom economy that is modern and competitive —as ever, opening possibilities for us. A confident United Kingdom will play a leading part in influencing the EU’s progress towards a comprehensive deal which there is a good chance—no more than that—will be achieved within the next year or two. The fact that it has been so widely welcomed in this House will help us give added impetus and improve British influence in the process on both sides of the Atlantic.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. The House will be aware that this is a time-limited debate and there is not very much time left. I therefore have to reduce the time limit for Back-Bench speeches to seven minutes.

15:44

[Mr John Spellar (Warley) (Lab)]

Thank you, Madam Deputy Speaker, for calling me to speak, and I will truncate my remarks.

I start by congratulating my right hon. Friend the Member for Wentworth and Dearne (John Healey) on securing this debate. I apologise for not being here in the Chamber for his comments; I was chairing a meeting elsewhere in the palace.

A number of colleagues have spelled out the considerable economic advantages of a transatlantic trade and investment partnership. The US is already our most important single market and trade with EU countries is a major part of our trade, even if—encouragingly—we are making significant advances in other markets.

An EU-US agreement would encompass more than 40% of world GDP, and along with EU agreements with Canada and Japan would encompass more than half of world GDP. Removing tariffs, however limited they are, and—more significantly—removing artificial restrictions would also provide a welcome fillip to these major economies, benefiting not only themselves but the rest of the world. The Foreign Office has made an interesting and useful assessment of the impact of such agreements on individual American states, and it would be very welcome if it did the same for both the countries and the regions of the EU as well.

However, it is clear from many of the articles that have been written and from some e-mails that we are receiving that we may have to take the debate back to first principles, starting by explaining why free trade is not only a good idea but why it has been a major driver in the removal of a massive number of the world’s people from poverty during the past two centuries, particularly during the past 30 years. The mass migration of hundreds of millions of people in China, the development of Chinese cities and infrastructure, and the raising of the Chinese people’s living standards have been awesome. That does not mean that I am oblivious to many of the faults, problems and stresses in Chinese society; given my political history, it would be surprising if I was. However, everyone must recognise the seismic shift that has happened on the back of the world’s freer trade environment.We must also consider the effects of that shift on wage distribution and the environment in other countries, and understand that generally protection does not benefit the worker or the consumer; mainly it benefits the monopolist, the corrupt bureaucrat or the profiteer and black marketeer.

As I have said previously, the argument about free trade goes back over the past two centuries. In our great industrial cities, we have monuments to the historic battles against the corn laws, and we may have to fight those battles again. If we do, the Conservatives would be particularly worried as the corn laws tore their party apart. However, we do not have the time available to us today to explore that issue further.

We must deal with three particular issues: the relationship between the EU and the US; the broader strategic approach of that relationship; and the vexed question of the dispute system, which is causing considerable agitation.

Too often, the debates on this subject have been focused on and posed as a choice between either the US or the EU. This agreement clearly shows that the US is not interested in having 28 separate agreements; it is interested in doing a deal with the EU—and not just about trade. A lot has been made in the defence field of the so-called “pivot” of the US between the Atlantic and the Pacific going from 50:50 to 60:40 in favour of the Pacific—by the way, that is still a huge presence from the world’s only superpower. The transatlantic alliance has served us and a stable world extremely well, and reinforcing it would be important in its own right. Agreements between the EU and the US, Canada and Japan make a much better context for maintaining a liberal trading and political environment, because although I have acknowledged the huge Chinese achievement I would not wish to see the economic and political muddle of China dominating the international trade scene. In particular, I would not wish to see the arbitrary use of state power against workers and citizens.

However, there are legitimate concerns about whether some trade deals can undermine the terms and conditions of workers; my hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan) raised that issue. That has been the particular concern of the American unions about the impact of the North American Free Trade Agreement, including the agreement with Mexico. However, having met representatives of those unions, I know that they have considerably fewer reservations about a deal with the EU, because of the higher level of protection for workers, consumers and the environment that we have in the EU. Indeed, the level in the EU is higher than in some southern states in the US. Only recently, we have seen a massively funded and vicious anti-union campaign against representation in Volkswagen’s plant in Tennessee. This time it was not even the employer, but feral right-wing Republicans—the buddies of some in the Conservative party—who were behind that action. The American Federation of Labour and the TUC have therefore gone into the matter in considerable detail—I congratulate them on their realistic appraisal—to seek reassurance about the impact of any deal on workers’ wages and conditions, as well as on the public provision of health and education, although such provision is not so much about the trade deal as the policies of the elected British and American Governments.

The Minister rightly drew attention to the impact of particular clauses. We have about 92 investment agreements with other countries, but only two have led to cases, neither of which related to public policy. We welcome the result of the World Trade Organisation agreement in Bali, yet the WTO has many arbitration provisions, several of which impact on such issues as tobacco packaging, which we have already considered in relation to investor-state dispute settlements. We need to be clear that investment must be encouraged, but both countries have mature judicial systems, so we must consider whether it is worth the argument about this to achieve the greater goal of what will be a beneficial agreement.

15:51

[Zac Goldsmith (Richmond Park) (Con)]

It is good news that we are discussing the TTIP which, as far as I am aware, is the most ambitious free trade agreement ever attempted. On these complex agreements, national legislators, in their worthy pursuit of job creation, growth and trade, do not always pay attention to the finer details.

Some years ago when I interviewed Ralph Nader, the consumer activist and occasional presidential candidate, about the North American Free Trade Agreement, he told me that even though Congress was set overwhelmingly to back the treaty, he was convinced from his discussions with members that few of them, if any, had bothered even to read the text. He eventually offered a substantial prize to any member who was willing publicly to answer 12 simple questions about NAFTA. Following a long pause, a strongly NAFTA-supporting Republican, Senator Hank Brown of Colorado, accepted the challenge and reserved the Senate Foreign Relations Committee room for the ordeal. The cameras and journalists were there and, to everyone’s amazement, he answered each of the 12 questions correctly, but when he had finished, he turned away from Ralph Nader to the cameras and said that having read the treaty, which he had not previously done, he realised just how awful it was, so he chose to do a U-turn and to vote against it.

At this stage, we do not have a huge amount to go on regarding the TTIP but, whatever one thinks about it, it clearly has serious implications and it merits close scrutiny. On the whole, free trade agreements are about lowering barriers to trade—that is their purpose—but, compared with the situation in other countries, there are relatively few barriers to trade between the EU and the US, so the main focus must be standards and regulations, with the goal of trying to harmonise them. However, it is hard to imagine that the process will involve any key standards going up; on the contrary, I suspect that we will see a spiral downwards. We only have to read several of the publications put forward by some of the most substantial big business lobby groups to see that they are openly talking about removing under the TTIP whole rafts of standards and regulations that businesses believe hinder their activities. One does not have to believe in a conspiracy theory; one just needs to read the communications of some of the companies that are playing an active role in the process.

We are already seeing an emphasis on lobbying with regard to food, about which several hon. Members have spoken, and it is difficult to imagine the harmonisation of food standards working in our interest. Europe believes that providing clear labelling for genetically modified food is a consumer right, but such practice is absolutely opposed by the vast majority of states in the US.

[Jim Shannon (Strangford) (DUP)]

On the subject of food, two companies in my constituency wanted to export to the United States, but the border controls and financial conditions to which they were subjected ensured that they could not be competitive there. They therefore had to franchise out in the United States, which meant that the company back home could not grow or create jobs here, which shows the unfairness of the system.

[Zac Goldsmith]

I thank the hon. Gentleman for that intervention.

There are so many differences between the US and the EU, and not only in the quality of standards, but in the approach to developing them. I cannot imagine a situation in which harmonising standards and regulations would work in the interests of the consumer. I have given the example of GM food labelling, but there are many others. A number of countries around the world, and indeed the EU as a whole, have chosen not to allow the import from the US of beef from cows fed a diet that includes the hormone ractopamine, because of the fairly grave health concerns. I suspect that most British consumers would support that position. Would that be challenged? Well, there is already plenty of talk among agribusiness in the United States that it should be.

Most worryingly, US agribusiness is strongly opposed to EU attempts to limit endocrine disruptors. The links between the use of such chemicals and the alarming increase in precocious puberty among young girls are not disputed. Will those standards that we have set across Europe be adhered to and maintained? That remains to be seen, but we know that plenty of lobby groups in the United States have their sights set on reducing those standards.

It is easy to imagine that regulatory convergence will mean chasing the lowest common denominator. It is worth noting that, according to a whole raft of freedom of information requests conducted by the Corporate Europe Observatory in the context of the TTIP, the Commission has met civil society groups just eight times over the course of those discussions, whereas it has met corporate lobby groups—I do not know how they are defined and am only repeating what has been reported—119 times.

I suspect that most Members across the House would agree that removing or simplifying unnecessary regulations, removing barriers to entry, particularly for small firms, and encouraging free trade are all laudable aims, but they need not happen at the expense of democracy. My concern is that the proposed ISDS mechanisms, which we have already heard a great deal about, will undermine democracy. Under those mechanisms, companies wishing to challenge a national regulation could effectively bypass the usual process and go straight to an investment tribunal. Often hugely important outcomes therefore rest on the shoulders of just three arbitrators—one is chosen by the company, another by the state and the third is a compromise of the two. It is hard to understand how this country would want or need such a system.

My right hon. and learned Friend the Minister was asked recently—

[Mr Kenneth Clarke]

rose—

[Zac Goldsmith]

He is about to intervene, but I am going to quote him anyway, because he might be about to repeat this. When asked why that would be useful for this country, and indeed for Europe, he stated:

“Investor protection is designed to support businesses investing in countries where the rule of law is unpredictable, to say the least.”

There have been so many requests to this Government and to the European Commission for examples of countries in the EU that are beyond the pale along the lines of the description he offered, but not one country has so far been listed, so why do we need this process? Why do we need these tribunals for countries where the rule of law is adhered to more or less across the board?

[Mr Clarke]

As I understand it, an investor who has access to this process would not be able to start arguing in favour of reducing standards in any regulation that has been passed by the legislature. Regulating will remain the responsibility of the authorities that already regulate. The only claim that can be made through the ISDS is that the state has gone back on its treaty obligation. Therefore, unless in the course of negotiations some agreement has been entered into to change regulatory standards on either side of the Atlantic, there is no way our existing rules on food standards or anything else could be challenged by some American company that suddenly decides that now that we have signed a TTIP it has the right to try to change the rules. What we are trying to get rid of is unnecessary regulation and the duplication by regulators on either side of the Atlantic of processes designed to reach the same public objective. That is the kind of thing that can be eliminated, to the huge advantage of companies on both sides of the Atlantic.

[Zac Goldsmith]

I very much appreciate my right hon. and learned Friend’s intervention. At this stage it is very hard to know how things will pan out. Much will depend on the terms of reference, but there are plenty of examples from around the world—as he pointed out, this is not a new concept—of companies using similar provisions in other trade agreements in order to undermine domestic legislation.

The North American Free Trade Agreement is a good example. According to a succession of polls in the past year, just 15% of US citizens want to remain in NAFTA. It has become one of the most unpopular free trade agreements of all; it makes the Euroscepticism that my right hon. and learned Friend talked about earlier look like a joke. A striking example in relation to NAFTA concerns Canada being sued via one of these dispute mechanisms by Ethyl Corporation—he is probably familiar with the case—for banning the chemical MMT, which Canada considers to be a highly dangerous toxin. Canada had to settle; it paid millions of dollars in compensation and eventually had to reverse its ban. Incidentally, the ban still stands in the United States, which makes the decision even more perverse. There are many more examples, and I was going to rattle off hundreds, but time is short and Members will be pleased to know that I will not.

As this treaty unfolds, it is essential that we remain mindful of who it is designed to serve. A guard needs to be erected against the voracious lobbying by big businesses that have a direct interest in undermining a number of the standards that I cited and have been cited by other Members. I personally do not trust the Commission to balance those competing interests, for all kinds of reasons, some of which I have hinted at in my short speech. I strongly believe that it falls to legislators like us to apply scrutiny throughout this process, and I very much hope that we do.

16:01

[Katy Clark (North Ayrshire and Arran) (Lab)]

It is a pleasure to follow the hon. Member for Richmond Park (Zac Goldsmith). I congratulate members of the all-party group on securing this debate. They have done a huge service to the House in the work that they have done to draw attention to this matter. This treaty could have massive consequences for all of us, many of which are good. However, many concerns have been raised that the Government need to address and to provide a lot more detail on as we move forward.

There is absolutely no doubt that this trade deal potentially has huge significance for all of us. I therefore congratulate the mover of the motion, my right hon. Friend the Member for Wentworth and Dearne (John Healey), on the four tests he set out in relation to which we should consider it. The three points put by my hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan) go to the heart of many of the concerns that Labour Members have about aspects of the treaty.

A great deal of concern has been expressed about multinationals, particularly their ability to use investor-state dispute settlement procedures where the nation’s regulatory framework is deemed to be a barrier to free trade. There is a huge amount of concern that this treaty could be yet another device that is used to thwart the wishes of Parliaments, as democratically elected bodies, to make decisions, particularly in relation to public services. We have heard a number of references to the health sector, which, in England in particular, is very politically contentious at the moment because of this Government’s attempts to open the health service up to enable private providers, many of which may well be US multinationals, to enter the sector. However, the concerns raised about these provisions in relation to the health service are equally valid in relation to many other aspects of the services and utilities on which the public rely, whether they are currently in the public sector or the private sector.

We have to recognise that this treaty will simply be a piece of international legislation that sits alongside a range of other legal obligations that we have in place. I am very aware of that because in North Ayrshire and Arran the Scottish Government have spent many millions —indeed, tens of millions—of pounds in restructuring the ferry services that serve my constituency so that CalMac, a publicly owned body in Scotland, could take part in a tendering exercise that some private organisations also took part in. At the end of that procedure, we ended up with exactly the same ferries providing exactly the same services between the ports in my constituency. That example is relevant because of the European procurement regulations.

Many of the concerns raised today could already be seen as problems when it comes to decisions being made by democratically elected bodies about public services. Genuine concerns are being raised about the ability to use public procurement to achieve social and environmental outcomes, and about whether the provisions of this partnership treaty could restrict the ability of Governments —whether they are the UK Government, the Scottish Government, the Assemblies or local authorities—to make decisions about not just health, but other sectors, including transport.

Will it be possible for local authorities to retain provisions relating to public transport and public ownership? Will it be possible to bring public transport back into public ownership, if that is what democratic bodies decide to do? That is why the CalMac issue is relevant. Many of the restrictions may already be in place because of our pre-existing commitments, but this Government owe this House and, indeed, the British public the highest levels of transparency.

The British public do not want to be told by multinationals how we should organise our country. We have fought for democracy and we want those bodies for which we have fought and which exist to protect the individual and our communities to have the democratic ability to make decisions. I say to the Minister that that goes to the heart of many of the concerns being raised by Opposition Members about whether we are signing up to something that, while it may result in huge benefits for this country, may have a lot of devil in its detail and may cause huge problems and restrict the democratic ability of this House and, indeed, the British people to make decisions about how we want to organise our society. I hope the Minister will provide assurances that the treaty will not do any of those things, that it will have positive consequences and that the concerns raised are not justified in any way.

16:07

[Guto Bebb (Aberconwy) (Con)]

It is a pleasure to follow the hon. Member for North Ayrshire and Arran (Katy Clark). It is difficult to try to make a speech after the Front-Bench speeches have been made, because many of the points I wanted to make have already been eloquently made.

Prior to this debate, I received a number of e-mails from constituents who are finally becoming aware of the issue of the TTIP, and that is no bad thing. The all-party group, which has been in existence for almost nine months, has held two debates and conducts regular meetings, so at least it is making sure that the issue is debated in a transparent manner in this Parliament. It is important that we discuss such issues as regularly as necessary and that we touch on the serious concerns that have been raised by a number of Members. It is clear that those who have spoken reflect a spectrum of opinion on this very important issue. I might not necessarily agree with everything that has been said by many a Member, but it is important that we have this open debate.

Given the current situation, this is an opportune moment for this second debate. A stock-taking exercise is taking place and there are question marks over the possible threat to the fast-track process, which will come as no surprise to those of us who travelled to Washington in October and early November, where the confidence of the British embassy was not reflected in our discussions with American Congressmen, who were very concerned about signing or agreeing any fast-track procedure prior to the mid-term elections this November. This is, therefore, an opportunity for us as parliamentarians to take stock as well.

We also need to be aware of the need to maintain momentum, because I am concerned at the number of scare stories I read in the press and certainly in my e-mail inbox. We need to address them, because it is important to make sure that our discussion is not just open, but honest. One of the scare stories I received in an e-mail said that the treaty would create no jobs or economic development, which is a risible claim. We have received evidence from the TUC, the CBI and the Federation of Small Businesses, all of which highlight the treaty’s potential. More importantly, individual companies, including small businesses and farming unions in Wales, see the real opportunities for job creation and economic benefit from such a treaty. It is therefore important, whatever the views of Members, that we highlight the fact that the potential for job creation is very real.

[Roger Williams (Brecon and Radnorshire) (LD)]

My hon. Friend the Member for Richmond Park (Zac Goldsmith), who is no longer in his place, raised the issue of unfair competition from America in food production, which might arise not only from genetically modified and synthetic hormones, but from lower levels of animal welfare. I am sure that my hon. Friend the Member for Aberconwy (Guto Bebb) agrees that those issues must be resolved before we can wholeheartedly enter into this trade agreement.

[Guto Bebb]

I accept that we must ensure that a treaty requires a level playing field for food producers. The Farmers Union of Wales and the National Farmers Union in Wales have certainly been very supportive of such efforts. Indeed, Hybu Cig Cymru, which promotes Welsh meat, has been to Washington in anticipation of the potential impact of the treaty on the Welsh food sector.

We need to make sure that there is a level playing field, but it is worth recalling the words of the Governor of Delaware when we were in America. That state is a huge producer of chickens, which it cannot export to the EU marketplace. He made a very fair point when he highlighted the fact that 96% of Members of the European Parliament have voted for a ban on American chickens, but that he had not met a single MEP visiting Delaware who said no to a club sandwich. When we talk about a safety issue, it is important that the issue is genuinely one about safety, not about a regulatory requirement that damages free trade.

[Mark Tami (Alyn and Deeside) (Lab)]

Is that not the key point? Without agreements such as this one, we will not have a level playing field, but will go backwards to having more barriers across the piece.

[Guto Bebb]

I could not agree more. It is a shame that my hon. Friend the Member for Richmond Park (Zac Goldsmith) is no longer in his place. On the regulatory burden in relation not to the food industry but to the automobile sector, which would undoubtedly benefit from a TTIP agreement, Jaguar Land Rover—a huge investor in our manufacturing base—has highlighted the regulations on airbags. It has to insert different panels and dashboards in its vehicles for the American market, because airbags in America have to work on the basis of people not wearing a seatbelt, while those in the European Union do so on the basis of people wearing a seatbelt. That leads to extra cost, and it is a disincentive for trade. We could certainly benefit consumers by dealing with such regulations, which seem to have no purpose whatever, except to add cost and possibly to create extra employment for health and safety experts on either side of the Atlantic.

Another scare story that I should mention is the one about these agreements bringing no advantage to consumers. Anybody who has listened to Which? would be hard pressed to conclude that no consumer would benefit from such a trade agreement. When people argue that consumers will not benefit from free trade, there is something important to bear in mind: I find it very odd that the very people who make that argument do so by sending me e-mails from iPads manufactured in China or from Samsung telephones manufactured in Korea. They are quite willing to use the advantages of free trade to communicate their concerns about free trade, which puts them in a very odd position.

Another key issue about which I am seriously concerned is how the national health service is again being used as a political football in this debate. I want to state on the record that nobody can outflank me in supporting the concept of a health service free at the point of use for those in need. Somebody whose family has needed the support of the health service, as mine has, would never not support the concept of a free health service. However, the mere concept that American companies accessing the health sector in the United Kingdom is somehow different from European ones doing so is very odd.

I simply do not get another of the arguments in relation to people being so concerned about the involvement of private companies in our health service. Ever since the instigation of the NHS in 1948, the most respected part of the health service has been the traditional GP surgery. That is a robust private sector initiative within the health service. The issue is not about whether doctors make a profit because of their work, but about whether they offer patients a good service. I would be very comfortable with American companies delivering medical services, provided that those services are of a very high standard, are in tune with United Kingdom regulations and, more importantly, are delivering good patient care. Surely that is the issue. It is a pedantic view that any private involvement is simply wrong. We need to challenge that view. We need to be honest about the way in which the private sector adds value to the health service. We should reject the use of the health service to attack the TTIP.

[Katy Clark]

Will the hon. Gentleman give way?

[Guto Bebb]

I have to conclude my remarks, because I have only two minutes left.

We have talked about investor-state dispute settlement. The United Kingdom has been signing such agreements for an extremely long time and some 94 agreements are in place. As yet, not a single challenge has been made on the basis of public policy and not a single case has been lost by the United Kingdom. I genuinely believe that this matter is being used by those who are lobbying against a trade treaty to make people feel opposed to it.

I have some sympathy with the argument that if such scaremongering is a danger to the treaty, we should ask ourselves whether we can compromise on that issue. We must acknowledge that the US and the EU have well-established, mature legal systems. I say that not because I agree with the arguments that are being made, but because I want to ensure that as few obstacles as possible get in the way of the treaty, which I genuinely believe would make a significant difference to our economic performance.

I have talked about food. It is crucial to my constituency that we have access to other markets. Farmers in the Conwy valley believe that they could export more than £30 million-worth of Welsh lamb to the US. The deal is therefore extremely important.

The key point is that any treaty must take into account the needs not just of large corporations, but of small businesses. Economic recovery in Wales is dependent on small businesses and this treaty must work for them as well.

16:16

[Ian Lavery (Wansbeck) (Lab)]

A number of people have said that there must be a good business case for the transatlantic trade and investment partnership. I think that we need much more than a good business case. I am concerned that there are huge inherent dangers in the TTIP for many working people and for public services in the UK. My major concern is that the trade agreement has the potential to dilute workers’ rights.

The hon. Member for Aberconwy (Guto Bebb) said twice that people are scaremongering with regard to the TTIP. He must not mix up scaremongering with people taking a different view from him.

There are two major problems with the TTIP. The first is labour rights and the second is investor-state dispute settlement, which we have discussed a lot this afternoon. I listened carefully to the Minister. He said, basically, that ISDS is ineffective. If it is ineffective and has not been used as much as everybody thinks it has, why is it in the agreement at all? That is a simple question. Why do we have ISDS if we do not need it?

The proposal is that the TTIP would establish in law the right of multinational corporations to sue nation states in a special court through investor-state dispute settlement if the nation’s regulatory framework is deemed to be a barrier to free trade. Of course that is concerning. It should concern everyone in this House. ISDS is a one-way street by which corporations can challenge Government policies, but neither Governments nor individuals are granted comparable rights to hold corporations accountable. Opinions suggest that these clauses could thwart attempts by a future Government to bring a health service back towards public ownership—again, that issue has been discussed at great length today.

It has been said time and again that there are major concerns about the impact the TTIP could have on the future of the NHS, and on the way the wider public sector is organised in the UK. There should have been a clear exemption, particularly for the NHS but also for the public sector more widely, in the negotiated mandate agreed by the European Council. Given the implications of the Health and Social Care Act 2012 for the commissioning and organisation of health services in the UK, there is a clear danger that major private health care corporations will be looking for opportunities within any TTIP agreement to force further large-scale privatisation.

There is an additional danger in the proposed inclusion in any TTIP agreement of an ISDS. Both the EU and the USA have respected and strong legal systems, and there is no justification for creating a mechanism to allow corporations to bypass the usual legal process to launch expropriation litigation should a UK Government attempt to bring elements of the health service, or other parts of the public sector, back under direct public control.

Labour rights are also extremely important. As I think has been mentioned, the US has ratified only 14 of the 190 International Labour Organisation conventions —among the lowest in the world. It has ratified only two of the eight core conventions dealing with forced labour, child labour, freedom of association and discrimination. It has not ratified conventions 87 or 98, and is almost certainly in breach of both, according to the ILO freedom of association committee.

The Wall Street Journal is not a newspaper that I normally acquire in the morning, nor want to read, but on this occasion I read a report that stated:

“Congressional Republicans are only willing to agree TTIP if extending EU labour standards…to the US is ruled out in advance.”

It basically states that congressional Republicans will agree to a TTIP only if the extension of any workers’ rights is ruled out before the TTIP is agreed in its entirety. If that is the case, it will be interesting to see what the EU has to say. I would have thought we understood that discussions would take place without any preconditions, and if there are preconditions—if that is what the Republicans are saying—perhaps we in the UK have little to concern ourselves about.

Many of those in US unions see a labour chapter in the TTIP as potentially opening up a European-style social model and worker dialogue with employers, which in some parts of the USA I think would be seen as a huge advantage. That has been explained clearly by the Communication Workers of America and the United Steelworkers. Organisations that have been terribly supportive of a TTIP that would enhance labour rights within the framework include the American Federation of Labor and the Congress of Industrial Organizations. The American Federation of Labor has a loud, clear voice and a mandate of 11 million workers.

16:23

[Mark Pawsey (Rugby) (Con)]

It is a great pleasure to speak in this important debate and I add my congratulations to the all-party group on EU-US trade and investment, and to the right hon. Member for Wentworth and Dearne (John Healey) and my hon. Friend the Member for Aberconwy (Guto Bebb) on securing this debate. I am pleased to contribute to this debate because, along with other Members from across the House, I had the opportunity to visit the United States in November as part of the British-American parliamentary group, on a visit focusing on the TTIP negotiations. I confess that prior to that visit, like many Members and people across the country, I had a lack of awareness about the negotiations. I was aware that something was taking place, but frankly I could not have said what TTIP stood for. On the visit I was particularly interested in the impact on small businesses, having run a small business before coming to this place. I represent a constituency in the west midlands with a resurgent motor industry, so I was also keen to see the impact on that sector.

It takes two parties to make a deal. Across the House, I think we have seen broad enthusiasm for the TTIP, and that is reflected across the UK and the EU. Generally, I think there is less enthusiasm in the US. Part of our role is to understand the anxieties and fears of people in the US and consider how we might persuade them to come to a deal. In Washington, we met politicians from both parties. We also went beyond Washington to meet officials in places such as Philadelphia and Delaware. We raised with the Governor of Delaware the possibility of public procurement being included in the TTIP and becoming available for countries outside the US. I have to confess that the Governor’s principal concern was jobs. Indeed, we heard concerns about jobs across the piece from all the organisations we spoke to.

We met the American Farm Bureau Federation and spoke about the opportunities for its produce in the UK. It expressed concern over geographical indicators: it would not be able to call its hard cheese “parmesan” in the UK market, as it is able to in the US. It also has concerns regarding the accessibility of its largely genetically modified foods in the UK. We met the American Federation of Labor and the Congress of Industrial Organizations. Perhaps I might reassure the hon. Member for Wansbeck (Ian Lavery), who has just spoken, that labour organisations in the US see the TTIP as an opportunity to bring Europe’s higher labour standards to the US, rather than allowing for transit in the opposite direction.

Throughout our discussions we heard about the need for a fast-track authority in the US that provides an unamendable resolution. The Minister talked about whether the granting of the fast-track process would affect the timing of a deal. I think it goes further than that. In the absence of fast track, it is highly unlikely that any deal will ever be made, because without a fast-track process any vested interest that believed it was threatened by the TTIP could derail an agreement. President Obama has made it clear that he would like to see a fast-track negotiating authority, but this remains unresolved. Indeed, we were shown a letter from 22 Members of Congress addressed to the President stating that they would not agree to cede constitutional authority to the Executive through the approval of a fast-track authority.

We found a real shortage of awareness about the TTIP in the US. It is important to recognise that in November, when we were there, the US Government had just had their first shutdown as a consequence of the stand-off between the parties on the budget. That in itself had led to the postponement of talks. There was also a preoccupation with the Affordable Care Act, otherwise known as Obamacare. More than once in meetings we heard people say that Obamacare was sucking the oxygen out of all other policy discussions in the US.

My impression of how Americans see the TTIP talks is that they are bothered that they have more to lose than they have to gain. They have a massive prize that they believe they are being asked to give away: access to the biggest and most successful market in the world. They need reassurance that if they allow access to their market, there will be something in it for them. There is a feeling that in earlier trade agreements—perhaps the agreement between Canada and Mexico—US negotiators had given too much away and that that had led to “Buy American” campaigns. The concern of opponents is that the TTIP might give too much away and that that will lead to labour losses.

[Guto Bebb]

On the “Buy American” strategy in America, is it not the case that the concern lies more with politicians than businesses? One business in Philadelphia said that “Buy American” often means paying more for lower quality, and that they do not have their own businesses to develop it.

[Mark Pawsey]

My hon. Friend makes a fair point, but the perception of politicians was that the “Buy American” policy kept jobs in the United States and prevented them from being lost. As politicians, they wanted to ensure that employment in their states was being maximised.

The US does not always give things away and there is not a gung-ho attitude to the free market. Regular reference was made to the 1920 Merchant Marine Act, otherwise known as the Jones Act, being a great example of how America can be protectionist when it wishes to be. That is the legislation that requires all goods transported by water between US ports to be carried on US-flagged ships constructed in the US, owned by US citizens and crewed by US citizens. So the US can be protectionist and prevent other countries from gaining access to its markets. We heard more than once the quote from Benjamin Franklin:

“No nation was ever ruined by trade.”

The TTIP provides massive opportunities for US goods and produce in the EU.

In the UK there is broad support, as we have heard from both Front Benches today, and why would there not be, when we are talking about 50% of world GDP and 30% of international trade? This is an opportunity for us only if our economy, our industry and our service companies are in shape to take advantage of it. That is why the broader policies of this Government to increase our competitiveness and our skills agenda are important. If those are right, we can take advantage of an additional £10 billion to the UK economy.

I am pleased that the Federation of Small Businesses here in the UK welcomes the TTIP negotiations and looks forward to a resolution. A fifth of FSB members are exporters, and the US is the second most important destination for small businesses that export. It is believed that the TTIP could add 400,000 UK jobs. The FSB has set out a wish-list for the TTIP, including a pledge to promote entrepreneurship and a pledge of smart regulation on both sides of the Atlantic.

This has been a very important debate. There are big opportunities for both the EU and the US in growth and jobs. There needs to be a timetable. One of the concerns that I was left with as I came away is that there are rather more serious consequences of not doing a deal than there would ever be of doing a deal.

16:29

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

I begin by congratulating my right hon. Friend the Member for Wentworth and Dearne (John Healey) and others and the Backbench Business Committee on scheduling this important debate.

If we want to achieve the permanent rebalancing of the economy more towards manufacturing and export-led growth, expanding markets for our goods and services and removing barriers to trade are essential. According to the OBR, two thirds of all UK growth between mid-2010 and 2015 was expected to stem from rising exports and business investment, but the most recent estimates indicate that less than a fifth of the growth over that period will come from those sources, and there are 300,000 fewer people working in our manufacturing industries, compared with 2008. This is adding to the United Kingdom’s growing problem with productivity. The proposed transatlantic trade and investment partnership that this House is considering today is vital to realising the vision of a higher wage and more highly skilled economy. As we know, this is an agreement that will expand global trade, not take trade away from other parts of the world.

We know that exports are likely to rise by 6% in the EU and by 8% in the United States, but we must recognise that this agreement has to benefit all in our societies, not just those at the very top. Reducing tariffs, securing regulatory convergence and aligning technical trading standards could make a family of four in the EU up to €545 a year better off. It could boost GDP in this country by up to £10 billion a year, according to the Government’s own impact assessment, and create up to 400,000 jobs.

As Which? found when preparing a briefing for Members before this debate, average import tariffs are 4%, but clothing imported from the US is subject to a tariff three times higher. Reducing roaming charges for communications and data services across the Atlantic and improving the co-ordination of food traceability would be tangible benefits for consumers from this agreement, but there will be areas where retaining separate regulatory systems, such as in financial services, will be absolutely vital without prejudicing the overall aims of the negotiations.

The right hon. and learned Member for Rushcliffe (Mr Clarke) used his formidable powers of advocacy to try to persuade the House that there was nothing in the proposed investor-state dispute mechanism about which Members ought to be concerned. I fear that, on this occasion at least, he was not entirely successful. He was right to point to the 91 agreements of a similar nature in bilateral investment agreements that we have signed with other countries, but perhaps he missed an important point. This agreement would bind 28 member states, which at the moment may have different standards in all these areas. We should do nothing in these negotiations to undermine the crucial role that the European Court of Justice plays in ensuring equal standards across the European Union.

We know that article 226 of the EU treaty permits member states that have breached treaty requirements to be brought before the ECJ for infraction proceedings, which bind all member states. The problem with the arbitration anticipated in some drafts of the negotiations is that it would not bind all member states: it would simply bind the parties to that individual dispute. We should emphasise that, in these discussions, the ECJ should be the final arbiter—the binding and conclusive arbiter—of whether member states have breached their commitments. We should do nothing to upset its position.

Removing barriers for EU exporters should not mean removing hard-won protections in the workplace. There should be a levelling up of standards, not a race to the bottom. We know that US workplace fatalities are three times as high as those in the EU. Simply by having a system of mutual recognition without recognising the protections we have at EU level could lead to concerns among workers. Neither should there be an expansion of competition into the national health service or other public services as a result of the TTIP.

The maximum benefits of this deal to British business and consumers flow from the strength that the European Union possesses in negotiating on behalf of all member states. Bilateral agreements between the US and each of the 28 member states, or with clusters of member states, would not be achievable, would not have the same worth and would not provide the same potential boost to living standards or to trade. Those who envisage the United Kingdom’s destiny as outside the European Union must address this point: why remove ourselves from the clear advantages to consumers and manufacturing exporters of this potential deal, or believe we could achieve as good a deal bilaterally with the United States, when the US Administration have said that they are interested in securing only an EU-wide deal?

It took more than 30 rounds of negotiation to secure the trans-pacific partnership, so I hope that the fourth round of TTIP negotiations, due to begin next month, can, given the important politics behind this issue, proceed at a more accelerated pace. We know that there will be elections for the European Parliament this May, the installation of a new European Commission later this year and the US presidential election in 2016. I welcome the fact that the chief negotiators gave a press conference last year on the progress of the talks, but stronger mechanisms must be developed to ensure that national parliaments—which, after all, have to ratify any agreement—are more properly consulted and have an opportunity to comment on or shape the context of the discussions.

In conclusion, let us hope that an eventually concluded deal can lead the way to further such agreements across the world. We have to bring down barriers to trade if we are to rebalance the global economy. Our exporters expect no less, consumers expect no less and future generations of manufacturing and service workers will expect no less either.

16:39

[Ian Paisley (North Antrim) (DUP)]

Let me say at the outset that I am pro-trade. I want our export industry to increase, and I want everything possible to be done to ensure that that can happen—and happen successfully. I think that we should approach the TTIP with confidence, but I agree with the Minister that we should also be alert to the needs of our community and our businesses, and ensure that they are given as much protection as possible in the negotiations.

I congratulate the hon. Member for Paisley and Renfrewshire North (Jim Sheridan) not only on the fact that he represents the finest-named constituency in the House, but on his agility in rightly focusing Members’ minds on the dynamics of the Scottish debate and how important it is to us. The Minister responded to the hon. Gentleman’s comments robustly, but I think that the issue should be a priority for us as well, and that we should remind our neighbours and friends of its importance to them.

I want to focus on farming, food production and consumer rights, because they affect my constituents dramatically. As I said to the Minister in an intervention, a good deal will be marked by how we ensure that the rights and needs of our farmers—our primary producers of food, and of excellent food—are protected, aided and abetted in the negotiations. There is no doubt that we produce the best traceable food in the world. It is a £20 billion-plus industry and an essential trade, and in my part of the United Kingdom it is the most essential trade. It is a mainstay of business and employment. It is the one sector in which our productivity is increasing annually. I believe that last year our food production increased by an average of about 12%. That is a Chinese-style proportion of growth. We need to keep a careful eye on it, and ensure that it continues.

The fact that we produce the best food in the world makes that food not just worth protecting, but worth exporting. It is clear that people want to buy our food and drink products. In my constituency, for example, the Bushmills distillery produces what I am told is the finest whiskey in the world. The Minister will have sampled it many, many times. That distillery employs 102 people in my constituency, but 90% of what it produces is exported, and the vast majority goes to the United States of America. Last year, its trade increased by 14%. Such growth must be encouraged, and must be seen as a major opportunity in the TTIP negotiations.

[Jim Shannon]

Not teetotal!

[Ian Paisley]

No, not teetotal, but TTIP.

I urge the Minister to think of the 85,000 people in our community who are involved in agri-food production, and to ensure that they and their rights are put at the top of the agenda, because that affects consumer confidence. We can say to our consumers, with strength and authority, that we know what they are consuming because it is traceable. That is one of the advantages that we have as an island nation, and we must use it to our advantage, because it makes our food a very desirable commodity. We need to ensure that food that is imported to the United Kingdom meets the same exacting standards as the food that we produce here. One way in which we can do that is to ensure that labelling is accurate, so that when we, as consumers, go to the supermarket, the local butcher or another local shop, we can see for ourselves what has been imported and where it has come from.

I think that farmers in the United States have a significant cost-of-production advantage over many farmers in the European Community. US farmers bear a lighter regulatory burden; they have a different approach to animal welfare, and they have a very different approach to animal traceability in their food production. They use hormones, and their environmental legislation is very different from ours. We must take cognisance of that in any trade negotiation. Trade must mean ensuring that imports are produced to equivalent standards, and that product labelling clearly distinguishes between different production methods in a way that is meaningful and not misleading. The Minister spoke about red lines. We do not have to reveal all the red lines; this should be a priority, and we should be aware of that.

The US is very competitive in beef production. Our prices are at crisis levels. Given the significant cost and production advantages in the US through the use of hormone growth promoters, if any changes are made to the EU hormone rules and tariffs are eliminated, it is likely that the US would be in a position significantly to increase the volume of beef exported to the UK. That could damage our significant industry. We need to be alert to that and to ensure that we get the best deal for our primary producers.

The poultry sector should be treated as a sensitive sector. Why do I say that? Since 1997, American poultry has not been allowed to be imported into the European Community because of pathogen reduction treatments. Those treatments mean that we do not believe that consumers should eat American poultry. If changes to the PRT rules result in an increase in poultry imports to the EC from the US, we need to take a careful line on that and ensure that we put our poultry industry, which is one of the biggest in the world and is associated directly with Brazil, first in the negotiations.

Those are key issues that will determine business direction in our country. I hope that the Minister will, as he has said, be alert to those issues.

16:34

[Jeremy Corbyn (Islington North) (Lab)]

Thank you for calling me, Madam Deputy Speaker. I apologise to the House for not being able to be here for the first part of the debate. I will end my remarks in time for my right hon. Friend the Member for Wentworth and Dearne (John Healey) to conclude the debate.

We should be extremely cautious about the whole process that has been put before us. If anyone has looked at the experience of the free trade agreement between the US, Canada and Mexico, they will quickly see who benefits and even more quickly who loses as a result of it. The people who lose out are those who are on the margins of society, those who are vulnerable and those who are open to great exploitation. Thus, farm workers in Mexico have lost their jobs in favour of high-tech farming imports from the US; and US companies have moved across the border to Mexico to exploit lower wages. Mexican trucks are not allowed to drive into the US beyond a short distance from the border. There are a lot of restrictions. It is not an equal power relationship. It is a very damaging power relationship. The agreement is unpopular in the US and Canada, but it is also unpopular with many people in Mexico, who see themselves losing out as a result of that.

I give that as an example. We should be extremely cautious about the claims that are made. When the North American Free Trade Agreement was reached, it was claimed that there would be several million new jobs as a result. The result has actually been the loss of about 1 million jobs. The same exaggerated but unsubstantiated claims about jobs and the profits that will be made by particular companies are being made about the transatlantic agreement.

There are specific concerns. Why is there such secrecy surrounding the negotiations? Why are all the documents not on the table? Why are the demands made on European public services by the American negotiators not made public? Why are the demands made in the other direction not also made public? I suspect that, if the agreement ever comes to fruition, every Parliament in Europe and the US system will be presented with a fait accompli: they will be told that they have to accept it.

There are huge concerns. Many of my colleagues have raised concerns about the NHS. We all, I hope, support the principle of a health service free at the point of use. What we do not support is the destruction of our health service in favour of a series of companies coming in to take over very efficient services delivered by public sector workers.

[Debbie Abrahams]

Is my hon. Friend not concerned that the Government still refuse to say that the NHS will be exempt from the TTIP negotiations?

[Jeremy Corbyn]

Absolutely. It seems strange that we cannot say that we are going to exempt the NHS from discussions. I am sure plenty of pressure will be put on to exempt cultural industries, particularly from France, which will probably be accepted. The same thing should apply to the NHS.

There are a couple of other issues that I want to mention. The first relates to our ability to decide the future of our own public services. At the moment, Britain’s railway system is a combination of a state-owned rail company and privatised services. The European directive on railways envisages a totally privatised system across the whole of this continent. I suspect that, under the kind of agreement we are discussing today, privatisation would be foisted on everyone on both sides of the Atlantic.

Secondly, concerns have been raised about working conditions, health and safety at work conditions and environmental protection. I am sure that all those companies that are busy lining up to destroy union organisation in the USA would want to do exactly the same on this side of the Atlantic. Various Members have mentioned environmental protection and environmental conditions. In the US, there are far fewer environmental protection measures—there is much more genetically modified food on sale and in regular supply, for example. Are we to destroy many of the hard-fought and hard-gained social advantages across Europe in relation to farming systems, to animal protection and welfare and to health and safety, in favour of a free-for-all for those big companies? We need to be very careful. Democracy is the issue, and democracy ought to be the means by which we decide these issues, rather than secret negotiations resulting in a fait accompli being presented to us.

16:51

[John Healey]

We have had a good debate, with very good speeches from both sides. Notwithstanding the contribution from my hon. Friend the Member for Islington North (Jeremy Corbyn), the debate has provided confirmation of the strong cross-party support for an ambitious deal, as well as confirmation of the concerns that will need to be dealt with if we are not to risk derailing that support. The House will have been glad to hear the Minister without Portfolio, the right hon. and learned Member for Rushcliffe (Mr Clarke), say that such cross-party support helps to strengthen our influence and the leading role that Britain can play in the negotiations. I hope that he will also see this debate as a demonstration of the House’s desire to hear more about what the Government are doing to increase public debate and understanding, to involve legitimate interest groups in the discussions and to use our leading influence in the negotiations to secure a successful deal. I am sure that the whole House will look forward to a further debate on this issue, perhaps even in Government time.

Question put and agreed to.

Resolved,

That this House has considered the Transatlantic Trade and Investment Partnership.

EU Funding

Tuesday 25th February 2014 Commons Chamber

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

16:52

[John Healey (Wentworth and Dearne) (Lab)]

I welcome the Secretary of State for Business, Innovation and Skills to the Front Bench, and I hope that his presence will presage a more balanced approach to the decisions on the EU funding period than has been the case to date. I hope that that hope will not be dashed.

Eight months ago, I led an Adjournment debate on two decisions that Ministers had made on EU regional funding. The first, announced on 26 March, was on the allocation of funds between the four UK nation states. The second, announced on 27 June, was on the allocation of funds between the English regions. I argued then that those decisions were unfair and unjustifiable. I was supported then, as now, by colleagues from South Yorkshire and from Merseyside. Two weeks ago, in the High Court, Mr Justice Stewart stated that

“the decisions of 26 March 2013 and 27 June 2013 are quashed”.

The Ministers were wrong. Their decisions are unfair, unjustifiable and unlawful. They take funds from South Yorkshire and from Merseyside to top up support for Scotland, Wales and Northern Ireland, to limit their losses to 5% while cutting our support by more than 50% compared with the figure for the current full EU funding period. They undermine the very purpose of EU structural funds, which of course is to boost the jobs, skills, businesses and economies of the regions lagging behind.

Documents disclosed for the first time to the Court show just how far Ministers are cheating South Yorkshire and Merseyside. They show that the Government have calculated that the European Commission’s intended allocation for South Yorkshire would be €236 million—€58 million more than Ministers plan. They show Merseyside’s intended allocation from the EU to be €318 million—€116 million more than Ministers propose. I suspect the Secretary of State may say that the allocation methodology was not found by the Court to be flawed, even though the judgment found that the allocations were unlawful. They were unlawful because Ministers: failed to comply with the public sector equalities duty; failed to avoid discrimination against those in our ex-industrial areas; and failed to consider the consequences of using criteria that took no account of the respective economic needs in all UK regions—in other words, we are talking about equality of funding.

I say to the Secretary of State that that is a concern to me, to my Labour colleagues, to our councils and to our business organisations in South Yorkshire and Merseyside. It will also be a concern to the European Commission, because the principle of equality is a general principle of EU law and a right conferred by it. By protecting Northern Ireland and allowing Scotland to protect the highlands and islands, the Government have completely distorted the funding purpose and the budget for the nine English transition regions, resulting in some wealthy, more developed regions receiving significantly more funding from the EU in this proposed seven-year period than the transition regions, which have a much lower GDP.

[Bob Stewart (Beckenham) (Con)]

I am slightly surprised that European funding, when allocated, can actually be interfered with by Ministers if it has already been agreed. I presume that is legal, but is it?

[John Healey]

The allocations are made to the United Kingdom, whose Government then have a degree of discretion about the distribution of those funds within the UK. What was at stake in the Court challenge and is at stake in this debate is whether those decisions were fair, whether they were justifiable and whether they were lawful. That is the point at stake and it is where things have changed since the debate I introduced about eight months ago.

[Jim Shannon (Strangford) (DUP)]

The right hon. Gentleman has mentioned Northern Ireland. Does he accept that Northern Ireland’s fuel costs are the highest in the whole UK, its levels of unemployment exceed those in other parts of the UK and its educational standards do not match those of some areas of the UK, and that allocations of EU moneys are based on the criteria of need and Northern Ireland falls into that category? I would be happy to see Yorkshire getting its true worth, but I would hate to see it happening at the expense of those in Northern Ireland.

[John Healey]

I understand that. Northern Ireland, South Yorkshire and Merseyside all face similar problems, and under this funding period arrangement they have all been designated as transition regions. I must say to the hon. Gentleman that the GDP—the wealth, product and income—in Northern Ireland is in fact higher than it is in South Yorkshire and in Merseyside, yet the decisions the Government have taken mean that Northern Ireland will be protected, with its drop in funding for these seven years compared with the previous seven years being limited to just 5%, whereas we face a funding cut of more than 50%. I think he would agree that that simply is not fair.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

I apologise to my right hon. Friend for the number of interventions, but he is so well informed. A few moments ago, he referred to the protection of the highlands and islands of Scotland. Will he offer advice to me and perhaps to the people of Scotland as to what might happen in the event of Scotland voting for independence?

[John Healey]

My right hon. Friend poses a bigger question than I would have imagined from the terms of this debate. Clearly, Scotland would have to become a part of the European Union and then to lay its claim for any potential structural funding support in the way that this programme is designed to deliver.

[Paul Blomfield (Sheffield Central) (Lab)]

I congratulate my right hon. Friend on the work that he has done in co-ordinating the concern of the South Yorkshire region over this issue. Does he agree that the perverse impacts of the way in which the Government have brought together their formula are illustrated by the fact that Cheshire, which happens to include the Chancellor’s constituency, has been allocated 34% more per head than South Yorkshire, even though its GDP is 19% above the EU average while ours is 16% below? What conclusion does he draw from the way in which the Deputy Prime Minister, although supposedly representing our region, has strongly defended the formula, which took money intended for areas such as ours and other poorer regions and gave it to wealthier areas?

[John Healey]

First, the Deputy Prime Minister was asleep on the job when the decisions were taken in government. Secondly, he is allowing the arguments that we have heard from other Ministers in this Chamber to pull the wool over his eyes. He has not been standing up for South Yorkshire, and I see this as a Forgemasters mark 2 against the card of the Deputy Prime Minister.

A more measured reflection on the figures that my hon. Friend has just given allow me to continue to develop my argument, which is that the Government’s approach to date does not apply the principles of equality and proportionality. Similar regions were treated differently, and allocations were not proportionate to their needs. I say to the Secretary of State that we will not let this matter rest. We will take it all the way. Our councils will take the case to the Appeal Court to ensure that the principles are taken into account by the UK Government, just as the EU does in designing and allocating the structural funds in the first place. We will also take the case to Commissioner Hahn, who has to approve UK Ministers’ plans to ensure that those principles are taken into account.

The High Court judgment two weeks ago requires Ministers to review, but not necessarily to change, the funding decisions. I urge the Secretary of State to take a fresh and deep view of this set of decisions. He should revise those decisions now rather than being forced to do so later.

Let me take the Secretary of State back to what his junior Minister, the right hon. Member for Sevenoaks (Michael Fallon), said in the first debate. He rightly said:

“The aim of the funds is to provide EU member states and regions with assistance to overcome structural deficiencies and to enable them to strengthen competitiveness and increase employment.”—[Official Report, 1 July 2013; Vol. 565, c. 725.]

The EU funds are designed to give a boost to the economy of flagging regions. It is an outrage that areas of the UK with more jobs, wealth, businesses and prosperity are also getting more European funding in the period ahead. South Yorkshire is one of those 11 transition regions in the UK, which means that our GDP is between 75% and 90% of the European average. All the more developed regions have a GDP of at least 90% of the European average. Nine of them will receive more, not less, funding than the Sheffield city region. They include Worcestershire and Leicestershire. As my hon. Friend the Member for Sheffield Central (Paul Blomfield) has said, they also include Cheshire and Warrington, which have a GDP not of 84% like South Yorkshire but of 119% of the European average and will get EU funding not of €117 per head like South Yorkshire but of €157 a head.

[Steve Rotheram (Liverpool, Walton) (Lab)]

I thank my right hon. Friend for highlighting this Government’s lamentable record on the transparency and fairness of previous funding allocations. Does he agree that there is no justification for this latest round of gerrymandering whereby the richer regions will benefit over and above areas such as Merseyside and his constituency and area?

[John Healey]

I do indeed. The judge at the hearing described the situation as bizarre. He rightly said that the decision to protect Northern Ireland and Scotland was what got the Government into this mess and skewed the budget for the nine English transition regions.

Let me illustrate the point about the flaws and the unfairness just by looking at the highlands and islands of Scotland, which like South Yorkshire is an ex-objective 1 area and, in the current funding period, has phasing status—in other words diminishing and tapering funding during the seven years. It is a transition region in the next period and has a GDP exactly the same as that of South Yorkshire—84% of the European average. But unlike South Yorkshire it is set to get not €117 a head but €478 for every man, woman and child in the region. In other words, it is similar in economic status but will receive more than four times the European funding for the seven years ahead. The Chief Secretary was clearly doing a job for his area. The Deputy Prime Minister was clearly not doing a job for ours when the Government were blatantly making such bad and damaging decisions for South Yorkshire.

[Kevin Barron (Rother Valley) (Lab)]

I congratulate my right hon. Friend on getting this debate. Does he think it ironic, after the 20 years or more of changing South Yorkshire’s infrastructure as a result of the coal mining programme, that we see a succession of members of this Government coming to the Advanced Manufacturing Park? The last Government used structural funds to build it, and these Ministers now all get their photo shots done there. It is attempting to turn the South Yorkshire economy around, yet the same people appear to be putting the boot into South Yorkshire through the structural funding.

[John Healey]

My right hon. Friend is right. We know how to use funds well in South Yorkshire. We have plans to use them well in the future. The Secretary of State himself has regularly visited the Advanced Manufacturing Park. He will know what a contribution it is making to overcoming some of the structural weakness in the South Yorkshire economy. We will fight this all the way because the Government are making decisions not just for next year’s funding. These decisions set the funding for a full seven years—for the whole of the next Parliament and the next Government and beyond. That is why they are so important. The Secretary of State has agreed to meet me and my hon. Friend the Member for St Helens North (Mr Watts). I hope that the review that the Court judgment has forced on Ministers will mean that he will lead the Government in thinking again and making good the funding shortfall for South Yorkshire and Merseyside that the allocation decisions so far have caused.

17:09

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

I congratulate the right hon. Member for Wentworth and Dearne (John Healey) on securing the debate. I welcome it because it gives me the first opportunity to set out in the House how we want to respond to the High Court, because we are dealing essentially with the legal implications of that ruling.

Let me start with the legal particulars before getting on to the wider policy question. On 7 February 2014, the High Court indeed quashed two decisions that I made last year. The first allocated EU funds to England, Scotland, Wales and Northern Ireland, and the second allocated funds to local enterprise partnerships within England. Two arguments were put forward by the claimants—the LEPs representing south Yorkshire and Merseyside—in the judicial review case. The first was that the allocations were irrational and unreasonable, which is the case the right hon. Gentleman has developed again today, and the second was that insufficient regard had been paid to the public sector equality duty.

On the first point—and this is absolutely crucial to the debate—the Court found that the methodology and allocations were rational, proportionate and permissible, and the claimants’ arguments on these points were dismissed. That is relevant, because it was not so much the right hon. Gentleman in his speech but some of his colleagues in their interventions who talked about gerrymandering, or the arbitrary attempt to include the Chancellor’s constituency. It is very clear that the Court found that the decisions were not arbitrary in that way. They may not have produced the satisfactory political outcome from Opposition Members’ point of view, but the Court did not uphold the argument that there was any form of irrationality or disproportionality in the decision.

[John Healey]

The Secretary of State is factually correct, as I said in my remarks, but does he regard those decisions as fair and consistent with the purposes of the European structural fund?

[Vince Cable]

Well, we do, because we have been trying to reconcile a whole series of different issues. I was going to make this point to the right hon. Gentleman later: he has been a Local Government Minister in his earlier capacity. I remember petitioning on behalf of my own council. He knows the problems of allocating resources when there is a fixed pot of money; some people will be happy and some people will be unhappy. These are difficult decisions, and we derived a methodology that we believed to be fair. These decisions were not based on arbitrary allocations; they were based on a methodology. That is very important—these were not arbitrary decisions.

The judge ruled—the ruling was very clear—on the sole ground that our public sector equality duty was not met, even though an equality impact assessment was completed and it concluded that it was unlikely that having regard to such a duty would have made any difference to the original decisions by the Department for Business, Innovation and Skills.

[Steve Rotheram]

Taken in isolation, perhaps the argument stands up in regard to what is perhaps a quirk of the formula. However, the moral argument may not be about the methodology; it is certainly about the poorer areas being penalised by the richer areas, which are the only beneficiaries from the formula.

[Vince Cable]

It is simply not true that richer areas are the only beneficiaries. There was a redistributive effect in some of the poorer areas of the country. If I remember correctly—I may be incorrect—the north-east of England, or many parts of it, benefited from this reallocation, but I will check that.

Let me go to the central point. Following the ruling, we have to follow the law. That is obviously our duty, and I now have to take a fresh decision on the allocations, having regard to the public sector equality duty. We are now doing further work, which we will take into account in making a new decision. However, I have to be clear about this point: on the basis of the Court ruling, the new decision will be limited to reconsideration of allocations in light of any impact on equality. We are not planning to reconsider the methodology, unless the equalities assessment highlights the need to do so. Obviously, we will need to be legally compliant and we will be legally compliant.

We want to announce the decisions in the next few weeks and it is very important that we move quickly, because we want to end the uncertainty about the allocation, which affects jobs and growth across the UK. I also want to make it clear that of course I regard it as absolutely essential that we pursue policies that are equal and fair. I have set out on many occasions my vision that equality, diversity and inclusion be embedded in what the Department does, so we will be working hard over the next few weeks to ensure that we meet our obligations under the public sector equality duty.

The right hon. Member for Wentworth and Dearne confirmed that Liverpool and Sheffield are seeking permission to try to overturn the High Court ruling on methodology. While they have every right to do so, I am obviously disappointed that they feel the need to take such action, not least because it risks delaying the allocation of funding. However, clearly the matter must be tested in the courts.

Let me say a little about the wider context regarding Liverpool and Sheffield, because the right hon. Gentleman is right that we must be balanced when looking at this in the round. It is fundamental that we take account of regions’ need and relative prosperity. Given his history in government, I am sure that he understands that Sheffield and Liverpool will not be alone—this is the nature of such allocations—in thinking that they would like more money. However, the EU sets the overall budget and we must address the needs of all UK regions.

The Liverpool and Sheffield decisions were reached after a great deal of thought and in recognition of the areas’ history, with which the right hon. Gentleman will be familiar. Between 2000 and 2006, Liverpool and Sheffield were both objective 1 regions, meaning that they were among the parts of the country with the greatest need, which was reflected in their higher funding. In 2007, they were reclassified as phasing-in regions because the indicators showed, although the levels were relatively low, that there had been considerable economic progress. Their recategorisation as phasing-in regions between 2007 and 2013 was designed to avoid the steep and sudden cut in EU funding that would have followed from relatively high levels of economic activity.

As I am sure the right hon. Gentleman knows, the phasing-in regions received a tapered reduction in funding between 2007 and 2010—given that he was in government, I am sure that he followed that process closely—and then received the same amount of annual funding between 2011 and 2013. The crucial point in this argument is that the phasing-in regions were fully aware of their changing status, so they must have anticipated a significant drop in funding between 2014 and 2020. The right hon. Gentleman must have helped to negotiate the current programme when he was in government, and it states categorically:

“Because of its phasing-in status South Yorkshire’s financial allocation annual profile is heavily weighted towards the first four years and tapers off towards the end of the programming period”.

The transition is clearly awkward for the areas affected, but it was fully anticipated and had nothing to do with a change of Government, as it was going to happen in any event.

South Yorkshire and Merseyside are now categorised as transition regions and must be treated in the same way as other such regions. The original BIS decision gave each transition region a 15% funding increase against an overall drop of 8% in European structural funds, with an across-the-board formula applied.

To give a wider context, I want to say a little about the support that we are trying to give through regional growth, some aspects of which have fairly been mentioned. It needs to be emphasised—this was missing from the right hon. Gentleman’s speech—that about half the funding in the period between 2007 and 2013 was retained for allocation by central Government, but we have tried to change to a more locally-based allocation system, with local areas, through their LEPs, determining how 95% of structural funds will be used. While some areas might have had more funding in the past, they did not have their current power to direct resources to their own priorities.

EU funding is only one aspect of official funding. The right hon. Gentleman will know about some of the schemes we have going, which I will run through quickly. The Sheffield city region has been granted enterprise zone status to extend the capability of advanced manufacturing technology, including £14 million to develop the Markham Vale site—I visited it some time ago following a suggestion by the hon. Member for Bolsover (Mr Skinner)—which we expect to generate just under £100 million in private investment and create 2,000-plus new jobs.

Sheffield’s city deal is expected to bring in £72 million in public and private investment over the next three years. The transport fund alone could be worth £500 million. Not every transition region has a deal of that kind. In addition, under the first three rounds of the regional growth fund Sheffield was allocated £57 million, including £25 million in support to the LEP’s business investment programme to unlock £100 million in direct investment, and £9 million has gone to three bids in round 4, although they are still going through due diligence.

Finally, the advanced manufacturing research centre, which I have taken a personal interest in—I met several Sheffield colleagues early in my period in office to try to help facilitate it—has now been allocated £37 million for development and manufacturing research in the civil nuclear sector. The centre is proving brilliantly successful and expanding rapidly. It is the source of the world’s most advanced research factory through the £43 million Factory of the Future project, to which we have granted £10 million.

A similar story can be told about Merseyside. I do not think that there are any Merseyside MPs here, but—[Interruption.] Sorry, I failed to pick up the accent of the hon. Member for Liverpool, Walton (Steve Rotheram), which I thought was from the north-east—I should have learnt from “Match of the Day” and not made that mistake. I profoundly apologise. As he will know, we have granted enterprise zone status to Liverpool and Wirral Waters. The city deals are extensive. The Liverpool and Liverpool city region deals have led to a £75 million economic development fund. The regional growth fund has a programme of £10 million, leveraging £50 million for private investment and safeguarding 1,200 jobs directly and £35 million for the new container port. Other major investments include the £470 million Government contribution to the Mersey Gateway bridge and the redevelopment of Liverpool Royal hospital.

If we take the position in the round, a great deal of thought has been given to how to support two parts of the country that undoubtedly have real economic needs. I restate our position that we must obviously act lawfully in respect of the Court’s judgment, which we will now do.

Question put and agreed to.

17:22

House adjourned.

Ministerial Correction

Tuesday 25th February 2014 Ministerial Corrections

Tuesday 25 February 2014

Community Primary Schools

Tuesday 25th February 2014 Ministerial Corrections

The following is the answer given by the Secretary of State for Education, the right hon. Member for Surrey Heath (Michael Gove), to a question from the hon. Member for Hammersmith (Mr Slaughter) during Education Question Time on 10 February 2014.

[Mr Andy Slaughter (Hammersmith) (Lab)]

15. How many applications for academy status from community primary schools have been declined by his Department.

[The Secretary of State for Education (Michael Gove)]

Eighty.

[Official Report, 10 February 2014, Vol. 575, c. 552-3.]

Letter of correction from Michael Gove:

The correct answer should have been:

[The Secretary of State for Education (Michael Gove)]

Twenty-six.

Westminster Hall

Tuesday 25th February 2014 Westminster Hall

Tuesday 25 February 2014

[Martin Caton in the Chair]

Educational Attainment (Disadvantaged Pupils)

Tuesday 25th February 2014 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(John Penrose.)

09:30

[Damian Hinds (East Hampshire) (Con)]

It is a great pleasure to serve under your chairmanship, Mr Caton.

There is in this country a large gap in educational attainment between children from richer homes and those from poorer homes as measured by eligibility for free school meals. As the Minister has said on a number of occasions, closing that gap is a moral imperative. I am proud of the Government’s commitment on that front, and of the fact that every time Ministers discuss raising standards in education the issue is always both increasing overall attainment and closing the gap between rich and poor. There have been many initiatives on that matter, and I am sure that there will be more, but probably the biggest change of all is how the pupil premium structurally funds schools. That has at least three effects. First, it ensures that schools in disadvantaged areas are better resourced; secondly, it funds specific programmes and interventions; and thirdly, it makes pupils who are eligible for free school meals more attractive—as it were—to schools.

The key problem is that opportunity in Britain is still not evenly spread. Much continues to depend on the type of family and income bracket that someone is born into. Of course, today we are discussing the fact that opportunity also has much to do with where someone is born. There are several aspects to that, and I am going to touch on three. First is the straightforward fact that there is variation in attainment for disadvantaged children both within and between regions, and that seems to happen differentially for primary and secondary phases. Secondly, there is the perhaps counterintuitive problem of being born poor into a relatively wealthy area. Thirdly, there is my main focus: outperformance at the top end and the increasing exceptionalism of London.

I will talk first about the overall variation within and between regions, although we must be careful when we talk about regions because, in a sense, they are not really anything—they are just administrative constructs; geographical niceties. Nevertheless, there does seem to be some sort of regional pattern. If we look at the proportion of children who get five or more GCSEs at grade C or above, including English and maths, we see that there is significant variation between regions. That variation is more marked, however, in children eligible for free school meals. On both counts—children overall and disadvantaged children—London tops the table. Versus the rest, it is ahead by 3% overall and by 16% for disadvantaged children specifically.

There are also variations between individual areas within regions. In a number of local authorities, more than 55% of children eligible for free school meals achieve five or more GCSEs at grade C or above: Newham, Redbridge, Lambeth, Tower Hamlets, Westminster, and Kensington and Chelsea. At the other end of the scale, in 14 authorities, fewer than 25% of children achieve that benchmark. Those areas are liberally scattered throughout the country—north, south, east and west. The important point is that all the top performers are in London and the poorest performers are all over the place.

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

I apologise to my hon. Friend for missing the start of his speech. Our challenge in North Yorkshire is that the overall performance of schools is good, but only 33.9% of children eligible for free school meals achieve five GCSEs at grade C or above.

[Damian Hinds]

Indeed; there are issues of that nature—a wide variation—throughout the country. Sometimes it makes sense to look at this issue at the regional level—for my hon. Friend, that would be Yorkshire and the Humber—and in other cases it makes sense to look at individual local authorities. Sometimes we must actually drill down lower still.

In general and on average, if a child lives in a richer area they are more likely to go to a school judged good or outstanding by Ofsted than if they live in a poorer area. Ofsted’s report last year, “Unseen children”, highlights that point well. The report shows that the gap between the proportion of schools judged good or outstanding for leadership and management in the poorest parts relative to the wealthiest parts is biggest for primary schools in the south-east and east midlands, and biggest for secondary schools in Yorkshire and the Humber and the north-east. It is interesting that the report highlights how different areas have the biggest gap for primary and secondary schools. The area with the starkest difference is probably the north-east, which has the biggest gap of all between the proportion of secondary schools judged good or outstanding for leadership and management, whereas for primary schools it is the top performer in the entire country. The blended average of those two gaps ends up being quite good.

Another problem is the fact that within otherwise wealthy areas there is a danger that poorer children can be overlooked. I said at the start of my speech that it is counterintuitive in many ways, but it seems to be true—at least to an extent—at both school and area level, that a child from a disadvantaged background is best off being in a place where there are either hardly any other children in that category or loads of them. They are worse off if they are somewhere in the middle range.

Ofsted has just started publishing regional-level reports, and of the south-east it said that

“the poor performance of small numbers of pupils entitled to free school meals is lost in the midst of otherwise strong performance by 16-year-olds.”

Of course, there are exceptions, and I was delighted to note that one of the schools singled out in that report as doing particularly well in that regard was Bohunt school in my constituency, which the Secretary of State visited a couple of weeks ago. Nevertheless, there is a problem in the south-east overall with children eligible for free school meals. The report says that

“pupils eligible for free school meals in the South East attain at levels below the national figure for similar pupils in every single local authority in the region.”

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on securing this debate. I realise that education is a devolved matter for Northern Ireland, but he is painting an image mirrored across all regions of the United Kingdom. North and west Belfast are the worst areas we have in Northern Ireland for numbers of children eligible for free school meals, perhaps because of the troubles. Does the hon. Gentleman agree with me that every child, whatever their background, deserves a proper education?

[Damian Hinds]

The hon. Gentleman is of course quite right. He will understand that I cannot comment in detail on the figures for Belfast, but I agree with his sentiment. In fact, one could argue that the worse off and more difficult a child’s background, the greater the moral imperative for politicians to ensure that a good school is made available.

A number of questions arise on within-school underperformance. How should the pupil premium be used? If a school has relatively small numbers of disadvantaged children, what is the best way to use pupil premium moneys to benefit them? We know that, in general, whole school improvement programmes tend to disproportionately benefit the better off—although they may be beneficial overall, they are less likely to be beneficial in closing the gap. When a school has smaller numbers of disadvantaged children, specific, targeted interventions become quite difficult. Interventions are presumably not targeted at pupils because they are entitled to free school meals—that would be both difficult and rather divisive, and not something we would want.

[Ian Mearns (Gateshead) (Lab)]

Therein lies the problem. Schools are entitled to a pupil premium for children receiving free school meals. Therefore, there is a problem in some poorer neighbourhoods. Because of housing tenure and type, lots of youngsters who are not entitled to the pupil premium or free school meals but who are still in relatively low-income and deprived households live cheek by jowl with kids who do generate the pupil premium, and they often have as many educational problems as the youngsters entitled to funding.

[Damian Hinds]

The hon. Gentleman raises a good point. There are a number of aspects to what he says. One is that free school meals entitlement is by definition a cliff-edge measure—children are either entitled or they are not—so, as he points out, crossing that line does not actually change whether a child is advantaged rather than disadvantaged. There can be a disconnect. Being on free school meals is not an indication per se that a pupil will not do well at school. The converse of what he says is that, as we know, lots of children entitled to free school meals do stunningly well at school.

[Ian Mearns]

On that point, I am a member of the Select Committee on Education. We visited the Netherlands last year, where the system considers the prior educational attainment of the parents in determining whether a child should attract additional funding in school. That is not perfect, any more than free school meals, but it seems to have some inherent sense behind it, because it is about the richness of the cultural experience of the child’s home life as well as the richness of the education that they get in school.

[Damian Hinds]

I will return to the educational attainment of parents when I discuss London specifically. The hon. Gentleman touches on something that I was about to mention. Entitlement to free schools and other measures of disadvantage are often correlated with certain clear indicators that children are less likely to do well at school, particularly those involving the home learning environment—whether there are books at home and so on.

Clearly, at system level, it makes sense to use the gap between free school meal recipients and others to chart our progress. Although entitlement to free school meals is not a perfect measure, it is the best we have in terms of accuracy. However, now that we have the new progress measure, which tracks the progress of each attainment group at entry and as they go through school, I wonder whether, particularly in secondary school, it would make more sense to use that as the primary measure in closing the gap, so that when students arrive at secondary school, whatever their prior attainment, we ensure that all schools are stretching all children to the best of their abilities.

I have numerous questions about between-school and between-area underperformance. The most obvious is how to get the best leaders and leadership support into the places where they are needed most, and how to incentivise great teachers into the areas that need them most. As I mentioned earlier, there is a vexing pattern. Certain areas are good either at primary or secondary, but not both simultaneously. Sorry; I should not say that they are not good, but hon. Members know what I mean. The proportion of schools judged good or outstanding is in primary or secondary, but not both.

I am pleased that this gives me an opportunity to say that within the south-east, Hampshire is an exception. I pay tribute to John Coughlan and his team. Hampshire is rated relatively well in both primary and secondary education. Overall, if all regions could reach their own internal benchmark—in other words, whether they are outstanding at the primary or secondary level, if they could get the other phase of education up to the same level—that would mean many thousands more pupils were attending a good or outstanding school.

Turning to London, I have already mentioned the gap at GCSE level between London and the rest of the country, and how London outperforms considerably when it comes to poorer children. In fact, it starts a lot earlier than GCSEs, and the effect persists a long time after age 16. It seems that in London, even before school begins, poorer children outperform children in the rest of the country at the early years foundation stage, to the extent that one can talk about a three-year-old outperforming. They pull away as they progress to infant and junior school, and by the time they reach age 15 and 16, they are almost 50% more likely than children outside London to get five or more good GCSEs, they are twice as likely as disadvantaged children elsewhere to go to university and, depending on which numbers one looks at, they are perhaps up to four times as likely to end up going to a Russell Group university, although the numbers are still small—one in 25 rather than one in 100.

Why is that? There was a thing called the London challenge. Whenever the outperformance of London comes up, the most obvious thing to say is, “London does well because of the London challenge.” Is that true? I have absolutely no doubt that the London challenge has been beneficial, and it is also true that there is a fuzzy boundary around it. In the period from about 2000 until now, many initiatives have either happened first in London before spreading elsewhere or been specific to London. They may or may not have been merchandised as part of the London challenge, but in a broader sense it could be said that they were.

But—it is an important “but”—there are a number of reasons to believe that the London challenge is not the sole or primary cause of London’s educational outperformance. The first and most important reason is that the year in which London’s GCSE performance caught up with the rest of the country was 2003, the year when the London challenge started. By definition, all the kids who did their GCSEs in 2003 had spent their entire life not in the London challenge. Politically, 2003 was a good year to start a programme focused on making London better, because from there everything was going up. The second reason is that after the initial London challenge, when it was extended to Greater Manchester and the black country, it did not translate as well. There were some improvements in performance, but not nearly on the same scale as in London.

[Ian Mearns]

The hon. Gentleman is right about the starting date for the London challenge, but the London challenge came on the back of other initiatives instigated by the previous Government, such as excellence in cities. Those programmes also occurred in other parts of the country, but they were not followed by the London challenge.

[Damian Hinds]

The hon. Gentleman is quite right. I acknowledged that there were a number of initiatives before 2003, and others that were not necessarily branded as the London challenge, but could more broadly be said to have been part of it. He is right that a number of things were done elsewhere, but the simple fact is that after all of that, and with the ability to copy from London anything that anyone would want to copy, we still have a 16 percentage point gap in GCSE performance among disadvantaged pupils between those who happen to have been born in London and those who happen to have been born in the rest of the country.

[Mr David Ward (Bradford East) (LD)]

I am in the awkward position of trying to avoid questions to prompt the Minister that he will no doubt be asked at tomorrow’s meeting as well. Can I plant something for the hon. Member for East Hampshire (Damian Hinds) to consider as he goes through his analysis of the situation? Where does a national strategy as a remedy fit in with the general direction of travel towards greater autonomy within schools?

[Damian Hinds]

There is always a balance. I suppose it partly depends on one’s political tradition, where one comes from and what one tends to think works. We could say that the London challenge had a bit of both. On one hand, one area, Greater London, was doing its own thing, and within that, there was plenty of innovation in individual schools, which were encouraged to innovate, but on the other, it had system-wide leadership. There is always a tension and a balance.

The third reason to doubt that the London challenge was the sole or primary cause of the improvements is that the difference between children on free school meals and others was so marked, and the London challenge was not solely about children on free school meals or poorer children. The fourth reason is that it seems that London’s poorer pupils may already be ahead before school has even begun. There are so many other things that are different about London that we owe it to ourselves to at least examine them and consider what role they may have played.

[Ian Mearns]

The hon. Gentleman has not yet covered one factor that I am convinced has an impact. The Greater London area employment market is such that it is much easier to have achievable employment ambition and aspiration than it is in other parts of the country. In areas such as the north-east, where unemployment has continued to rise and youth unemployment is still growing, ambition and aspiration are difficult for many, because they do not see light at the end of the tunnel.

[Damian Hinds]

Can we hold that point? I will come back to it a wee bit later.

If the difference is not the London challenge alone—I totally acknowledge the beneficial effects of many of the programmes within it—is it simply more money? Of course, whenever we mention London’s outperformance, people say, “Oh, they get more money.” Yes, London schools get more money, but when we adjust that for deprivation, we discover that the difference is not quite as big as it at first appeared. In other words, when comparing the high number of free school meals in London with those in the rest of the country, the funding premium is not quite as large, although costs are higher in London, which is why there has historically been higher funding.

If we were to say it is just about having more money, we would have to say what more money has bought. Since I started working on this subject, people have told me that class sizes in London are smaller, but they are not. Bizarrely, they are slightly bigger than in the rest of the country, except at key stage 3. There is not a higher proportion of teaching assistants. Teachers are paid more, as are people in lots of occupations and professions in London, because of London weighting, but the difference in pay for the average London teacher versus the average teacher elsewhere is less than advertised. According to the ads, someone can earn up to 25% more as a newly qualified teacher in London, but the actual difference in take-home pay is on average smaller, because London teachers are younger and further down the pay scales.

What is different? I shall come to some of the things that the hon. Member for Gateshead mentioned. First, all sorts of things about the city are different compared with other parts of the country. The employment market is different, as he rightly says, which manifests itself in different ways. There are differential rates of unemployment, and youth unemployment in London remains concerning. In addition, there is the visibility of opportunities. If someone is travelling on buses and underground trains, they will be interacting with all the adverts, the people and all the rest of it. There is the cultural capital of the city—the museums and art galleries—and the pull factor of more university places. There are more university places per head of population in London than in other cities, and most people travel only a short distance from home to go to university. Everything is nearer. That helps with school choice—children go across local authority boundaries to go to school—and it helps schools wishing to co-operate with one another.

[Kevin Brennan (Cardiff West) (Lab)]

I have read the report by the hon. Gentleman’s all-party group on social mobility. It is a fascinating, interesting and detailed piece of work, and I congratulate him on it. However, all the factors that he has mentioned have not changed in the past 15 years. London is no further away from anywhere else than it was 15 years ago. I presume he will go on to explain what he thinks has changed.

[Damian Hinds]

The shadow Minister is such a nice man. He has read “Capital Mobility”, the report by the all-party group. I did not realise he had also read the sheet of paper in front of me, which states that many of those things were also true when London was the problem child of British education, before it became the poster child. Although such factors are relevant, we cannot ascribe the difference in London performance specifically to them.

The population make-up of London is one massive change and a massive difference. London is diverse on a scale unknown in the rest of the United Kingdom—indeed, unknown in most of the rest of the world. London’s state secondary schools are now 32% white British by ethnic origin, and the statistic for kids just starting secondary school is extraordinary: 48% do not have English as their mother tongue. An even more surprising statistic is that children with English as an additional language come very close in performance by GCSEs to children who have English as their mother tongue, and in London they beat them—in GCSEs in London, children who do not speak English as their mother tongue very slightly outperform those who do. That raises difficult questions.

I do not want to pre-empt tomorrow’s Committee meeting, at which, sadly, I will not be able to join my Opposition compadres, but I know the Minister will be appearing before the Committee to talk about the performance of white working class pupils. It is true that all ethnic groups do better in London than they do outside—spectacularly so in the case of children of Pakistani origin. There is a 14% gap between the performance of pupils of Pakistani origin in London versus the rest of the country.

There are other relevant differences in London, some of which might be driven by differences and diversity in ethnicity and religion, such as larger families and older, better educated mothers. Surprisingly, it is estimated that parents in London are slightly more likely to be married than parents outside London. It is slightly odd that we can only estimate that, but that is another question altogether. There are more families with a parent at home. There is less use of formal child care, slightly lower participation in free school provision, and slightly more use of tutors. One would normally associate such things with lower educational attainment, particularly in terms of early years participation, which again raises important, difficult and challenging questions.

What is different and what might we be able to have an impact on, given that we cannot have much impact on the composition of the population? London teachers are more diverse, more likely to have been educated abroad, more likely to be full time, and, before somebody says it, a bit less likely to have qualified teacher status—given the sorts of numbers we are talking about, I do not think that that is particularly relevant.

Teachers are also a little less likely to be on upper pay scales or the advanced skill scale and more likely to be on the main pay scales. Within the London challenge, there were various recruitment initiatives, which included addressing housing problems. One of those initiatives was Teach First. Opinions vary and sometimes teachers get wound up if we bang on too much about Teach First, but Teach First teachers can have a positive, disruptive impact as they come into schools, observe existing teachers, bring ideas of their own, swap things around and so on. Some 48% of Teach First teachers are still in London, and I think there is an opportunity to spread that scheme more widely.

There was a big focus on leadership in the London challenge. It was about supporting leaders in schools and ensuring that they were paid properly. As an aside, primary schools in London are on average a lot bigger than primary schools outside, and I wonder whether that means it is possible to afford more by way of leadership. Alongside that support and remuneration was intense scrutiny and what people close to the London challenge operation would describe as verging on ruthlessness to ensure that schools were being run absolutely as well as they could be. That was all facilitated by an intense use of data and what are called families of schools, whereby someone could compare their school to others in similar circumstances, so they could see what was really possible.

London also over-indexed greatly on sponsored academies. Compared with the rest of the country, London is much more likely to have sponsored academies. That relatively small number of schools had a disproportionately larger impact on the overall performance of London as a whole, because the results tended to go from very low to very good.

Where does all that leave us? I should like to put a number of things to the Minister. I do not pretend for a moment to have all the answers, or even most of them, but some things are obvious challenges. First, on attracting the best teachers, we know that most people stay in their home region. That puts a premium on marketing intensely the teaching profession to high performers within the areas and regions where they are most needed, at school-leaver level and university graduate level.

Secondly, there has to be a big opportunity for Teach First outside London. That is happening, or starting to happen, already. There is now a focus on Bournemouth, which is welcome. We need to bear in mind why 48% of Teach First teachers were in London. One reason is that the programme started there. Another is that, of course, young people like to move to London; that cannot be changed very much. Another big factor is the network effect: knowing that other new graduates are doing the same programme in schools relatively nearby and so having social and support networks. Some co-ordinated, geographically-focused expansion of Teach First would be smart.

There are always questions in some schools about what the pupil premium can be used for. What is the Minister’s attitude to schools in heavily disadvantaged areas using it to pay teachers more, to attract the best? Alongside attracting the best teachers, there is also the matter of getting top leadership to the areas where it is needed most. In that regard, I look to the growth of initiatives such as Future Leaders. I wonder whether the incentives are enough. Can those be looked at, to ensure that they are sufficient and that they persuade people to go where they are most needed?

I turn to geographical patterns. There can sometimes be an over-supply of national education leaders in areas away from schools where their support would be most beneficial. I wonder whether it is possible to improve that situation by using technology, for example.

[Julian Smith]

On attracting talent, does my hon. Friend agree that, as well as the Government’s coming up with initiatives, we need to encourage schools and local authorities to cast the net wider? Again, coming back to North Yorkshire, it is a challenge to get local authority education department leaders or heads from outside the region. We need to get the schools and council to work harder to achieve that.

[Damian Hinds]

My hon. Friend is right. An intense marketing effort, leaving no stone unturned in the search for talent, is absolutely essential.

Having mentioned people, let me speak more broadly. We need to be impatient on behalf of the places where the academies revolution has not happened. In London, we have seen what it can do. There needs, through whatever means, to be a lot more push on that issue in parts of the country where the change has not happened.

There are some specifics from the London challenge. Are we using data enough outside London—particularly in identifying families of schools, so that each school can compare itself with others? Although the term “sub-regional strategies” always gives me a bit of a rash, I wonder about the role of system-wide leadership. When I am talking to teachers and head teachers about the London challenge, they always talk about the person who led it and his assistant and immediate team. I wonder about the balance that must be struck between individual school autonomy, which I am a great supporter of, and having a sense of shared ownership and system leadership.

I started by commending the Government’s twin approach to education, in respect of raising overall attainment and narrowing the gap. It is right that we do both; it is no good equalising performance around some sort of acceptable average. A lot has been done, but the gap is still wide. There is much more to do in our quest for the combination of social justice and economic efficiency which is social mobility or opportunity for all.

There is a lot going for us in that quest. We have unprecedented amounts of data at our fingertips as well as international benchmarking and case studies. Schools have been set free to innovate, and we have the Early Intervention Foundation and the Education Endowment Foundation. There is certainly the political will from the Minister and his colleagues. However, quite a lot of questions remain. As I said, I certainly do not have all the answers and I am concerned that some of the answers do not yet exist. However, we need to keep asking questions, including about how one area of the country can learn from another. That is the focus of this debate, which I hope will play a small but useful role in that quest.

10:03

[Alex Cunningham (Stockton North) (Lab)]

It is a pleasure to serve under your chairmanship again, Mr Caton.

I congratulate the hon. Member for East Hampshire (Damian Hinds) on securing this debate. I am delighted that he continues his interest in education, although I suspect he still laments his retirement from the Education Committee. We probably agree about more things than we disagree about, and there are probably more things that unite us than divide us.

We have already heard about the importance of education. It is undeniably important, whether as a route into work, if work exists, as a means of attaining personal potential, as a mode to better understanding of the world we live in or simply as a quench for a thirst for knowledge. It is—or at least should be—a powerful tool for young people of all ages, driving social mobility and providing the foundations on which our country’s future sits.

It is crucial that we do everything in our power to ensure that our young people have unrestricted access to education of the highest quality, to safeguard the notion of equality of opportunity. Sadly, that opportunity still depends on where people were born, to whom they were born, their ethnicity, their level of affluence, what the local offer is and, of course, as my hon. Friend the Member for Gateshead (Ian Mearns) said, what their parents’ prior attainment was.

In its recent report, the all-party group on social mobility recognised a series of seven key truths on social mobility, related to education and the associated opportunities and policy challenges. Although countless factors impact on social mobility, the report identifies quality of teaching as

“the most important controllable factor”.

We are aware that the education systems we would deem to be the most successful are those that promote success at all levels for all students. We also appreciate that levels of ability are not uniform across schools, let alone across entire regions. We recognise the challenges that that issue brings; the hon. Member for East Hampshire outlined it in considerable detail. Some degree of variation in outcomes is to be expected. However, the Ofsted report of 2012-13 identified the north-east and the Yorkshire and the Humber region as having an “unacceptably large variation” in performance. I will probably be a bit parochial or regional here.

Although the primary sector in the north-east is among the best in the country, Yorkshire and the Humber has one of the highest proportions nationally of primary schools rated as being less than good. In secondary education, more than 90% of pupils in York attend a secondary school that is good or outstanding, while in Barnsley, only 40 or so miles away, that falls to just 20%.

[Julian Smith]

In analysing such issues in Yorkshire, does the hon. Gentleman feel that councils of whatever political hue have been coasting for too many years and need to get real about what they have to do, to get the performance of their schools up, and markedly?

[Alex Cunningham]

I do agree that there are examples of local authorities across the country that have not been doing the job of driving up standards that we would have hoped for. That varies throughout the country. However, in local authority areas there are still excellent schools, whether they have converted to academy status or they remain as local authority schools. It is the ones that are not doing well that the local authorities and others need to turn their attentions to.

Across the country, there are nine local authority areas, predominantly in London, where every secondary school student attends a good or outstanding institution. Yet in 13 local authority areas a majority of secondary students attend a school that is not good or outstanding. Although there are areas of high performance across the regions, they are unfortunately far from the norm.

Ofsted’s report puts it bluntly, saying that secondary schools in the north-east and Yorkshire and the Humber are among the worst in the country. That is not an observation I relish, as a north-east Member of Parliament, but it is one that we cannot afford to hide from. Those results are symptomatic of an education system that is failing many of our young people, but it is not all about the system; there is something else.

As has already been said, the Education Committee is currently examining the underachievement of white working-class children, many of whom come from impoverished working and non-working families living in areas where jobs are hard to come by and, as is the case in north-east England, regions where unemployment continues to go up. We are looking for answers to that underachievement, and we want to understand the variation across the country. Perhaps the answer is back in early years, as Governments appear to have agreed over the years.

The previous Labour Government did much for early years provision. I witnessed that in the north-east region, where they did more than ever to give children a better chance at the start of their education. However, we are still not reaching the children we need to reach, and the loss of provision is a serious concern. It is not wholly surprising that young people in the north-east and Yorkshire and the Humber are less likely to attain results above the national level in the key indicator of five good GCSEs, including English and mathematics, than young people from almost anywhere else in the country.

As I said, we have successes in the north-east. The Secretary of State for Education, in his evidence to the Education Committee last month, talked about Sunderland, Gateshead and other pockets across the region where there have been improvements. In my own backyard, the North Shore academy in my constituency has improved considerably in the past few years. The school was developed under Labour and delivered under the current Government.

Poverty is a strong and powerful player. The north-east has the highest proportion of pupils eligible for free school meals outside London, and the gap in attainment between those eligible for free school meals and those who are not is wider than the national average in primary schools. Worse still, the gap widens by the time pupils leave secondary school.

Her Majesty’s chief inspector of education, children’s services and skills may be right to assert that children in England now have the best chance they have ever had of attending a good school, but that broad remark fails to acknowledge the dramatic regional variations that are turning education into that most horrible of clichés, a postcode lottery. Indeed, Her Majesty’s chief inspector accepted as much when he described our school system as

“a tale of two nations.”

He said that the system is

“divided into lucky and unlucky children.”

“Luck” is not a word I work with, but that is what he said. He talked of an

“educational lottery that consigns some children to substandard schools and favours others”.

Her Majesty’s chief inspector is clearly right to state that too many children in our country are unlucky, but too many children from similar backgrounds and with similar abilities end up with widely different prospects because the quality of their education is not consistently good—in other words, because they grew up in different regions and attended different schools with different opportunities.

As my hon. Friend the Member for Gateshead outlined, the north-south divide means that people in the south can aspire to tremendous things, but there is not so much aspiration in the north and other regions. That is not fair. We must develop a system that minimises regional and local variations and restores fairness to our education system, ensuring that it delivers the skills and knowledge that the young people of today will need to succeed tomorrow.

We must deliver not only to some young people but to all young people. A crucial element of attaining that goal is to ensure that our teachers—their teachers—are fully equipped to do the job. The path to educational attainment, a path that every parent wants their children to follow, is guided by teachers. Nobody, apart from family, is more important in children’s lives. It is clear to me that the key to securing improved attainment for all, irrespective of the geographical fortune of social circumstance, lies in ensuring that teachers are trained to the highest standards to allow the cycle of progress to continue.

[Ian Mearns]

Outlining the importance of teachers is crucial to this debate because, for too many youngsters, the school day is an oasis of calm in an otherwise chaotic life. It is all too sad that we are asking teachers to put right an awful lot that is wrong for our youngsters.

[Alex Cunningham]

We certainly do, and I have seen some tremendous examples in my constituency and across the Stockton borough of teachers picking up a lot of education. Young children are arriving in nursery school still not knowing how to use a knife and fork, how to interact properly with children or even how to have a proper conversation. We rely on teachers tremendously, which is all the more reason why outreach through children’s centres and other organisations is so vital to helping parents and the wider family to help children to develop.

We need good teachers at all levels and in every neighbourhood, each equipped to deliver a modern education based on an up-to-date understanding of developments in teaching practice, specific subject knowledge and the latest educational tools and technology. The previous Labour Government responded to the challenge of failing education with huge investment in early years and across the primary and secondary sectors. The London challenge delivered great results, but that achievement was not reflected everywhere despite unprecedented resources in our schools.

The current Government are seeing some positive results from the pupil premium, but again the success is far from universal. I have no doubt that the social factors that my hon. Friend the Member for Gateshead describes, as well as the quality of education, have to be addressed to build the desire to learn and the desire of all parents to have high expectations of their children so that they do well in a society that offers equal opportunity for good-quality jobs and careers that can ensure they have a life to enjoy, rather than simply an existence.

10:16

[Kevin Brennan (Cardiff West) (Lab)]

I congratulate the hon. Member for East Hampshire (Damian Hinds) on securing this debate, which has been excellent so far, and on his thoughtful and, as ever, intelligent contribution. I once again congratulate him on the report, which I have read and is worthy of reading. I have also read his blog, which is a little more partisan, but I will forgive him. One has to take such things into account. Heaven forfend that we should be partisan.

I visited Bohunt school in the hon. Gentleman’s constituency last year before the Secretary of State for Education’s visit, and it is an excellent school that has a healthy disregard for Government initiatives, including, I hasten to add, the current Government’s initiatives such as the EBacc. The school has a progressive approach to the curriculum, which I am glad the hon. Gentleman supports. Perhaps that is why it is such a good school.

I also congratulate my hon. Friend the Member for Stockton North (Alex Cunningham) on his extremely thoughtful contribution. I look forward to following the proceedings of tomorrow’s Education Committee, before which the Minister will make one of his glittering appearances.

My hon. Friend the Member for Stockton North said that Ofsted has talked about young people being lucky or unlucky, which triggered a thought, if the Chamber will indulge me, about my own background. I feel extremely lucky, because both my parents left school at 14, which was not unusual for the working class in my parents’ era. My father was an immigrant from the west of Ireland, although that part of Ireland was still part of the United Kingdom when he was born, and my mother was the daughter and sister of coal miners in the south Wales valleys. They both left school at 14, but I feel lucky because they both cared about education and thought that it was an extremely important opportunity. My father was taken out of school by his father to go on to the farm at a time when his teacher wanted him to stay on to get more education, so I feel lucky generationally.

Like many in this Chamber, I had some inspirational teachers, but I went to a school from which no one had ever been to Oxford or Cambridge. It was hoped that I might get into university, so when I did my summer job, which my father secured for me—patronage is everywhere—at Llanwern steelworks and phoned up to get my A-level results, it was much to my surprise that I had done so well. I went back to take the sandwiches from the canteen to the gang, and one of the men with whom I was working said, “You ought to go to Oxford.” That was the first time anyone had ever said that to me. I had completed my A-levels and my schooling and was working at Llanwern steelworks, and he was the first person who had ever suggested to me that going to Oxford might be possible.

I feel passionately about this subject, as do many colleagues. I welcome the commitment from Members from all parts of the House to trying to ensure that people can fulfil their potential, and that poverty of aspiration is overcome as much as the problems resulting from the economic consequences of poverty. Not that I was from a poor background, I hasten to add; my parents were fortunate enough to be in employment for pretty much all their working lives.

The subject is extremely important. In a sense, the debate is about regional disparities, rather than class or ethnicity, although those factors obviously play into it a great deal, as the hon. Member for East Hampshire said. Those disparities also play into the Select Committee’s report and its inquiry into the performance of white working-class boys. It is worth considering for a moment why white working-class boys are not doing as well as they should in our education system. Perhaps it is a misnomer to talk about white working-class boys in this context, because it is often as much about the parents’ background and their low educational attainment as it is about income. It is also about worklessness and such factors within families.

The hon. Gentleman talked about how the migrant factor plays into this issue, particularly in London. Perhaps many such families look at the school system with fresh eyes and high hopes compared with parents who had a bad experience of the school system. They might have gone through in a low set and absorbed a feeling that school was not valuable to them or that they were not valued by school. They might then have transmitted that on to their children, which would be a factor. I think we can all agree that parents’ behaviours and attitudes matter in this debate. One thing we should consider is how we best influence parents and the role that the Government can have in raising parents’ aspirations and encouraging good parenting on education. We have to consider policy on parents and not just policy within the four walls of the school.

The issue of geography, which is essentially what the debate is about, and the issue in relation to London have been raised, and I will come back to them later.

[Mr Ward]

I suspect that the hon. Gentleman will come on to this, but it is a bit like we are casting the fly into the river; we keep coming near to this thing that bites for the fly, but then it disappears again, and that thing is the quality of teaching. We have heard about aspirations, parental involvement and career advice and so on, but we know about those and we keep coming back to them. The hon. Member for East Hampshire (Damian Hinds) spoke about the quality of leadership and management and the Ofsted reports about certain schools in certain areas, and we keep coming back to this idea of how we get the very best teachers into the most difficult schools. How do we deal with that conundrum when someone is deciding where they want to teach or where they want to be a head teacher?

[Kevin Brennan]

I will come on to that. I was about to say that one of the key challenges is on how we motivate people to go into areas that are struggling with recruiting and retaining highly effective teachers. How do we spread out excellent teachers to ensure that they are available to schools across the country? I will come back to that later.

The previous Government had policies on this issue and made narrowing the gap a priority, as this Government have. There is evidence that the previous Government were successful in narrowing the gap. The Institute for Public Policy Research report “A Long Division” contains some helpful information that illustrates that the attainment gap between the richest and poorest students narrowed between 2003 and 2011. We have to monitor the gap closely to ensure that it does not widen once again. The report shows that schools play a part in that, as does excellent teaching. Having good and outstanding schools is an important and necessary method of ensuring that we close the gap, although it is not sufficient in itself. We need to think more broadly about policies.

Many hon. Members will be familiar with the Sutton Trust report, “The Reading Gap”, from July 2013. It showed that boys aged 15 from disadvantaged backgrounds are some two and a half years behind their counterparts from the most advantaged backgrounds. That shows the problem of the attainment gap. Similarly, a Sutton Trust report from September 2011 highlighted the point that the hon. Member for Bradford East (Mr Ward) just made, namely the importance of high quality teaching. The executive summary of that report said:

“The effects of high-quality teaching are especially significant for pupils from disadvantaged backgrounds: over a school year, these pupils gain 1.5 years’ worth of learning with very effective teachers, compared with 0.5 years with poorly performing teachers. In other words, for poor pupils the difference between a good teacher and a bad teacher is a whole year’s learning.”

That shows the significance of raising teaching standards and ensuring that they stay high.

Teacher morale matters. I said that in a recent debate in the House, although the Minister was unable to attend on that occasion. Digging down into the detail of the programme for international student assessment report and the OECD reports, they clearly show that in systems where teacher morale is high and teachers feel valued—it is not necessarily where they are the best paid—pupils perform better. The Sutton Trust has shown that it is particularly important for disadvantaged pupils that we have high performing teachers. Will the Minister commit to publishing the data collected during the 2013 teacher workload survey? I and others have asked the Secretary of State to publish that on many occasions. We need to know what happens, because teacher morale matters to pupil outcomes, particularly those from the most disadvantaged backgrounds.

[Mr Ward]

In terms of the earlier discussion on the challenge in London, does the hon. Gentleman feel that there is a Hawthorne effect in London? Teaching in London is seen to be special and teachers are held in high esteem compared with many other parts of the country, where the teaching profession feels undervalued.

[Kevin Brennan]

That might well be a factor. There have been many initiatives in London and a real attempt to attract good quality graduates into the profession through a number of different routes, including Teach First, as the hon. Member for East Hampshire mentioned in his remarks. I have not seen data to show that the public regard teachers more highly in London than in other parts of the country, but that might be a factor.

Returning to the point I was making, on 13 January—I have asked this question subsequently, too—I asked the Minister

“when he intends to publish the findings of the most recent Teacher Workload Survey.”

Bear in mind that the survey was undertaken in March 2013, almost 12 months ago. The Minister’s answer was:

“Officials are currently analysing the data collected during the 2013 Teacher Workload Survey.”—[Official Report, 13 January 2014; Vol. 573, c. 360W.]

Now, when one asks a parliamentary question, one never expects an answer—certainly not from the Department for Education. The relevant word in my question was “when”, but there was no reference in the answer to when the Minister intends to publish the report—not even to “shortly”, “soon” or other civil service terms. Nor was there any reference to “in the autumn”—a term that usually extends to 31 December.

[Julian Smith]

The shadow Minister seems to be alluding to the suggestion that the report contains some sort of smoking gun that teachers are overworked or unhappy. Would it not be better to focus on what teachers need to do, which is to improve markedly, and on having a massive step change in our educational performance? Worrying about what happened last year or whether teachers are feeling a bit stressed is not the goal. We need to get our PISA rankings up, and that should be the priority.

[Kevin Brennan]

I do not know whether the report contains a smoking gun; I have no idea what it contains. It cannot contain a smoking gun, because the gun has not been fired, despite us waiting a year to hear what the survey says. If the hon. Gentleman would care to read in detail the OECD reports on the PISA rankings, he will see that they make the point that teacher morale matters, and that it is a key component of ensuring that our system produces good quality outcomes and, therefore, a component of raising our performance in the PISA tables.

[Ian Mearns]

As a member of the Select Committee on Education, I would find it useful if the Department published the findings of the teacher workload survey. It would be useful for everyone in the field to see what those findings are.

Also, instead of focusing on PISA rankings, it is much more important for us to focus on educational outcomes for children. That will have a knock-on effect on PISA rankings, but the matter is about educational outcomes for individual children.

[Kevin Brennan]

My hon. Friend is absolutely correct.

I appreciate that the civil service’s work load may be great. I understand that in the most recent survey of civil servants in the Department, many of them expressed concern about how they are being treated. However, a year is a reasonable period, after a survey has been completed, to publish it. In this day and age, the Department does not need to analyse the data; it should just publish them. Others, including the Education Committee, the hon. Member for East Hampshire, who is thorough in his research, as we have seen today, and many others in the blogosphere so loved by the Secretary of State for Education, will tell us what they conclude the survey to say. Will the Minister commit today to publish the survey, in the interest of letting us know what is happening with teachers; whether the Government are getting it right in doing what they said they wanted to do in their White Paper a few years ago, which is to give proper status to the importance of teaching; and whether the work force are well motivated by the Government’s policies? I hope that he will tell us in his conclusion when he will publish the report, with the emphasis on “when”.

The London factor was mentioned a lot in this debate. There is considerable evidence of the impact of the London challenge. I accept what the hon. Member for East Hampshire said in his remarks—that that is not the only factor we should consider regarding the performance of London’s schools, which have outperformed schools in other parts of the country and are the most improved schools in the country—but the London challenge is undoubtedly an important part of the London factor.

An Ofsted report published in 2010 found the London challenge to be a great success. The report attributed that to a number of factors:

“Clear, consistent leadership…Improvement programmes which matched strategies to the needs of individual schools…Strategic deployment of support from the London Leadership Strategy…Successful heads mentoring head teachers in target schools…Sensitive matching of partners under the leadership of LC advisers…Support, ‘without strings attached and without conflicts of interest’, from local authorities…external consultants or teaching schools aimed at raising the quality of teaching and learning…Collaboration between schools and grouping schools in families…Continuing development programmes for teachers…Teachers being committed to all London children not just those in their own school…The development of robust tracking systems to monitor children’s progress.”

Those kinds of factors are the ones we should be seeking to replicate across the country. I have a concern—I put it no more strongly than that, in this more academic forum this morning—that elements of the Government’s approach to education policy are militating against the ability to achieve the 10 key factors that were identified in the Ofsted report.

[Damian Hinds]

Just out of interest—this is not meant to be a political challenge—regarding all the things the hon. Gentleman mentioned that could be replicated, the Labour Government tried to do that in 2008 in the black country and in Manchester. I am interested in his analysis of why there was no read-across.

[Kevin Brennan]

I think there was some read-across, particularly in Manchester, where it worked better than elsewhere. I do not think the policy was given enough time. This Government were wrong to abandon that approach when they came in, in favour of a wholesale structural and cultural revolution, rather than looking at those key factors and attempting more effectively to replicate them. The system has been endangered by wholesale atomisation—the creation of this kind of Govian archipelago of schools across the country that are not well connected.

What the London challenge tells us—I sense sometimes that the Schools Minister may have some sympathy with this point—is that, while autonomy at school level is important, it should be provided within a collaborative system and a culture of collaboration, with highly qualified and well motivated professionals working together in the interests of all the children in that particular area. That was the lesson from the Ofsted report, which should be returned to and should become our mantra in trying to improve schools across the country. We should not simply rely on the idea that changing the sign at the front of the school and introducing academies and free schools will solve all our problems. It will not, and any intelligent analysis will show that.

We accept that we now have a variety of different types of schools, but let us re-introduce into the system the values of the London challenge that have been shown to be valuable in raising standards. That is not to say that everything from London is replicable across the country, due to many of the factors mentioned by the hon. Member for East Hampshire, but it is clear that they are key features of the London challenge that worked, and features of school systems in other parts of the world that show them to be a success.

I am conscious of time and I want to leave the Minister with time to respond, so I will briefly say a few more things. We have not heard much today about the importance of early years. I am not going to speak extensively about what the previous Government did on that; it has already been mentioned by other colleagues. We welcome and support—in fact, we proposed this—the extension of early years to two-year-olds. However, we need to do much more on that, and we need to have a much better offer for parents, particularly in relation to child care. We have already proposed a primary child care guarantee and extending free child care for three and four-year-olds from 15 hours to 24 hours per week. The Government ought to consider those proposals.

The pupil premium has been mentioned. Let us be clear: it was not really a premium, in the sense that it did not constitute any extra money in the system. When in opposition, the Schools Minister had said that there would be additional money—

[The Minister for Schools (Mr David Laws)]

indicated dissent.

[Kevin Brennan]

The Minister may challenge the figures if he likes. The premium constituted no real increase in the schools budget. I know that the Minister is an economist, so if he wants to challenge what I say, he can, but it is a fact. When is a premium not a premium? When it is a pupil premium. Nevertheless we welcome the focus on the most deprived children, and we need to talk more about how best to use what is in effect a ring-fenced part of the school budget to close the gap. There is no silver bullet for that, or for overcoming regional differences identified by the hon. Member for East Hampshire, but the factors I have mentioned are important, and teaching quality is essential. The Government are getting that wrong with their message about unqualified teachers, and we think all teachers should be willing to become qualified so that the profession can be valued, so that they are up to date with the best pedagogical methods, and so that they understand child development properly. Strengthening parents’ role is vital and we need to think about how best to do that.

We have not talked much about the social and emotional aspects of learning, but those are important for children, and especially those from deprived backgrounds. We need to give more careful consideration to approaches such as mindfulness for improving the attentiveness and emotional well-being of children in school. Those are important factors in a good education.

[Ian Mearns]

The Select Committee recently went to Peterborough and met a gaggle of primary school heads. They said that because of the state in which some youngsters were coming to school they were using pupil premium money to feed them.

[Kevin Brennan]

Children often come to school with more than just the books in their schoolbags—they come with their home issues; and sometimes, unfortunately, they come with little in their bellies. I am a former teacher and it is difficult to teach them if they are hungry, or if they are distressed or perturbed because of something that has happened at home. We need to focus on more rounded issues to do with the child in education, if we are to close the gap.

The shadow Education Secretary, my hon. Friend the Member for Leeds West (Rachel Reeves), has made a big contribution to the debate recently, which I welcome, with reference to the importance of character and resilience, and schools’ role in helping to develop those qualities in young people. Those are the bedrock of educational attainment, and will contribute to closing the gap.

10:42

[The Minister for Schools (Mr David Laws)]

It is a pleasure to serve under your chairmanship, Mr Caton. I want to start in the traditional way by congratulating my hon. Friend the Member for East Hampshire (Damian Hinds) on securing the debate and choosing such an important issue—not just for education policy, but for the challenges the country faces. I congratulate him, too, on setting out the case in such a thoughtful, measured way. He built it strongly on recent work on educational disadvantage by the all-party group on social mobility, which he chairs, and highlighted some of the challenges that any Government will face in the coming years in dealing with low attainment and the unacceptable gap in outturns between those from advantaged and disadvantaged backgrounds.[Official Report, 3 March 2014, Vol. 576, c. 12MC.]

I thank other hon. Members who spoke. There were good speeches from the hon. Members for Stockton North (Alex Cunningham) and for Cardiff West (Kevin Brennan), and interventions from my hon. Friend the Member for Bradford East (Mr Ward) and the hon. Member for Gateshead (Ian Mearns). I should put the hon. Member for Cardiff West out of his misery before he intervenes on me to ask about the teacher workload survey, which he has become obsessed about. I have fantastic news for him, which will make his day: it will be published, not just shortly, but on 4 March. In the very near future he will be able to see all the information and get all the answers he wants.

[Alex Cunningham]

Will the Minister give us a few headlines from the report?

[Mr Laws]

I certainly do not intend to get into trouble by falling into the hon. Gentleman’s trap and giving out information that has not yet been approved. It would be an affront to Parliament.

We have had a good debate and talked about the challenge of raising attainment and closing the gap. My hon. Friend the Member for East Hampshire talked in some detail about the pupil premium. Among the achievements of the coalition Government that is one of the policies I am proudest of. The pupil premium will rise next year to the full amount of funding that we said, at the beginning of the Parliament, we would allocate to it—£2.5 billion. That means an uplift, for each disadvantaged young person who receives it, of £1,300 in primary education and £935 in secondary education. That makes, and will in future make, a massive difference to the schools with the additional funding.

Contrary to what the hon. Member for Cardiff West suggested, that is on top of the existing cash protection per pupil. It is happening at a time of austerity in the public sector, which would have been necessary whichever party was in power, and when we have been deliberately controlling the cost of schools by keeping down their biggest cost—teachers’ salaries. That has not been popular with teachers, but it has enabled us to contain costs while putting in additional money. Hon. Members will be aware from visiting schools that the ones that receive a lot of pupil premium money, because they have many children who qualify for it, notice the difference even in the present tough times. In Redcar, for instance, where the local economy has never properly recovered from the recession of the 1980s, I have visited schools where 80% or 90% of the young people are entitled to the pupil premium, which enables teachers and head teachers to transform their opportunities.

[Alex Cunningham]

My hon. Friend the Member for Gateshead (Ian Mearns) alluded earlier to children on the margins, particularly the children of the working poor, who are just below the threshold to qualify for the pupil premium. Are there plans to address that, particularly for areas such as the north-east, where the attainment gap is wider?

[Mr Laws]

That is an important point. Some of the ways in which we now allocate funding for disadvantage go beyond the pupil premium. They include area-based methods and prior attainment, a factor that many local authorities use. It is not only through the pupil premium that we channel money into schools. However, I am serious when I say that we are keeping under review the question of whether in future we should have a different way of targeting money at disadvantage. The hon. Member for Gateshead raised the question of free school meals targeting, and whether that is sufficient. It is worth keeping other options in mind for the future beyond the current Parliament. I was interested in his comments about the Netherlands experience of targeting money towards children whose parents do not have strong educational qualifications. We should not assume that we have the perfect method for allocating disadvantage funding at the moment, and should seek constantly to build on what we do and improve it.

The performance of disadvantaged pupils has improved across the country since the coalition Government came to power in 2010, and it improved before that. The proportion of pupils eligible for free school meals who achieve the expected standard in maths at the end of primary school has risen from 66% to 74% since 2010, and the gap between those children and their peers has narrowed by 4 percentage points. The picture is similar at key stage 4. The proportion of pupils eligible for free school meals achieving at least five A* to C grade GCSEs, including English and maths, has risen from 31% in 2010 to 38% in 2013. The gap between those youngsters on free school meals and the rest of the pupil population has narrowed. As my hon. Friend the Member for East Hampshire pointed out, however, the performance of disadvantaged pupils is different throughout the United Kingdom and throughout England.

[Kevin Brennan]

Does the Minister agree that one should not be complacent about such things? In England last year, the GCSE attainment gap widened in 72 out of 152 local authority areas. In 66 areas, it was larger than it was two years previously. In England as a whole, the gap was 26.7% last year, up from 26.4% in 2011-12, which means we should not be complacent.

[Mr Laws]

We certainly should not be complacent at all. We have a huge amount of progress to make in reducing the gap. In the previous year, 2012, there was a particularly large reduction in the gap at secondary level, so I am not surprised to see some push back against that in 2013. The trend is still clearly downwards, but there is a long way to go and I would like a much more rapid pace of progress than we have had in recent years.

A number of Members, including my hon. Friend the Member for East Hampshire, pointed out that progress in London has been more impressive over the past decade or so, as was said in the all-party group’s report, “Capital Mobility”, which was published at the end of last year. Disadvantaged young people in London are now more than 10 percentage points more likely to achieve five A* to C grades including English and maths than those in the next highest-performing region. The gap between disadvantaged young people and their peers is narrowest in London.

We need to ask, as my hon. Friend did, what the important factors in London are. He was able to put aside some factors that do not appear to be explanatory and to identify others that are significant, such as aspiration among young people in London being higher, for which there is some evidence. There is also a different ethnic mix in London, compared with much of the rest of the country, with a greater proportion of London pupils from high-performing ethnic groups such as Chinese, Indian and Korean. There is also important and impressive performance by many ethnically Pakistani and Bangladeshi children, who perform better than white children in London, but worse than white children outside London.

As is well known, London schools are better funded, but we need to be careful about drawing easy conclusions from that. Part of the headline difference simply relates to area cost. London also has above-average unemployment and deprivation, so it might be expected to attract higher levels of funding on average. As my hon. Friend pointed out, however, London has less experienced teachers and larger, rather than smaller, class sizes, although it has more sponsored academies, which have been making impressive progress under this Government and the previous Labour Government in raising attainment and narrowing the gaps.

My hon. Friend also mentioned Teach First. It is true that around half of Teach First graduates are in London. That is a hugely disproportionate share, but it reflects the fact that the programme started in London and that, to some extent, it is easier to find young people who after university want to be located in our biggest cities. I am delighted that Teach First not only has doubled in size since 2010 to become the country’s largest graduate recruiter, but will from next year be present in every single region of the country. I hope that will ensure that we get effective teachers teaching in schools throughout the country and not only in our largest cities.

It is worth pointing out, as a number of hon. Members have, that Teach First will only ever provide a minority of teachers in this country. My hon. Friend the Member for Bradford East invited us to think about what more could be done to develop the talents of the rest of the teaching work force. After all, we have around a third of a million teachers, and we need to ensure that we attend to all of them and focus not simply on the Teach First programme, important though that is.

We need to look at ways to get teachers to some of the most challenging schools and we need to allow schools to use the pupil premium in whatever ways are effective, including paying to attract better teachers to the more challenging schools. We know, however, that some people will not move around the country, for family and other reasons, and we have to be able to recruit good teachers throughout the country, in every single area and region. We cannot assume that teachers can be moved around.

In some local authorities, our schools are not doing well. For example, in England as a whole, just under 80% of schools are now good or outstanding, which is the highest figure since Ofsted began, but in 13 local authorities fewer than half of all secondary pupils are in such schools. None of those authorities is in London. They are clustered in Yorkshire and the Humber, in places such as Bradford, Doncaster, East Riding and Barnsley; and in the north-west, in places such as St Helens, Blackpool, Salford and Tameside.

In 14 local authorities, the attainment of free school meal pupils at key stage 4 is more than 10 percentage points below the national average for such pupils. In places such as Barnsley and Portsmouth, performance is appalling: only 22% and 23% respectively of children eligible for the pupil premium achieved five good GCSEs including English and maths, which is only just over half the national figure. Achievement for that group of pupils declined in 2013 in both places. In 12 local authorities, attainment at the end of key stage 4 for pupils eligible for free school meals was lower in 2013 than in 2010. That, too, is completely unacceptable.

Ofsted is addressing regional underperformance through its regional inspection arrangements, with focused inspections of local authorities and groups of schools. It is carrying out inspections not only of schools, but of school improvement functions. I welcome the chief inspector’s plans to ask challenging questions of local authorities and others about their contribution to school improvement. After each such inspection, the Department looks carefully at Ofsted’s conclusions. Where the chief inspector is unhappy with a response, we will take action as necessary.

In the case of the Isle of Wight, we issued a direction under the Education Act 1996, which required the local authority to enter into a strategic partnership with Hampshire to tackle its weakness in school improvement. We will not hesitate to intervene again where local authorities fail in their Ofsted inspections on school improvement and where they fail to improve swiftly or to rise to the challenge.

We are keen to see local authorities and sponsor groups on the front foot, taking the initiative, rather than waiting to be challenged by Ofsted or the Department. We are heartened to see initiatives breaking out in many parts of the country to lead improvement in schools, such as “By schools for schools” in Greater Manchester.

We are targeting schools and local authorities where the attainment of disadvantaged pupils is unacceptably low. I recently wrote to 214 schools—115 primary and 99 secondary—with the poorest value-added progress among disadvantaged pupils. I will shortly be writing to the schools, local authorities, dioceses and academy sponsors so that they may provide additional challenge.

A number of Members mentioned the importance in a system of autonomous schools of having more school-to-school support to ensure that we spread best practice. That is extremely important and something that the Department takes seriously. Teaching school alliances and peer support networks can be effective in raising standards. Currently, 345 teaching schools cover around 4,800 other schools. In September, the Secretary of State announced an expansion to reach a total of 600 alliances by 2016. I have seen for myself—in Redditch, for example—the importance of such arrangements and what the alliances can do for work on school improvement.

We also need more national leaders of education in those parts of the country in which they are in short supply, as my hon. Friend the Member for East Hampshire mentioned. We need a programme to support our best leaders and deputy leaders taking up posts in parts of the country in which there are large gaps and weaknesses in educational attainment. That will not necessarily suit everyone, because many people have family and other commitments to keep them in particular places. Many are willing to move, however—people with high aspirations, who might have already improved their schools and be willing to attempt it elsewhere in the country. From September 2015, the talented leaders programme announced by my right hon. Friend the Deputy Prime Minister will start by matching 100 head teachers with underperforming schools in areas that struggle to attract and develop outstanding school leaders. In these ways, we hope to spread the improvement that we have seen in areas such as London to the whole country.

Post Office Closure (Sutton)

Tuesday 25th February 2014 Westminster Hall

11:00

[Paul Burstow (Sutton and Cheam) (LD)]

It is great to have the opportunity to raise this matter in Westminster Hall this morning, and to debate the issue with the Minister. I look forward to his response to the issues I want to bring on behalf of constituents and business interests in my constituency.

There is a proposal to close two Crown post offices in Sutton and create one replacement Crown post office. The Crown post office in the St Nicholas shopping centre is to close. That is in Sutton high street—I will say more about the geography of my constituency and the town in a minute. Under the proposals, its business will be transferred to another post office, on Grove road, outside the main commercial district of Sutton town centre.

I will start by giving some geographical context. Sutton town centre is on an old coaching route out of London towards Brighton. That might not seem immediately relevant until I mention that the sites of the old coaching inns at the top and bottom of the town—the Angel inn and the Cock inn—are at the bottom and top of a hill. In just under 1 km, the climb from the bottom of my town centre to its top covers 25 metres, so it is quite a haul to get from bottom to the top of that hill. That is one of the challenges of how town centres have been constructed over the years.

The climb is an issue that comes up in my mailbag and it leads to people not always choosing to shop in Sutton. The proposals will result in the Crown post office in the St Nicholas centre, which is at the heart of the town, being closed, and the next nearest being at the top of the hill. That will be an inconvenience. It is vexing many of my constituents, although it is not the only reason why they feel vexed by the proposals.

The coaching inns have gone, and so have the coaches, and today we have a Crown post office at the top of the town and one in the middle of the town. At the moment, the proposals seem to amount to the Post Office placing its own convenience ahead of that of the public. The closure of the post office in the middle of the town will cause the maximum inconvenience to the maximum number of customers of the Post Office’s services.

I have a number of objections to the proposals, as do the London borough of Sutton local authority and many other interested parties. The first, as I have said, is the geography and topography of the area, which is an important consideration, particularly for some of the people who use the services. Sutton has a stable and settled population, and around the town centre there is a large elderly population. Those people are being told that they must now climb to the top of the hill to use the remaining post office in Grove road. I should stress that Grove road is part of Sutton’s one-way system, which allows the high street—the main commercial district of the town—to be a pedestrian-only area. Grove road is a wide, busy, fast road and marks an important break between the retail heart of the town and the outer parts of the area.

I have received expressions of support and of concern about the proposals, not only from residents but from local businesses. Sutton town centre has a business improvement district, called Successful Sutton—a really good initiative taken by the town’s business leaders, who have taken the opportunity to use resources to invest in their own future. As part of Successful Sutton, there was a pre-Christmas offer to shoppers that introduced a complimentary customer buggy, similar to the sort of buggies used at airports, to transport people up and down the hill I just mentioned. The director of Successful Sutton, Ross Feeney, has told me that when the users of the service were surveyed ahead of its proposed winding down after Christmas, many said that one of their principal concerns, and one reason that they would like the service to be retained, was the threatened closure of the post office in the St Nicholas centre.

It was not only customers who were concerned. Successful Sutton has also told me that, as the leader of local businesses in the town centre, it is concerned, and many of its members have expressed concern as well, for a number of reasons. When I met Successful Sutton’s representatives to discuss the closure, they were particularly concerned about the impact it would have on cash businesses in the town, which need to be able to bank their money at the end of the day. The convenience of having a post office in the heart of the retail district was important to those businesses, for safety and security and their ability to carry on with business operations.

Another concern raised was that traders want easy access to parcel services. As the proposals would close a post office in a major shopping mall, a further issue is the loss of footfall and potential loss of trade. Post offices are often important anchors in such facilities. The impact is not just on the general public but on the business community and the town itself.

I referred earlier to the Post Office putting its own convenience ahead of the public’s, and I hope the Minister will be able to help by getting some information from the Post Office and possibly Royal Mail. The Grove road Crown post office is leased from Royal Mail, on what I understand are very favourable terms—part of the reason why the Post Office wishes to consolidate activity at that site. However, the site is a valuable piece of real estate. Although at present there is nothing, to my knowledge, in the development pipeline, its location next to Sutton railway station must make it a candidate for consideration by Royal Mail as to whether best use is being made of the site in the long run. The future of that site is a real question, as is the impact there would be on provision of Crown post office services if the site were to be disposed of and redeveloped in future.

I turn to the St Nicholas centre post office itself. My understanding is that the Post Office walked away from negotiations about renewing that site’s lease despite the flexible approach being adopted by the owners of the St Nicholas centre. I hope that the Minister will pursue with the Post Office the issue of whether those negotiations might be reopened.

Sutton faces an unwelcome consultation about the loss of its post office. I think that there is a case for keeping both Crown post offices; I know that is what my constituents would prefer, but I am sure that I am going to be told the economic costs of doing so and just how expensive Crown post offices are. However, if there is to be a merger, the Post Office must put the needs of its customers first. Maintaining a Crown post office in the heart of the retail centre of the town should be the minimum the Post Office seeks to do.

My requests to the Minister are as follows. Will he assure me that customers will be put first, and in the event of a merger the best location for the post office will be the Post Office’s priority? Secondly, will he press the Post Office to re-engage with the owners of the St Nicholas centre and to discuss options with Sutton council and with me? Thirdly, will he clarify the safeguards and guarantees that are in place already or could be put in place should the Grove road Crown post office become the candidate for the new merged and expanded Crown post office, so that, down the line, my constituents do not face the prospect of a redevelopment leading to another search for an alternative location for a Crown post office?

Those are the issues I want to put to the Minister today. They are causes of concern for my local authority, the local business community, local residents and local traders. I hope that he will be able to give us some indication of how the Post Office can engage constructively with those issues and I look forward to his response.

11:09

[The Minister for Skills and Enterprise (Matthew Hancock)]

It is a pleasure to serve under your chairmanship, Mr Caton, and to respond to this debate. I congratulate my right hon. Friend the Member for Sutton and Cheam (Paul Burstow) on securing the debate and welcome the opportunity to discuss post office provision in Sutton and more broadly. I acknowledge the role he has played and the reasonable tone he has adopted in tackling the tricky issue of the best future for the Post Office and its customers in Sutton.

We all recognise the Post Office’s vital role in our communities throughout the country. Communities are worried whenever changes are proposed to the post office network, not least because, as well as being shops, they are a vital hub of the local community. That is one reason why we made a commitment to provide almost £2 billion in the years to 2018 to protect the post office network, to ensure service provision in communities and to put the network on a long-term footing. As I am sure my right hon. Friend expects, that will be the basis of my response today.

We are acting now to the tune of almost £2 billion and are committed to ensuring that the post office network is sustainable in the long term. That is particularly important following the closure programmes in 2003 and 2008, which saw 5,500 post offices close permanently under the previous Government. This Government’s extra spending on the post office network to secure its future has achieved the most stable network in more than two decades.

The closure programme impacted on many constituencies, including Sutton, and we must take account of later changes within the context of 5,500 post offices having closed over the last decade or so. Some local sub-post offices in Sutton closed in the last decade, and I hope that my right hon. Friend agrees that our long-term spending to secure a sustainable future for the network is the right broad approach. We are ensuring that a minimum network size of 11,500 branches is maintained and investing in those branches to ensure that they are high quality, attractive and more financially sustainable.

[Paul Burstow]

The Minister is right to talk about the loss of sub-post offices in my constituency and many others. A map of Sutton and Cheam shows large gaps in the network, with inconvenience for people who need access to a post office. One has been closed for a long time, but was never formally closed. I hope we will hear good news about that one reopening.

[Matthew Hancock]

I cannot give my right hon. Friend good news on that today, but I am sure that his point will be noted. We all care about post offices because they are critical to hundreds and thousands of small businesses and the many millions of customers who use them daily for the diverse range of services on offer in the branches. I agree that local people of all ages and backgrounds regularly use post offices for mail and access to finance. The Post Office is living through a period of technological change and it is vital in a world of new technology, and to a positive and sustainable future, that it can provide those services while allowing post offices to remain a hub for local communities.

I turn to the proposals for the Sutton Crown post office. The post office network is diverse and of the existing 11,800 branches only around 360—the Crown branches— are directly owned and operated by the Post Office. The rest are operated by independent business people—sub-postmasters—who play a key role. The 360 Crown branches represent only a small proportion of the total number of branches, but they are important to the network as a whole because they tend to be larger and to earn the greatest revenue. However, they also have the highest costs, and they have been responsible for a significant proportion of the Post Office’s losses in recent years. Bringing the Post Office into a sustainable long-term position involves trying to ensure that we get a grip on those losses.

Last year, the 360 Crown post offices lost a total of £37 million throughout the country. Those losses are not sustainable, which is why the Post Office is working hard to tackle them. Probably the best way of doing so is through increasing revenue, which is a mark of a rejuvenated post office network. In a similar vein, costs must be reduced, and that includes the Post Office working with its employees and stakeholders to introduce new technologies.

We are investing about £70 million in 300 branches to make them more attractive to customers and to identify savings in property costs. We are making a short-term investment to ensure that costs are brought under control and revenue is increased to ensure that the Crown post offices come into balance. Those activities will deliver considerable benefits, but expanding revenue alone is not enough, so the Post Office is exploring the possibility of franchising about 70 Crown post offices and merging around six Crown branches. That brings me to Sutton.

We must make the post office network sustainable for the long term. The Post Office is considering merging two branches in Sutton, which are less than half a mile apart. As my right hon. Friend said, the consultation is still open. The situation is unusual because normally there is only one Crown post office for any given area. Due to the Post Office’s franchising and merging activity and the imminent expiry of the lease on the High street Crown post office, it is reviewing the configuration of the Crown post offices in the area.

Merging the high street and Grove road branches will bring the benefit of more investment in the single Crown post office that will remain under the proposal that is out for consultation, so there would be advantages for customers as well as the obvious challenges that my right hon. Friend highlights. The merged branch will have considerable investment, and it will be refurbished and modernised with a brighter environment. It will have new technologies, an additional counter and a private consultation room. It will offer a wider range of services than are currently available at the high street branch, including an external cash machine and identity services, allowing customers to apply for passports and driving licences more easily.

The high street Crown post office costs around £2 to operate for every £1 of revenue that it brings in. The Grove road Crown post office costs £1.50 to operate for every £1 of revenue that it generates. I am sure my right hon. Friend will understand that those costs are not sustainable. If the two branches are merged, the Post office will not only make its business more efficient but will protect services for the long term and make the branch sustainable, which is vital for local communities, customers and small businesses.

I understand that the Post Office considered several options before proposing the merger and it was decided that the current proposal offers the maximum benefits, so it is out for consultation. My right hon. Friend asked about negotiations with the landlords of the high street premises. The Post Office has obviously approached the current landlords but has not been able to negotiate a renewal rent that is better value for money than the current proposal to retain Grove road. Those conversations have taken place, but I cannot say whether there is more to be done. Discussions have taken place, but were not concluded successfully. Under the plan, customers will continue to have access to Grove road’s large Crown post office, which will be improved, but the merger also plans to eliminate the losses incurred in the branches, making them more sustainable and the whole post office system in Sutton more financially viable for the long term.

Having said all that, no decision has been taken. As my right hon. Friend is aware, a consultation is out. I am encouraged by the open dialogue taking place between the Post Office and the council to see whether alternative options can be considered. All the issues, including the topography and customer convenience, will be taken into account in the consultation. I urge any interested parties to submit their views to the Post Office as part of the process and ensure that the community’s concerns and points are considered appropriately.

[Paul Burstow]

I want to ask the Minister about one other thing—he might not be able to help with it today, but perhaps through his officials he could come back to me. I am talking about the status of the Grove road post office and guarantees about its future, given that it is such a prime site for future development.

[Matthew Hancock]

I shall certainly get back to my right hon. Friend with the position on longer-term guarantees about Grove road, should that be the option that goes forward after consultation on the proposal. Discussions with the council will be exploring a range of options, including the council identifying potential alternatives for a post office close to the town centre, taking on board considerations about negotiations on the high street site and the location of the Grove road site. Discussions with the council about an alternative location are part of the ongoing consultation.

I urge the council to continue to work with the Post Office to try and address local concerns, while providing a sustainable, long-term financial future for post office services. I know that Post Office management remain open to discussing all those options with the council and trying to find a solution, in response to the consultation, that is best not only for the Post Office, but for the Post Office’s customers, who are a vital part of the Post Office, too.

To sum up, I fully appreciate the concerns of not only my right hon. Friend but his constituents about the proposed changes. I hope that I have been able to set out some of the thinking behind why the consultation has been proposed in this way and also given some assurances that the consultation is ongoing and that all options are being considered. The reasonable approach being taken by my right hon. Friend, the council and Post Office management is right. Everybody understands that the losses in the Crown network were unsustainable. Given that finance is available to put together an option that can be sustainable over the long term, it is important that the process is gone through, but I am glad that it is open and consultative. The consultation closes in early April, so anybody wanting to submit a view has just over a month to put their points to the Post Office. I will ensure, and can provide reassurance, that the Post Office is listening to all points and options that are put on the table.

In closing, I hope that my right hon. Friend recognises not only the understanding of the vital role that post offices play in communities, but that this genuine consultation is about trying to find the best, financially secure, long-term solution to having a post office in the middle of Sutton—whether through the proposal on the table now or through other options being considered with the council. Although some changes are likely, I hope that, in the longer term, they will bring benefits to his constituents and reassure them that they will have a sustainable post office network to serve them in the way we all know and understand is so vital to our local communities.

11:25

Sitting suspended.

Land Registry

Tuesday 25th February 2014 Westminster Hall

[Mr Charles Walker in the Chair]

14:29

[Mrs Siân C. James (Swansea East) (Lab)]

I am pleased to have secured this important debate and thank the Minister for attending. I will declare an interest at the top and state that the Land Registry has its largest facility in the UK in my constituency of Swansea East. That provides a substantial number of jobs and plays an important role in the socio-economic life of Swansea East and the surrounding areas.

On 23 January, the Minister announced plans to launch a consultation on ending the Land Registry’s status as a trading fund. The consultation exercise proposed two things: first, that Her Majesty’s Land Registry be separated into an office of the chief land registrar and a service delivery arm; and secondly that the service delivery arm be transferred out of the civil service and become a company, either a Government-owned company—a GovCo—or a private or quasi-private company.

Currently, the Land Registry, as a trading fund, is entirely self-funding and therefore no drain on the Government purse. Furthermore, year on year the service makes a surplus, which is passed on to the public by way of reduced costs for usage of the service and by way of providing the Treasury with significant income.

The Public and Commercial Services Union suggests, and I agree, that only by keeping the Land Registry’s trading fund status can the service maintain its necessary independence, impartiality and accountability. I also believe that the status of the organisation as it stands offers best value in providing a land registration service to the public. Given the success of the current service, not to include in the consultation a proposal to retain the current trading fund status seems ludicrous. It is certainly not a good business move and shows a distinct lack of forward thinking by the Land Registry executives.

Let me give some background. The Land Registry has been a non-ministerial Department since 1862. It was established as an Executive agency of the Lord Chancellor in July 1990 and as a trading fund in April 1993. The main aims and functions of Her Majesty’s Land Registry are set out in the framework document of 2008. As with other non-ministerial Departments, the Land Registry’s functions have always been entirely statutory. It has no prerogative powers. The Land Registry’s main statutory functions are to keep a register of title to freehold and leasehold land throughout England and Wales, and to provide the statutory service of registering, on a daily basis, the many thousands of new titles and dealings with land. That includes registering mortgages, changes of ownership and many other legal interests.

There are many challenges for the future. I repeat that the Land Registry’s managerial dilemma appears to be what sort of company the Land Registry should become—a GovCo or a private enterprise—but where is the evidence that changing from a trading fund to any sort of company would meet the Department’s objectives? None has been provided. The current system is tried, tested, evaluated and proven; and as the old adage goes, if it ain’t broke, don’t fix it.

[Mr Henry Bellingham (North West Norfolk) (Con)]

I have been approached by a number of companies in my constituency, including Norfolk Information Ltd, trading as the Property Search Group, Index Property Information and AW Searches, which is also trading as the Property Search Group. They all say that the changes being proposed are important and that a much longer consultation period is needed, particularly when we are talking about small and medium-sized enterprises, many of which are expanding. As the Minister correctly keeps reminding us, SMEs are the lifeblood of our economy.

[Mrs James]

I thank the hon. Gentleman for that intervention. I will come to the importance of SMEs, the role that they have in the process and how we must protect their interests.

[Mr Peter Hain (Neath) (Lab)]

I congratulate my hon. Friend on securing the debate and on the eloquence with which she is advancing her case. Is she aware that the proposal has cast a big shadow of uncertainty and job insecurity over the staff of the organisation, some of whom work in my constituency, which is nearby, and that when Tesco recently advertised for staff to open a local store in nearby Briton Ferry, 15 posts attracted 600 applicants? These are communities of very high unemployment, and job insecurity is therefore a big problem in the area.

[Mrs James]

It is. I thank my right hon. Friend for that intervention. The Land Registry jobs are quality, well paid and well respected posts, and it is very important that we retain them in a mixed economy and give job opportunities and a way forward to people from all sorts of backgrounds. I am very loth to lose one job, of any type or description, from my constituency when, as he has just pointed out, they are all very important.

Have the Government failed to notice that the Land Registry has a customer satisfaction rating of 98%—a rating that many large-scale, international and well known organisations would love to have—that it operates at no cost to the taxpayer and that it made £98.8 million last year for the Treasury? That was used to reduce fees and to invest back into our everyday lives. Why is the Minister not standing up and congratulating that organisation on its effectiveness rather than swinging the sword of Damocles over its head?

The service users—every person in the UK who owns property—need a reliable, low-cost and secure land registration service that also guards against the ever-increasing crime of property fraud. Nothing in the current proposal provides any evidence that moving to a commercial model will improve the existing service, so I ask again: why mend what is not broken? The talk is rhetorical.

[Alison McGovern (Wirral South) (Lab)]

My hon. Friend is, as has been said, making an excellent speech. On behalf of my constituents who work in the Birkenhead office, does she agree that her point—if it isn’t broke, why are we fixing it?—is apposite, and that, at a time of high levels of insecurity, especially in parts of the country such as the north-west, the proposal adds insult to injury for people such as my constituents who have worked incredibly hard for the satisfaction scores she mentions?

[Mrs James]

I thank my hon. Friend for that intervention. Yes, the proposal beggars belief and causes me concern. It causes me even greater concern when I consider that that is how hard work and loyalty are repaid. We hear much about the training of staff and the investment in staff and training, but now we are considering losing an excellently trained and efficient work force, and at what cost? That is of great concern. It is of even greater concern that we could even think about moving these people out of a job that is doing such great and good things for us as a society.

No comparisons have been made to show how a company would achieve more than the organisation does with the current trading fund status. No information is being offered as to how the supposed benefits of change, said to be agility, alignment and capability, will be achieved or even what those mean. The Government claim that a change in status from a trading fund would allow

“greater flexibilities to operate around pay, recruitment and possibly provide other services”.

I suggest that there is ample scope in the current model to accommodate all of those.

The Minister has declined to provide vital information to Parliament, as demonstrated in his responses to written parliamentary questions on 13 February on the Land Registry’s business strategy and new plans for service delivery. I crave your patience now, Mr Walker, because I would like to quote directly two of the responses. The first states:

“The way in which Land Registry’s services are delivered will likely change as the business pursues a digital, efficiency and modernisation agenda through its Business Strategy. This will continue irrespective of the outcome of the consultation—including if the status quo is maintained.”

He continues on the theme of service delivery, stating: “The target operating model”, which is the Land Registry service delivery plan,

“includes initial operational planning based on the number of LR business delivery assumptions. The consultation reflects a broader and different range of issues, as it considers and seeks views on a range of Land Registry commercial models. Some parts of the TOM will be affected by the consultation’s outcome. Therefore, it would be misleading to provide further details.”—[Official Report, 13 February 2014; Vol. 575, c. 773-774W.]

The Minister cannot have it both ways. If, as he claims, the proposed changes to service delivery will continue irrespective of the outcome of the consultation, he can hardly refuse to reveal those changes on the basis that they would be misleading.

The PCS has provided me with its formal consultation response, which demonstrates that part of the rationale for moving from a trading fund to a company is tied to “speeding up” new methods of service delivery. That new service delivery, which is part of the Government’s digital by default agenda, appears to be a plan to remove the vast majority of the service provision of land registration from the Land Registry and move it to the customers—conveyancers and solicitors. Those solicitors and conveyancers will have to self-serve and they, not the Land Registry, will have to register legal interests in dealing with land on behalf of the public. If that is what is planned, where is the evidence that solicitors and conveyancers have been consulted?

The Government purport to be a friend of small businesses, but what evidence is there that small and medium-sized high street firms can make those changes and become self-servers in land registration for the public without incurring massive costs in IT equipment and increased staffing? If the Government put an end to the current low-cost, efficient public service of land registration and make solicitors and conveyancers undertake that work, how will that change be reflected in the prices paid by the public? How will such momentous changes fit in with the aim of making the system less vulnerable to increasing property fraud? We need answers to those questions.

The Minister for the Cabinet Office and Paymaster General once accused the previous Labour Government of losing control of IT procurement and locking out small, innovative and efficient IT firms from supplying services to Government. The current Government claim they have changed all that and that they support procurement from SMEs in the form of the Government Digital Service. Why, therefore, has the Land Registry board, which includes non-executive directors from the shareholder executive—part of the Department for Business, Innovation and Skills—said that it wants the “unfettered” agility to avoid the Government’s alleged preference for using SMEs for procurement? How is that consistent with being a friend of small businesses?

I said at the beginning of the debate that land registration involves the granting of title to land and the guarantee of legal interests that it registers on a daily basis. Those are fundamental to every home owner in England and Wales and an essential part of the UK economy, and there is much potential to expand. The Land Registry’s reputation is its greatest asset. As a public service, the trust that has always been placed in it assures the public that it is independent and has authentic credentials of honesty. It is entirely focused on its service to users and not distracted by profits, outside interests or political interference. Given that it provides the state guarantee of title, it must surely remain entirely free from commercial influence.

The case against changing the Land Registry into a company, whether a GovCo or a privately financed company, is that doing so would create a body with unclear commercial status, which would lose the necessary independence from commercial influence. The proposed funding changes might easily negate the current controls—statutory and Treasury—on surpluses, which serve as checks and balances on trading funds and control what surpluses can be retained. Those all feed into the argument that there are disadvantages to shifting the delivery of land registration to a commercial profit model.

In conclusion, I emphasise that plans to make the Land Registry a commercial enterprise are unclear. We are not yet sure whether such an enterprise would be fit for purpose, because we do not know what the aims are. The proposal is uncosted, so we do not know whether any savings would result. It is untested, so we do not know whether it would work. We know, however, that the current Land Registry trading fund model is self-funding, profitable, reliable and trusted, tested, secure and in a good position for development. Once again, if it ain’t broke, don’t fix it.

14:45

[Mr Stewart Jackson (Peterborough) (Con)]

It is a pleasure to serve under your chairmanship for the first time, Mr Walker. I congratulate the hon. Member for Swansea East (Mrs James) on her speech, and I would like to put on the record that she will be a loss to the House when she leaves at the general election. She is a diligent and hard-working Member.

Almost four years ago, I stood on the other side of the Chamber opposite the then Justice Minister Michael Wills, who represented North Swindon. During that debate, I argued against the changes to the Land Registry estate that had been mooted by the previous Labour Government. Those changes were driven by the Lyons review of 2004, which focused on capital, land and buildings, and rental values.

I opposed the proposal because the methodology used was flawed, and it was very much a top-line, cost-saving exercise rather than one about efficiency and effectiveness. It did not take into account the great professionalism, esprit de corps and commitment of my constituents, some 210 of whom work in the Land Registry in Peterborough. I seek, as always, to protect the interests of my constituents; those are good-quality, white-collar jobs in Peterborough.

There is a difference between those proposals and the current ones, however. I echo the comments of my hon. Friend the Member for North West Norfolk (Mr Bellingham). There should be a consultation, but the Government should consider extending it because the proposals will have implications for many small and medium-sized enterprises involved in conveyancing and other property-related activities. If there is inherent merit in the Government’s case, I do not think that it will be damaged by extending the consultation.

[Mr Bellingham]

Does my hon. Friend agree that outside London and the south-east the housing market is still quite fragile, so any change in that local authority-based arrangement may lead to a great deal of uncertainty? That is another reason why the consultation period might easily be extended a bit.

[Mr Jackson]

I take my hon. Friend’s point, and I largely agree with him. However, it would be remiss of the Government not to look at different models for the delivery of necessary public services. In some important public service activities, even the previous Government looked at substantial changes in governance. That is the distinction between the proposals enunciated by the previous Government between 2008 and 2010—as hon. Members will have concluded, they resulted in the saving of the Peterborough Land Registry office and others across the country—and the current proposals, which are much more about governance.

For the record, 10 constituents have written to or e-mailed me about the matter, which is substantially fewer than contacted me about the debate four years ago. I make no comment on that; I merely highlight it for comparison. I support a proper debate on the delivery of such an important service, but I have no ideological opposition to the splitting of functions, whereby a GovCo might carry out practical land registration functions separately from the office of the chief land registrar, which is much more policy-based.

I agree that there must be a new business model, not least because we must always be mindful of the fact that our first priority as constituency MPs is to protect our constituents’ job opportunities, as the hon. Member for Wirral South (Alison McGovern) says, particularly in areas with high unemployment. However, we also have a wider responsibility to other stakeholders, including the taxpayer and businesses that rely on the Land Registry being efficient and delivering a good service. It is an important tripartite approach.

[Julian Sturdy (York Outer) (Con)]

My hon. Friend is making a powerful point. Like him, I have had regular contact from constituents on this issue. North Yorkshire Legal Services Ltd, based in York and run by one of my constituents, has written to me on a number of occasions. It is deeply concerned about how the proposals that my hon. Friend has set out will affect the market. The potential consequences could be devastating for my constituent’s business. Does my hon. Friend agree that we have to understand any wider implications before rushing into such decisions?

[Mr Jackson]

That is a typically astute point from my hon. Friend. He anticipates some of the comments I will make later.

The Land Registry is almost totemic: it is a trusted, strong brand and the people who work there are professional and committed to the public service ethos. There is a general commitment in the Conservative party—indeed, across the House—to good governance and the aspiration to the proper ownership of land, owner-occupation and property ownership in general. The Land Registry is at the heart of that and, as the hon. Member for Swansea East said earlier, it has been in existence, governed by statute, for more than 150 years.

[Mike Weatherley (Hove) (Con)]

GroundSure Ltd, a company in Brighton and Hove, is very concerned about the impact of changes to the Land Registry on smaller businesses. Does my hon. Friend agree that we really should take such businesses into account?

[Mr Jackson]

Yes, indeed.

I would be remiss and rather churlish if I did not compliment the work of the PCS union. Members do not often hear me saying that, but it has done a good job on the research it has sent to Members and entered into a good, fact-based debate, which is as it should be. Members will no doubt be aware of the very good PCS document “The future of our Land Registry”. It might also be appropriate to mention the contribution of Mr John Manthorpe, the former chief land registrar who also prepared interesting information, both for me in 2010 and now for other Members and others.

However, to a certain extent we have moved on, even since 2010. The provision of services is now online much more than even four years ago. The digitisation of the core facilities and services of the Land Registry is developing at a significant rate. We must take that on board as an important factor that informs the debate.

This is not necessarily a party political point, but we also need to remember that all public services are and should be much more customer-focused than they ever were before. The integrity and reputation of the Land Registry must, of course, be of uppermost concern. To a certain extent, I am reserving judgment on the proposed changes. I would like to look in detail at any future primary legislation that governs the operation of the Land Registry. Although it may not be fashionable, I think that there must be a degree of ministerial accountability for the activities of the Land Registry—the Minister can take that as my direct consultation response. It is too important an operation and piece of our national life to be disregarded. There should be some form of—circuitous, if necessary—direct or indirect accountability to Ministers and certainly to Parliament.

I am also slightly concerned about the potential of offshoring. I do not buy the concept that delivering a public service in a different way is necessarily a bad thing, in and of itself. Ultimately, the issue is what is good for the taxpayers, the work force and the wider community. Nevertheless, when considering an important function such as the Land Registry, offshoring slightly worries me. I would like the Minister to reassure me on that point.

There must also be a strong business case for the different model—the GovCo. They probably will not want to do so today, but in future the Government may want to say that the proposed changes are a signpost to a future privatisation. That does not scare me particularly and in principle I am not against it, but there must be a robust, demonstrable, fact-based business case in the preparation of the target operating model going forward.

As my hon. Friend the Member for York Outer (Julian Sturdy) said earlier, there must also be very thorough analysis and scrutiny of not just the benefits but the costs of any new model. It is important that we look at the costs of, say, moving over to e-conveyancing, or of the development of new IT. That is important, and I am sure that the Minister will want to reassure me on that point.

I will not be much longer, Mr Walker, because I know others wish to speak. As the hon. Member for Swansea East said, we are discussing a self-financing organisation that currently costs the taxpayer nothing. The proposition I would put to the hon. Lady is that if we could replicate the professionalism and efficiency of the present Land Registry and also make a profit for the taxpayer, we would be duty bound to look into that.

I would like to make a few other brief points. We must have an open and transparent procurement process for things such as IT. I am sure that the Minister is mindful of that. We should not have any sweetheart deals if we are looking into new IT procurement. If people transfer over, we must also ensure that the Government are mindful of TUPE in relation to the terms and conditions of people who have given a great deal of their professional life and commitment to public service in their local area.

I want to see more details of the GovCo and would want greater clarity in any future regulations or primary legislation. I believe that there should be flexibility and autonomy for the new company, if it so develops. That could well be the right thing for the taxpayer, for the work force and for business. As I say, however, I currently reserve my judgment. Let us extend the consultation and have a proper debate based on facts. We have a duty to all stakeholders and I expect the Government to rise to the challenge and robustly put their case for any future changes. I look after the interests of my constituents in Peterborough, who come first, last and always for me. I hope that the Government are mindful of the individual circumstances resulting from any large-scale changes to people’s jobs and opportunities.

[Several hon. Members]

rose—

[Mr Charles Walker (in the Chair)]

Order. Four colleagues have risen to speak, and there are just over 40 minutes until winding up. That is about 10 minutes each if Members wish to take that long.

14:58

[Alison Seabeck (Plymouth, Moor View) (Lab)]

It is a pleasure to serve under your chairmanship for the first time, Mr Walker. It is also a pleasure to follow the hon. Member for Peterborough (Mr Jackson)—my father represented that seat, so I understand some of the specific constituency issues he has mentioned. I am delighted that my hon. Friend the Member for Swansea East (Mrs James) managed to secure this debate.

The hon. Member for Peterborough is absolutely right that there was a period under the previous Government during which a number of us who were involved with land registries in our constituencies had meetings with the then Minister, Michael Wills, to express our concerns. The economy was then in a downturn and the Land Registry was finding things quite difficult financially, for a whole range of reasons, but the position has now changed, as has the potential trading position. As the hon. Member for Peterborough pointed out, there is potentially now scope for money to go back into the Treasury, because the Land Registry is a successful enterprise.

The proposal suggests splitting away the Land Registry policy arm—comprising around 30 staff—and having a commercial delivery arm. The options for the latter are set out: a GovCo, a joint venture partnership or contracting out. All those could lead us down the route to eventual privatisation, which is a major concern for all of us.

At the moment, we do not have clarity—indeed, there is quite a lot of confusion out there. It is partly due to the compressed nature of the consultation, but there are also issues involving Ministers’ approval for the Land Registry board to go ahead with a target operating model, which could lead to a significant rationalisation or downsizing of the organisation. However, we do not know what is in the TOM, as it is not public. It is difficult for people to make a submission to a consultation when the ground rules are not properly known and available. We could be saying that we want to do X, when in fact, according to suggestions and proposals in the TOM, Y would be a far more sensible route. The information is not available for people to respond intelligently to the consultation.

A number of organisations have mentioned the length of time available, which is not adequate as more and more small businesses come out of the woodwork. I have had a couple more letters today, on the back of the 90 that I have already received. I take the point made about differences in response, but more than 90 people have got in touch with me, and I am encouraging them all to feed into the consultation. From my perspective, this is all rather back to front. I know that the Minister’s colleagues felt a few weeks ago, rather perversely, that it would be misleading to provide any more detail. Does he take a different view?

Let us look at the implications of drastic change. Is the Minister aware that a decision to remove posts from cities such as Plymouth will pose problems? Plymouth is still heavily dependent on the public sector. The Government have the view that if they remove public sector jobs, they will be backfilled by the private sector, but a recent Centre for Cities report flagged up the fact that Plymouth is probably in a slightly different situation. Our peripherality makes it difficult for us to attract new business, and our issues with transport in recent weeks—the south-west has effectively been cut off—do not send out the message to private sector businesses, “Come and set up in Plymouth.”

Some 650 jobs sit in our Land Registry; there is a slight difference—about 50 full-time equivalents—between the figures provided on the ground to me and the figures in a parliamentary answer. Those jobs are well paid. They contribute to our economy significantly. More importantly, we have about 100 highly skilled IT people there. Plymouth has no capacity to soak up those people if they are not employed at the Land Registry. That would be a loss to the city, so I hope that the full socio-economic impact of any change, downsizing or moving of offices around the country would be seriously considered.

One option is a GovCo, which would require people to be imported to fill capability gaps. Is it the Minister’s intention to offer enhanced salaries, terms and conditions, as the Ministry of Defence has done? If so, I assume that she is aware of the huge mess that the GoCo has left in its wake. The Treasury is still baulking at offering the MOD freedoms and flexibilities. The union PCS says in one of its briefing notes that it assumes that the ability to vary pay will depend on the model chosen. At the moment, the Government’s own model, chosen by the MOD, is running up against the buffers. It would be interesting to know whether the Minister has the Treasury’s go-ahead to offer enhanced terms and conditions to people in a GovCo in this circumstance.

What is the Minister’s view on the experience of the Forensic Science Service, which has pursued a similar option? Can he confirm that the assumed benefits of being commercially competitive did not in fact materialise? Why does he feel that the Land Registry is different?

[Jenny Chapman (Darlington) (Lab)]

My hon. Friend is making an excellent case. What does she think the motivation might be for pursuing that line of approach? If the Land Registry were making a loss, performing poorly or not providing customer satisfaction, perhaps we could understand. Why does she think the Government are intent on following this particular course?

[Alison Seabeck]

That is a good question. As the hon. Member for Peterborough said, if it ain’t broke, why fix it? We need to understand from the Minister exactly what the benefits of fixing it will be, or whether it is purely ideologically driven, leading in the long term to privatisation.

In Plymouth, the registry’s computing centre has been recognised as an award-winning success. There has been very little turnover of specialist staff, all of whom have an experienced Land Registry background, and unlike other Government computing centres in London, it does not constantly lose staff to the private sector. It is not an exaggeration to say that the registry’s successful computerisation of the land register, its fast online inquiry services and the development of online lodgement succeeded where others in Government, dependent on major outsourcing to private IT companies, have failed. We must look at what we do well, nurture it and learn from it.

Like other Members, I have been lobbied by organisations such as the Local Land Charges Institute and those involved in independent land searches. All have serious issues with the proposals, not least because of the target operating model and the fact that it has not been made public. I would welcome the Minister’s view on whether the options proposed will fragment the local land charging function, as those organisations feel it will. The LLCI feel that it will result in a poorer service to the property-buying public. Clearly, there are a range of views on the subject, but the property-buying public are stuck in the middle, and nothing that we have heard—either fact or rumour—inspires confidence in the process being undertaken by the Government and the board.

Members of the Property Codes Compliance Board feel that the proposed changes will negatively affect those involved in the house-buying process and affect the market and small and medium-sized businesses, as we have heard from hon. Members. Their view is that SMEs will be disproportionately affected by what they see as Government transferring current activity into a private-sector monopoly. They also express their concern about the accuracy of the impact assessment.

There are complaints all round about the consultation, involving its accuracy, the timing, the process, the questions and the fact that a significant part of the picture has not been painted for those responding. I have not received a single representation from any organisation or individual in favour of the proposals. I look forward to the Minister’s response.

15:07

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

It is a pleasure to serve under your chairmanship, Mr Walker. I thank my hon. Friend the Member for Swansea East (Mrs James) for securing this timely debate and making such a powerful case in support of keeping the Land Registry much as it is. Like many hon. Members here, I am concerned by the Government’s recent statement on the future of the Land Registry because of its potential impact on a national level; my primary concern, of course, relates to my constituency.

There is a large Land Registry office in Durham. Many local people are concerned about the possible consequences of the proposed changes announced in the consultation, should they go ahead. Significantly, they are concerned, as am I, about the potential impact on jobs in Durham. Durham has had a Land Registry for nearly 50 years. It has been the only one in the region since the closure of the office at York several years ago.

The Durham office is reported to be worth £10 million a year to the local economy. I hardly need remind the Minister that Durham’s economy has gone through a difficult period and is not yet fully experiencing what the Government are referring to as an economic upturn. Perhaps that is about to happen, but at the moment, things are still pretty depressed locally, leading to additional concern about what will happen to the Land Registry and the jobs that go with it if the proposals go through.

The Land Registry office in Durham provides many good-quality jobs that we desperately need locally, and I do not want that to be diminished in any way by potential privatisation. More than 400 highly skilled staff work at the Durham office. They provide a valuable national service that returns considerable value for money to the taxpayer. It is a strong brand and very much trusted by the people who have to use Land Registry services. It is vital that we should scrutinise the Government’s proposals and any impact that they could have. However, that is quite difficult because of the lack of information from the Government in the public domain.

In its consultation paper, the Department for Business, Innovation and Skills proposes that the Land Registry be replaced by both a small Government body and a new company, which would carry out the current service delivery functions. There would be a new role of regulation and a maintained role of fee setting for a newly created Office of the Chief Land Registrar, which would sit within Government and be accountable to a Minister. It would set only the fees of the statutory functions, not the commercial services it might provide. That is one of the key aspects of the proposals that is creating a lot of nervousness in the sector.

The Government suggest three options for this new service delivery company: 100% owned by Government; jointly owned by Government and a private sector company; and 100% owned by Government, but day-to-day operations would be the responsibility of a private sector company on the Government’s behalf, which I think means outsourcing. Critically, what is not on the list is the Land Registry staying as it is.

Significantly, the Government consultation describes the above models as being considered for the “transition phase”. We are not sure exactly what that means, but I suspect it means a transition phase on the way to a future privatisation. If it does not mean that, the Minister will have to clarify the situation and be clear about what the transition phase means.

In addition, the Government’s consultation does not address the issue of why the changes are being proposed; it merely focuses on how they will be done. As other hon. Members have mentioned, there is no rationale as to why the changes are necessary. Several organisations, ranging from the PCS to the independent Law Society, have raised concerns regarding the consultation. The Law Society highlights the statement in the consultation that

“beyond the transformation phase, Government will review the ownership and control of the service delivery company in line with the policy on asset ownership”.

Importantly, this policy includes assessing options for moving assets to the private sector

“where there is no longer a strong policy reason for continued public ownership or where there is potential for an asset to operate more sensibly and efficiently in the private sector”.

As has been said, that potentially leaves the door open for complete privatisation after the transition period. Again, there is no information available to us about what the Government mean by

“more sensibly and efficiently in the private sector”.

I find the proposed changes to be remarkable, particularly given both the lack of evidence offered by the Government in support of their proposals and given that the Land Registry currently operates under a trading fund model, and in 2012-13 made a surplus of £98.8 million. Equally remarkable is the fact that, despite such considerable changes being proposed, my local Land Registry has refused to meet me to discuss the issues. I find that truly extraordinary.

In all my years as a Member of Parliament, I have never had an employing body refuse to meet me to discuss what are real concerns for many of my constituents. I was so shocked that I wrote to the Minister in January and pointed out to him that I thought this was an extraordinary course of action being taken by my local Land Registry. I asked him to intervene so that I would be able to attend a meeting to get more information and to raise concerns on behalf of my constituents.

I found the Minister’s response in February even more extraordinary. I will read out what the letter said:

“Some parts of the”—

target operating model—

“may be influenced by the outcome of the Government consultation as the future structure of Land Registry will necessarily affect business planning—and I understand that is why Land Registry does not think a meeting with you to discuss potential impacts on staff at the current time would be productive.”

In other words, it does not want to share its true thinking, or it does not want it to be obvious that there is very little evidence behind the proposals, or it does not want to be clear and open and honest and transparent, as it should be, about what the true impact of the proposed changes will be on my constituents. I think that is extremely bad practice. The Minister should have intervened and ensured that I got a meeting to represent my constituents. I would like to hear a further response from him today to see whether he has reflected further on this issue and come to a different conclusion.

[Jenny Chapman]

I am very disturbed by what my hon. Friend has said. Many of the staff at the Land Registry in her constituency live in my constituency, which is the former constituency of the Minister. I hope that he listens carefully to her remarks and has something positive to add.

[Roberta Blackman-Woods]

I thank my hon. Friend, who has made an excellent point. It is very wrong for any employing body not to be prepared to meet a Member of Parliament, who will obviously raise issues on behalf of their constituents.

The Law Society has stated:

“No detailed evidence is provided to explain how any change to the current model could bring about increased efficiencies or effectiveness to an organisation that currently makes a significant profit.”

The Minister needs to provide evidence to support his proposals, and to address the following issues. If the move to more digital services leads to some job cuts through voluntary redundancy, can the Minister assure me that the Land Registry will continue to have a presence in the north-east, particularly in Durham? Can he explain why the delivery of land registration by a company that would permit

“greater flexibilities to operate around pay, recruitment and possibly provide other services”

would make the Land Registry’s business strategy more achievable? Will the taxpayer be getting value for money from the privatisation? I do not trust this Government to get it right, given their appalling track record on undervaluing Royal Mail. What if the same situation arises again?

In addition, there may be long-term costs to the state and users of the service, which could undermine any sale price. If there are going to be new costs or restrictions on what information businesses, individuals and public sector agencies can access in relation to land programmes, how will that be monitored? No details have been provided as to the precise nature of how any of the options might operate, making it, as we have said many times, difficult to assess accurately the extent to which any new model will work better than the existing one.

I finish with one further question to the Minister. The Land Registry in this country—I wonder whether he is aware of this—has been giving advice to many other countries about how to set up land registry services. We are seen as a model of best practice around the world. I implore him to think very carefully before he severely disrupts a model that has been shown to work so well.

[Mr Charles Walker (in the Chair)]

We have time for three more colleagues with about seven minutes each. Mr Bellingham, are you standing?

[Mr Bellingham]

No.

[Mr Charles Walker (in the Chair)]

I apologise. Mr McDonnell.

[Mr Bellingham]

I may later.

[Mr Charles Walker (in the Chair)]

Very well.

15:19

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

I shall be brief, because it is important that everyone should have a say. My hon. Friend the Member for Swansea East (Mrs James) gave a marvellous exposition of the arguments. She should rethink her decision to stand down. The contributions that she has made in the House have always been based on sound common sense, and so was her speech today.

I chair the Public and Commercial Services Union parliamentary group and want to express the view that is coming back from PCS members. The PCS represents 3,000 staff in the Land Registry, and there is a drop-in briefing from half-past 10 to 12 tomorrow in Room W1; those who want to know what PCS members are concerned about should come. The hon. Member for Peterborough (Mr Jackson) said that he has had only 10 letters this time. He need not worry: we will sort that out for him. There is real anxiety among the professional, highly competent, dedicated and committed staff.

In debates under the previous Government we argued that of course it is open to any Government to review the administration of a service, but that they should not throw out the baby with the bathwater. If a service provides high standards of professionalism, brings income to Government—which is unusual for any Government service—and is respected not just in this country but throughout the world, the last thing to do is destabilise it with rushed or hurried reform. To give the previous Government their due, they carried out an exercise, and exhaustive consultation was carried out over a long period, with staff, the relevant small and medium-sized enterprises, and professional groups. They reached the conclusion that moving to a trading operation was the best way forward.

We expected that there would then be a long period of stability. The last thing that is needed is a continuous round of reform and change, which destabilises an organisation. A professional with a family, whose job is threatened every four years will look for another profession or line of work, and I fear that that is what will happen. The professionals at the Land Registry will look elsewhere, because of the insecurity of their situation, and we shall lose the bedrock of expertise as a result of continual attempts at change—and why?

Everyone has asked the same question; what is the motivation? The service operates effectively, on every premise. It has 98% satisfaction rates. I would love that rating, for myself as an MP, and for any organisation, whether commercial, public or private. Even in the most difficult circumstances, in the trough of recession, the Land Registry still brought money to the Treasury, covering its costs and making a contribution. There was a short period of deficit, but that was overcome as soon as the economy began to lift. The Land Registry has won the respect of every professional body, and there is now an alliance: I am the chair of the Socialist Campaign Group, which is in that alliance with the Law Society and the other groups that are coming forward. That shows the breadth of the support. Yet again, however, an attempt is being made at destabilisation.

What is the motivation? We know what it is. As to the hedging of bets about the various consultation options, I am sorry, but there is one option that the Government want to pursue. It was in the report obtained by the PCS in a freedom of information request: the 2012 KPMG report, which said that the GovCo was the best way forward, to make it possible to move on to full privatisation. My concern is that that is the Government’s motivation; an attempt is being made at full privatisation, which will result in the siphoning off of the profitable areas of the service, job cuts, and the undermining of workers’ conditions of employment. The result of that will be to undermine their professionalism as well. The Government need to come clean about their long-term objectives, because, if they do not, the suspicions will remain. I should rather that they would publicly state that those are their intentions now—to follow the KPMG recommendations for full privatisation. At least then we could have an honest debate. At the moment I do not think that the debate is honest, and as a result suspicion is building. Suspicion leads to lack of confidence in the organisation and further destabilisation.

[Lilian Greenwood (Nottingham South) (Lab)]

My hon. Friend makes a passionate plea on behalf of those who are worried about the future of the Land Registry. A concern expressed in response to the consultation is that it will become less accountable to the public. Does not the experience of my hon. Friend the Member for City of Durham (Roberta Blackman-Woods) heighten our fears about the Land Registry’s future and its responsiveness to MPs’ and the public’s concerns?

[John McDonnell]

The reason the suspicion of privatisation is so clear in the minds of PCS members is that they cannot get access to information about the Government’s real plans—and nor can Members. When an organisation refuses to have a meeting with a Member of Parliament, just for some dialogue and discussion about their constituency concerns, it undermines the principles of parliamentary democracy. It is a disgrace. I do not know of any other Government organisation that has refused to meet Members, including bodies such as Her Majesty’s Revenue and Customs, where there are confidentiality issues. That refusal builds on people’s suspicions that the Government are not coming clean.

There is also suspicion about the point raised by the hon. Member for North West Norfolk (Mr Bellingham)—the short consultation period. Why is it so rushed? Why push it through so rapidly, other than to get to full privatisation before the next general election? That is unacceptable. Everyone is now asking the Government to stand back and carry out a full consultation with staff and the professional bodies that have expressed an interest; and to take into account something that has repeatedly been said—the fact that the staff in question are usually in locations where there is high unemployment and high need.

A range of examples about the impact on local economies came out of the previous consultation. My hon. Friend the Member for City of Durham (Roberta Blackman-Woods) mentioned the figure of £10 million. I think that the calculations about Wales made it something like £15 million the last time around. The impact is substantial. It is not acceptable to take a leap into the dark with respect to the organisation and the ramifications for towns and areas. Undertaking a consultation in such a way, in a rush and with the information not fully available to all the interested parties, is not good governance.

I urge the Government to stand back and think again. There are many other places where they can look for major reform, and there are areas worthy of examination, or whose long-term futures need to be discussed, in which Ministers can busy themselves: the Land Registry is not one of them. Why are 150 years of public service about to be thrown out? I think it is because of an ideological commitment to privatisation. I cannot think of any other reason. Any other Department would want to keep the Land Registry in-house because it is such a successful organisation. Any other Minister would be proud to represent such a successful area of work. Privatisation must be the motivation, and that is why PCS members are so anxious. I urge Members to come along to tomorrow’s drop-in meeting to meet the professionals and let them explain what they do, as well as the implications of the threat to their services and their own plans for making the Land Registry even more successful as a public service.

15:28

[Nia Griffith (Llanelli) (Lab)]

Thank you, Mr Walker. I shall try to be brief and not repeat too much of what has been said by my hon. Friends and, indeed, coalition Members. I congratulate my hon. Friend the Member for Swansea East (Mrs James) on today’s excellent exposé, and on all the work that she has done. We shall all miss her genuine feeling for the community, and the way she expresses that here.

I shall come straight to the point and talk about the Government-owned company being part-way to privatisation. That is what is on the agenda, and we should stop beating about the bush, and say it plainly. Privatising the Land Registry would be nothing short of daylight robbery. It would rob the taxpayer of millions of pounds. The Land Registry currently brings in close to £100 million a year. It makes a profit and does a good job. Why on earth would anyone want to hive it off to the public sector? It is madness to steal that money from the public purse. What would happen afterwards? We would stuff it into the pockets of private contractors; and what would they do? They want to maximise profits, so they would put up prices, and hike the fees for the customer. Of course, who is to say that this Government would not be wilfully incompetent and sell off the Land Registry at a bargain basement price, just as they did with the Royal Mail, depriving the public purse of the true value of this asset?

We are facing loss of income, potential privatisation and potential hikes in fees—and a monopoly—if we go down the route of a Government-owned company. Part of the argument for privatisation is always that competition will be a good thing and that prices can be driven down, but this is an invaluable asset, looking after the land assets of the country, and it is a monopoly. What would we have if that were put into private hands? There would be profiteering, just as we see with some energy companies, which have managed to make six into one—a monopoly.

It makes no sense to privatise the Land Registry, and that is before we come to the issue of trust. Currently, it has a customer satisfaction rating of 98%. Hon. Members have said that everybody would be overjoyed if their organisation had that rating. People can trust the Land Registry precisely because it is a public body. They know it is impartial. How can we possibly say we are surprised when there are bank scandals and when people whose job is to make money try to make money in all sorts of ways? Exactly the same situation would arise if the Land Registry were privatised. There would be conflicts of interest. Would we be surprised, then, if shilly-shallying were going on or there was a lack of integrity and, potentially, corruption, if people want to use such a strong word? People want there to be the utmost integrity in land transactions, but feel that the door would be left open for precisely the type of behaviour I have mentioned if it were put in private hands.

There is another issue: data protection. I am advised by the PCS that there would be nothing in law to prevent a private company from selling on personal data to buyers who wanted the information. I think we have all had a gutsful of this, with information here and there, and people’s details being sold on. The last thing people want is yet another source of data leaking out into places unnecessarily. I feel strongly that these are good reasons why we would not want the Land Registry to be privatised.

Of course, to maximise profits, private companies would look to reduce labour costs, worsen terms and conditions and make jobs more insecure. It would be harder to attract high-quality staff and there would be a greater turnover of staff, leading to loss of expertise and low morale. I make no apology for wanting to protect quality job opportunities: I do not want to see a race to the bottom. But much more than that, I do not want a poorer service. High turnover of staff, loss of morale and lack of expertise would result in a much poorer service. That is without even talking about whisking the jobs off to some far-flung place, as hon. Members have mentioned.

The point of moving some public sector jobs was precisely to offer quality job opportunities in a range of locations, where perhaps there had not been such opportunities because some main industries had closed down. What do we find in those areas? These are prestigious jobs that people want and that they try to keep for a long time, because by comparison with local rates they are good jobs. As has been mentioned, in some areas of the country where the economy has heated up, the top-quality people are being lost. That control would be lost if the Land Registry were privatised, because there would be no choice about where the jobs were; they would be put into the private sector and could go where they like.

Swansea has the largest Land Registry office. Many of my constituents work there and they have expertise. It does not take them three or four glances at a Welsh word to write it; they can write, type, speak it and say it on the telephone. They do not have to think twice about dealing with complex Welsh place names, even Llanfair-pwllgwyngyllgogerychwyrndrobwllllantysiliogogogoch. [Interruption.] I would say it again if there were time. It is essential that we keep these jobs in the public sector and do not go down the private sector route.

There is a wider role for the Land Registry. Surely, we value our land. Land is key to development and crucial to our economy. We have heard a lot about shortages of land for housing and about not being able to get planning and about land banking. If we are going to have a more strategic view and to have any opportunity to use the Land Registry in a much broader sense, again, we want to keep it firmly in the public sector.

Finally, on the consultation, why on earth are we going down this route? As has been said, past changes are just about beginning to bed in, but here we are going through some sort of phoney consultation all over again. I say “phoney” because there seems to be an agenda behind it and because we do not have the information available. There is a lack of clarity and insufficient information. We do not know why we are having this consultation.

We should strongly resist any attempt whatever to hive off the Land Registry into a Government-owned company, which would pave the way for privatisation. Privatisation would mean selling it off at a low price, as was done with the Royal Mail, ripping the public off with higher fees, leading to poorer terms and conditions for the work force and, ultimately, no doubt, some great scandal in future, which we could avoid by avoiding going down that path now.

[Mr Charles Walker (in the Chair)]

Mr Bellingham, you have four minutes, but if you spoke for three minutes I am sure the Minister would be grateful.

15:36

[Mr Henry Bellingham (North West Norfolk) (Con)]

Of course, Mr Walker. It is a great pleasure to serve under your chairmanship for the first time.

This has been an interesting and important debate. It was brought to my attention by a number of constituents whose companies I mentioned at the start of this debate, when I intervened on the hon. Member for Swansea East (Mrs James). I spent quite a lot of time in the first part of this Parliament, when I was on Her Majesty’s Government’s payroll, going to developing countries. Quite often, I would ask them what more the Department for International Development could do to help in terms of capacity building and improving the standard of government. Time and again, we were told that they really respected our Land Registry and that they wanted help embedding expertise, knowledge and capacity in that area. Obviously, if there is no fit-for-purpose Land Registry system, it will be difficult to have a proper market in property.

I respect the Minister’s intent in all this, but it is incredibly important that we get it right when he finishes the process. I am concerned about a number of points. At the moment, there is no question but that public confidence in the organisation is high. As a number of colleagues have said, the public respect this organisation and have confidence in it. The chief land registrar—the chief executive—has said that the new strategy is all

“around customer needs”

and that the organisation needs to focus on

“our customer needs…to improve our service delivery”.

However, he must be careful, as must the Minister, not to take away home owners’ confidence.

Let me say just a word about this organisation, which is making substantial sums for the Treasury. I do not have any difficulty with privatisation, but I am concerned about an organisation that is successful and making money, remitting a dividend to the Treasury. If that continues, it is good for Government finances and for the Budget deficit. I accept that, if this organisation was privatised at a premium, it would perhaps help pay down the Government national debt by a small amount, but the Minister should also think about the recurring income to the Treasury from the organisation in its current place in the public sector. That is not to say that I rule out any changes in future.

I am concerned about the need for proper consultation. In addition to the names of the companies I mentioned earlier, I shall quote an e-mail from a constituent, who says that 12 months ago he invested in a new property information franchise, which he operates from his home, employing himself and his wife. He says:

“Due to the success of our business, only last week we took office space in Hunstanton”—

a small town in my constituency—

“and employed two local people (both out of work) to keep up with demand”.

He is looking to expand and hopes to take on another four. Over the next few months he may have increased numbers further. He continues:

“These types of jobs are rare in this area and there will be no shortage of local candidates of all ages.”

He wants to build his SME up, but says:

“Needless to say, until we know exactly where Land Registry is going with its plans I am reluctant to push on with my plans”.

I hope that the Minister will meet these SMEs, which are the lifeblood of our constituencies. Will he also ensure that he has a meeting with the Council of Property Search Organisations? If he has already met CoPSO, will he update us on exactly what it said? I hope that he will take on board the strong points that have come out of this debate and, above all else, allow further time for the consultation.

15:39

[Mr Iain Wright (Hartlepool) (Lab)]

It is a pleasure to serve again under your chairmanship, Mr Walker. I remember with fond affection the Committee on the Education Act 2011. My mother sends her regards.

I congratulate my hon. Friend the Member for Swansea East (Mrs James) on securing this excellent and sensible debate. I reiterate what others have said by saying that I will be sorry to see her go. She will be a huge loss to the House. She has served her constituents diligently, and it has been an absolute pleasure to work with her.

The recording of land and property ownership is vital and has to be done with integrity, impartiality, professionalism and consistency, which has been provided by the Land Registry since 1862. The Land Registry serves a population of more than 55 million, and as its annual report stated last year, it

“facilitates one of the most active property and mortgage markets in the world”.

More than 23.5 million titles are recorded by the Land Registry, which is an essential part of the home buying market. Any changes to the service must be made with clarity and purpose and must be backed up with empirical evidence, and it is clear from today’s debate that the Government have not provided that clarity.

I have a series of questions for the Minister based on three themes: the consultation, the process and the impact on staff. The Minister published a written ministerial statement announcing the consultation on 23 January 2014. The consultation, as we have heard, is to last eight weeks until 20 March 2014. Cabinet Office advice on consultations issued in November 2013 said that consultation periods should be decided on a case-by-case basis but that:

“For a new and contentious policy, 12 weeks or more may still be appropriate.”

Employees of the Land Registry and the millions of people like us who rely on the integrity of the data held by the organisation will find the Government’s proposals new and contentious.

I hope the Minister saw the letter in The Times last week by Ms Hilary Mobbs of Leeds, which stated:

“The consultation has not been widely advertised and the (very short) consultation period ends in March.”

The hon. Member for North West Norfolk (Mr Bellingham) made a pertinent intervention reflecting the concerns of businesses in his area. Will the Minister respond to Ms Mobbs and explain why only eight weeks was decided upon? What sort of wide-scale communication campaign was put in place to alert stakeholders, including many members of the public, of the proposed changes?

On the consultation document, it appears that the Government are fairly agnostic on which option to choose, but there is some doubt about that. My hon. Friend the Member for Hayes and Harlington (John McDonnell) asked the Government to come clean on whether the GovCo is the preferred option for ultimately getting to privatisation. What is the Minister’s preferred option? In the interest of greater scrutiny and transparency, will he publish the KPMG report, as has been asked? If he does not have a preferred option, how on earth does he know how the perceived benefits of greater flexibility to deliver, greater focus on service delivery and more flexibility on pay, recruitment and the provision of other services will be achieved? How will the outcome of the short consultation affect the Government’s thinking? If there is overwhelming support from stakeholders for maintaining the status quo, will the Minister pledge to ensure that that will be the Government’s policy? What happens after the consultation? There will be a period of Government consideration, and then presumably, if necessary, legislative changes will be outlined. Does the Minister anticipate that something will be in the Gracious Speech before the next Session? Does he ultimately think that legislation will have to be enacted before the next general election?

The big theme of today’s debate is what problem the consultation is trying to solve. As we have heard time and again, the Land Registry does not seem to be a failing and inefficient organisation—quite the reverse. If the Minister thinks otherwise, perhaps he will say so. It is required by statute that income from fees charged to customers covers all the Land Registry’s expenditure. There is no burden on the taxpayer whatever, and there is no need for a call on moneys from the House.

The annual report states that the previous chief executive left the organisation

“in a healthy financial position with improving staff morale and a signed-off Business Strategy.”

The Land Registry, as we have heard, achieved a surplus of £98.8 million, showing that the organisation is on top of weeding out inefficiencies. Cost per unit is £23.36, which is significantly better than the key performance target of £28.41. The return on capital employed was a hugely impressive 23.4%. Many good private sector organisations would kill for such a return on capital employed. Net assets approach £0.5 billion and the cash-flow position at year end is positive, with £472 million cash in the bank. This year, the Land Registry paid a dividend back to the Treasury of £26 million. Under no possible criterion could the Government claim that there is a need for private sector financial rigour to be injected into the organisation. The Land Registry is well run and the financial metrics are sound.

As we have heard time and again, the Land Registry has 98% customer satisfaction and, to quote the annual report again, enjoyed

“target-beating performance in terms of the quality and speed of our registrations.”

In such circumstances, I do not understand what the Government are doing. That is especially pertinent when paragraph 37 of the consultation document explicitly states:

“The proposals outlined in this document would have a very limited impact on customers”.

If that is the case, why on earth do it? Is it really to ensure that the Land Registry is fit for purpose in the digital age, with a central focus on digitising land registration services? If that is the case, why cannot it be done under the present statutory arrangements? The Land Registry seems to be diversifying its business model and being more innovative. Why is a change in corporate and statutory status necessary? Given the high level of customer satisfaction, will the Minister say how he anticipates fees will move in the next few years? Does he anticipate that fees will increase and, if so, to what extent?

The consultation document states that there is scope for additional services and refers to amending the Land Registration Act 2002. Will the Minister provide more detail? What other services does he anticipate and what services would he like the new entity to provide? There is talk in the consultation document of

“greater access to a richer data set.”

What does that mean? It is vital that customers have faith in the integrity of registering land. To quote Ms Mobbs from Leeds again:

“One could envisage a situation, as has arisen with our power providers, whereby the registered title to all properties would be in the hands of an overseas company or one with its own commercial interests in the property market. This concerns me.”

I can understand Ms Mobbs’s concern. What will the Minister do to address that concern? Will a vertically integrated business model, whereby a company provides the full range of property services to the customer, whether conveyancing, land registry or otherwise, be acceptable to the Government? Would the Minister be concerned if, say, Zoopla owned the company? What about a bank? What will the Government do to put safeguards in place to prevent that from happening? How will data protection be safeguarded? There is no clarity whatever on that in the consultation documentation.

Finally, I want to address the Land Registry’s staff. More than 4,000 people spread across the country provide a prompt, professional and efficient service. We have heard a number of hon. Members talk about the great work that their constituents do for the Land Registry. I have constituents from Hartlepool who work for the Land Registry in Durham. What will happen to those staff? The consultation document states that

“we expect that the majority of staff would transfer to the service delivery company and would cease to be civil servants.”

There is a lot of ambiguity in that short sentence. What does the Minister mean by “majority of staff”? Does he mean that all current staff who want a job will have a job, whether it is in the new service delivery company or in the proposed office of the chief land registrar? If so, what about location? Would my constituents who travel to Durham be required to travel to Swansea if they want to keep their job in the new organisation? Will the Minister provide clarity? Does it mean that there will be rationalisation of both work force and locations? What is the TUPE situation? Can the Minister make any comment on pension entitlements for current staff?

The Government have poor form on such things, whether one considers the botched change in respect of the GoCo for the defence procurement function—that change was very similar to that proposed for the Land Registry—or the Royal Mail privatisation, which short-changed the taxpayer. The Government are in danger of making the same mistakes again. It is difficult to avoid the conclusion that, regardless of the organisation’s performance and given the absence of evidence, the process is merely a means of privatisation. I ask the Minister to exert caution, provide more evidence before making a decision and consult widely—that has currently been eluded—before embarking on such important yet irreversible changes.

15:50

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

I, too, congratulate the hon. Member for Swansea East (Mrs James) on securing this debate on an important subject. I am also sorry that she is leaving us at the next election. I am sure that she is not considering retirement, and I wish her well in whatever form of public politics she continues to pursue. I thank all hon. Members who have participated in the debate. I will try to reply to a number of their points, but if I may, as there were a number of questions—not least those fired at me by the hon. Member for Hartlepool (Mr Wright)—I will reply by letter to some in the interests of time.

A well-functioning property market is critical to the UK economy. Ensuring that the market functions properly has long been one of the Land Registry’s main tasks. It recently celebrated a landmark 150th year and continues to be a cornerstone of property ownership in England and Wales. It undertakes a range of functions and responsibilities that are critical to the property market operating effectively. In the past, successive Governments have been at pains to ensure that land registration procedures keep pace with a dynamic and rapidly-changing property market. As we look to the future, it is important that the Land Registry is able to modernise successfully and move into the digital age. The Land Registry already provides a number of services through digital channels, but it is looking to become a leader in digitising land and property services, and in the management and reuse of land and property data.

Accordingly, its ambitious new business strategy is focused on a number of areas: the digitisation and re-engineering of its core registration services, which should reduce processing times, risk of error and the costs of those services; playing a wider role in the land and property market, including being able to take on other adjacent registers; and maximising the reuse of property data for the benefit of the wider economy. Reduced processing times, errors and costs, and wider services and better access to public sector data, will all bring significant benefits for customers and make it easier to register land in England and Wales.

The strategy also reflects our broader digital, efficiency and modernisation aims and as such is a key priority. The experience of other countries in modernising their property services makes a compelling case for us to realise those benefits at an early stage. A number of other countries and states have already successfully digitised their land registries, so it is important that England and Wales do not fall behind where there are useful lessons that could be learned.

Before I turn to the commercial models, I will say something about local land charges. The Land Registry is looking to become the sole registering authority for local land charges, a job that is currently undertaken separately by each of the 348 local authorities. The benefit of the Land Registry providing a single central solution is that it would result in cheaper, quicker and more standardised services, so avoiding the current postcode lottery.

Commercial models dominated the debate. The hon. Member for Swansea East fairly asked: “If it ain’t broke, why fix it?” I will reply directly to that. Of course, the Land Registry is profitable, but we have a responsibility to review continually whether the business can drive further benefits to its customers and the wider market by driving digital by default services, which could deliver lower-cost services and reduce processing time.

The proposal in the consultation to introduce a new service delivery company is aimed at supporting the business in delivering its business strategy in the best way possible. We have been working with the business to consider whether the current model is fit for purpose or whether there may be benefits in considering alternative commercial models. Following that, there should be a number of benefits through a greater focus on service delivery, greater operational flexibility and a more clearly defined relationship with Government. Central to any change in the commercial model is the guiding principle that we must continue to protect the integrity of the registry in such a way that its role in underpinning the property market by giving confidence to buyers, sellers and lenders is not compromised.

[Mr Stewart Jackson]

I am sure the Minister would like to reassure us on the comments made by the then Lord Chancellor at the time of the feasibility study in 2011. He said that

“the registry’s state guarantee of title to land and property is essential, and that it must be retained in any arrangements that we make.”—[Official Report, 29 March 2011; Vol. 526, c. 151.]

[Michael Fallon]

Indeed. The proposal being considered in the document is to introduce a new Land Registry service company that would have responsibility for the performance of the service delivery functions. There would be a separate office of the chief land registrar retained within Government primarily to perform the regulatory and fee-setting functions. It is also envisaged that the indemnity arrangements will continue to be state-backed. The new company, if we choose to go down that particular road, could focus on delivery. Its ability to carry out additional activities would no longer be narrowly constrained by legislation. It would be outside the civil service and would have greater flexibility on pay and recruitment.

I emphasise that no decision has yet been taken about the ownership of such a new company, should we move forward with the proposal to create it following the consultation. A number of models are being considered, but the oversight that will be retained by the office of the chief land registrar would ensure that Land Registry companies and the integrity of the register would be protected irrespective of ownership. Models being considered include a wholly owned Government company, a joint venture and a contracting-out model. It is Government policy to assess options for moving assets to the private sector where there is no longer a strong policy reason for continued public ownership or where there is potential for an asset to operate more sensibly and efficiently in the private sector.

I was asked what the transition period means—it means the digital transformation phase. During that phase, we see benefits in partnering with the private sector, whether the status quo is maintained or whether there is a change in model, as considered by the consultation. The form of that partnership with the private sector would be different under each scenario. Looking internationally, a range of commercial models have been adopted to deliver the digitisation of land registration, but in each case there has been partnership with the private sector to bring in the capacity and capability needed.

I was asked about data protection. I confirm that the data protection procedures that currently apply would apply to any new service delivery company, to ensure that personal information is not mishandled. I was asked about the KPMG report, which was prepared in March 2011. Many parts of it are no longer relevant, but I understand that a redacted version of the report has been supplied to one of the unions under a freedom of information request.

My hon. Friend the Member for North West Norfolk (Mr Bellingham) asked me specifically about conveyancing self-service. I make clear to him that the current customers of the Land Registry will have their views sought before any new or revised services are launched. They would certainly be consulted again before any such services were mandated by the Land Registry. I hope that that reassurance will be of use to him.

I was asked about meetings with MPs. I say to the hon. Members for City of Durham (Roberta Blackman-Woods) and for Darlington (Jenny Chapman) that I do not think it is satisfactory that the meeting was refused. I am asking the management of Land Registry to look at that again to see whether, as we come to the close of the consultation period, those meetings can now be organised with the hon. Member for Darlington and her colleagues. I hope that it offers some comfort to her that my former constituents are still at the forefront of my mind.

Local Television Stations

Tuesday 25th February 2014 Westminster Hall

16:00

[Mrs Madeleine Moon (Bridgend) (Lab)]

It is a delight to speak under your chairmanship, Mr Walker.

The plans to introduce local television throughout the United Kingdom had cross-party support. The Minister had previously concluded that legislation on local television came as a result of “all-party support”. He said that, in his opinion, it was one of the Government’s “more popular policies”. Given the lack of competition for that dubious honour, I am not exactly sure how wonderful an accolade that is, but nevertheless.

Wales, rightly, has a reputation for the quality of its contribution to the television industry. We are proud to be associated with genuine screen legends such as Richard Burton, Anthony Hopkins, Michael Sheen and, more recently, Rob Brydon, an ex-Porthcawl comprehensive school pupil—the school is in my constituency—and Ruth Jones, from the popular “Gavin and Stacey” programme.

Those individuals have not just left Wales and gone to develop their careers outside Wales; they have come back to Wales and invested in developing the ability of Welsh people to get into television, theatre and film. For example, Ruth Jones has set up Tidy Productions, which specialises in comedy and comedy drama set and always filmed in Wales. New investment is coming all the time.

Television companies are recognising the benefits that Wales can bring to their work. Pinewood Studios announced in 2012 that it would move the bulk of its studio facilities to Cardiff. It has brought the largest indoor film studio in Europe to Swansea, where top dramas such as “Da Vinci’s Demons” are filmed. Wales is also the home of some of the BBC’s most successful programmes recently, such as “Doctor Who” and “Sherlock”, which were filmed and made in Wales.

Wales has become the home to innovative production companies and companies developing local talent and skills. It’s My Shout Productions, headed by ex-Porthcawl drama teacher Roger Burnell, seeks out and showcases emerging talent and skills. The company produces around 30 short films a year for Welsh television and has won several awards. It also has a training programme to pair young people with professionals in their chosen area of interest, so that their skills can be developed. All that shows how Bridgend and Wales as a whole have contributed to our television industry

From the start, Welsh Members of Parliament have recognised that the introduction of local television services would bring us new opportunities, which we were eager to embrace. The introduction of local television in Wales moved relatively quickly. Made Productions was given a 12-year licence as the first local TV station to be based in Cardiff, called Made in Cardiff. As part of its agreement with Ofcom, it will provide a wide range of programming, focusing on local news, sport, traffic, community affairs and local entertainment.

Welsh MPs recognised the opportunities to showcase our skills and talent. From the Royal Welsh College of Music and Drama to the engineering department at Bridgend college, there were opportunities to be grasped. We recognised the wide range of employment opportunities for our constituents that the new and emerging talent, production and TV opportunity offered. The creative industries are not just for performers or just about actors or musicians; they bring work for writers, caterers, handling crew, set designers, movers, drivers, electricians, scaffolders and costume designers, as well as lawyers, salespeople, web designers and economists. All would have opportunities for work, thanks to Made in Cardiff coming to Wales.

Unfortunately, as the process moved forward, it became clear that the situation in Wales—as opposed to England and Northern Ireland—was not as positive as we had hoped. It is particularly disheartening that Made in Cardiff will be allocated channel 26 on Freeview, compared with its counterparts in England and Northern Ireland, which will be allocated channel 8.

Channel numbers have a direct impact on viewing figures—the lower the number, the more likely a viewer will turn to that channel. The majority of all viewings on Freeview take place on the first 10 channels. England and Northern Ireland have been included within the first 10, so will the Minister tell us why Wales is being disadvantaged by being allocated a channel that few viewers will ever explore?

As recently as two weeks ago, the Minister reaffirmed his personal commitment to maintaining the prominence of our public service broadcasters. Both the Secretary of State and her predecessor have regularly spoken about the importance of such broadcasters. Therefore, why are public service broadcasters in Wales and Scotland being treated in this way, with services in England and Northern Ireland given a higher priority on Freeview?

The Minister has previously admitted that the criterion for public service broadcasting—appropriate prominence —is “a relatively vague term”. He said that it was important that we update the regulations. Will he tell us when that will be done, and why it was not done before the roll-out of local television?

The Minister also claimed that the presence of S4C in the Welsh television market is “an idiosyncratic situation”, a description I am not sure S4C or indeed the people of Wales feel particularly flattered by. Is the Minister claiming that the existence of S4C means that, while local television in England and Northern Ireland will be able to occupy the channel 8 slot, local television in Wales must be satisfied with channel 26? S4C does not operate in Scotland, so why is Scottish local TV also going to be placed at 26? The argument about S4C simply does not make sense to me.

The Minister has said that we should be grateful to be at channel 26, as when the plans were originally tabled, it was the intention that local television in Wales should be allocated channel 45, and that 26 is a huge improvement. While it is undeniable that going from channel 45, which most viewers would never find, to channel 26 is better than nothing, that will still place the channel below shopping and music channels. If the local television station is placed below those sorts of programming, will anyone ever find local television in Wales? Does the Minister feel that that will bring appropriate prominence? If channel 26 is good enough for Wales and Scotland, why is it not good enough for England and Northern Ireland?

[Kevin Brennan (Cardiff West) (Lab)]

I associate myself with the points being made by my hon. Friend and wish to add to them. One of the problems for local television is the marketing of a new and important service. Some of the first 10 channels in Wales—such as ITV2 at channel 6 on Freeview, BBC3 at channel 7 or ITV3 at channel 10—have lots of opportunities for cross-marketing, such as by ITV1 or other ITV services, whereas local television does not have such opportunities. That is why it is crucial for local television not to have to spend lots of money on marketing because it is on an obscure channel lower down on the dial.

[Mrs Moon]

My hon. Friend made a point that I intend to come on to, but one that I hope the Minister is listening to, because this matters a great deal to us in Wales.

Wales has experienced a double injustice. Services in Scotland will also suffer from being placed on channel 26, but they will join England and Northern Ireland on Sky channel 117, while Wales has been given channel 134. That is a double reduction in prominence for Wales compared with the other nations. Will the Minister explain why? Why is Wales being singled out in that way?

The reduction in viewers will severely harm the income that local television services will receive and use to make and develop programmes, taking up the point made by my hon. Friend the Member for Cardiff West (Kevin Brennan). Made Television will be forced to allocate more of its resources to market its position on channel 26, because that is so low down the list, and that will result in reduced programme output and employment opportunities—the absolute opposite of what the Minister was trying to achieve and which we in Wales were desperate to be provided.

The responsibility for channel allocation on Freeview lies with Ofcom. Clearly, it does not have the powers to force any type of change to the position that Made in Cardiff will be placed in on Freeview. The Minister has previously spoken of his desire to update the regulations. Is he consulting with Ofcom and will he grant it the necessary powers?

The previous debate in Westminster Hall left us with a guarantee that the Minister would go away and keep us updated on a consultation to grant Ofcom those powers. He expected the consultation to take about three months, but he gave no indication of when it was likely to begin. Since then, while he has been working on the issue, has a date been set? If not, will he explain why we are still waiting for a consultation to begin?

The Made in Cardiff channel launches this summer. Unless a consultation is about to start in the next few days, no decision will be made in time for the company to do the marketing necessary before the launch of its new channel. The argument is not esoteric, but about basic business, and it could demonstrate a greater chance of success for Made in Cardiff. It is important for the Minister to address the matter as soon as possible.

This is the second Westminster Hall debate on local television in two months. The channel in Cardiff, and the one in Glasgow to which the previous debate referred, launch in the summer. How can we allow that launch to take place with the channels at a lower level on the electronic programme guide than in England and Northern Ireland? Why are the two devolved Administrations in Wales and Scotland being dealt with in a totally different manner?

Prominence on the EPG has been used to ensure that local services in England and Northern Ireland will be given the spot that they deserve, without detriment to Channel 4. The Minister also places a lot of importance on the prominence of public service broadcasters. Can we therefore agree today that action will be taken to ensure that Wales does not get a worse deal than the rest of the UK? Any consultation needed by the Minister in order to make changes to the regulations affecting Ofcom, so that it can address greater prominence for Made in Cardiff, should begin, so that the three-month period indentified for the consultation can be completed and a decision made before the marketing for Made in Cardiff starts.

I hope that the Minister understands that for us in Wales the matter is of grave importance. We have a huge reservoir of talent and we want the opportunities for people, in particular young people, to find work in the creative industries across a wide spectrum of job and skills. I hope that the Minister has some positive news for us today.

16:15

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)]

It is a great pleasure to serve under your chairmanship, Mr Walker. It is one of those moments to realise that someone I came into the House with is now of such august importance that he is chairing a Westminster Hall debate.

I am grateful to the hon. Member for Bridgend (Mrs Moon) for initiating the debate. She started with her glass half full, but by the end her glass was half empty. I hope to refill her glass, or at least to persuade her to take a slightly different perspective to the one suggested by the tone she took later in her speech. I join her in paying tribute to the many Welsh stars mentioned in her opening remarks, in particular Michael Sheen, Rob Brydon and Ruth Jones. I thank her for noticing the fact that Pinewood Studios last week signed a deal to develop in Cardiff.

It is also probably worth noting that one of the reasons for such a renaissance in television production is this Government’s decision to continue the film tax credit and to extend it to high-end television drama and animation. There has been a real renaissance in the animation industry even over the past six months since the tax credit was introduced. We hope to have some news shortly on our application to the European Commission for a tax credit for the video games industry. The Chancellor has also announced proposals to extend a tax credit to the visual effects industry, as well as to regional and touring theatres. There is therefore good news for the creative industries, which the statistics show are flourishing, and Wales—south Wales in particular—is one of the hotbeds of their development. In saying such things, I am echoing the hon. Member for Bridgend, who was setting the context for local television not only in Wales, but throughout the country.

The last time we debated local television was in connection with its prominence in Scotland, when I generously said that I regard it as a cross-party issue. I hope that I am not considered churlish, however, in pointing out that the genesis of the policy emerged under the previous Secretary of State, my right hon. Friend the Member for South West Surrey (Mr Hunt), who is now the Secretary of State for Health. His passion in opposition was to introduce local television, and his energy and drive as Secretary of State saw it come about. We are on the verge of realising his vision, albeit with support from all parties.

Last year, I went up to Grimsby to visit Estuary TV, one of the first local television stations to start broadcasting. It is working in partnership with local media and local universities. Local television therefore has the enormous opportunity to provide not only the chance of yet another media outlet for us, but so many community organisations with the kind of media coverage that they need and deserve. The local television companies also have the opportunity to forge strong partnerships with many of those community organisations.

The hon. Lady rightly referred to Made Television, which will be running the Cardiff local television service. It will serve a wide area stretching to her constituency. I gather that it is due to launch as early as this summer. Along with Bay TV, it was awarded the Mold and Swansea licences by Ofcom in January. It has set out a range of plans to develop a wide range of compelling programming, with local services broadening the choice for viewers.

That is just the tip of the iceberg: over the next three months we will see the start out of the roll-out of local TV in earnest. As well as Estuary TV, which I have already mentioned, London Live will launch shortly, as will Mustard TV in Norwich and Notts TV in Nottinghamshire. We hope that the majority of the 19 phase 1 channels will be on air by autumn.

Significant public money is being invested in the launch of local television services. In 2011, as part of the most recent licence fee settlement, which runs until March 2017, the Government made £40 million available, £25 million of which has been allocated to the development of the local TV transmission network. That work is being undertaken by Comux, which was awarded the local TV multiplex licence by Ofcom in January 2013. The remaining £15 million has been allocated for the purchase by the BBC of the local TV content that will be generated. Detailed arrangements for the distribution of that funding have now been agreed with the BBC executive. That investment will give local TV the best possible chance of establishing itself against the ever- increasing choice that viewers have, whether watching on traditional linear channels or watching catch-up and downloadable content available on other platforms.

So far, I hope that everybody’s glass remains firmly half full. The creative industries are thriving, and are supported by generous and ever-growing tax credits brought in by this Government. They will be supported by the vision of the former Secretary of State, my right hon. Friend the Member for South West Surrey, for the introduction of local television for the first time in the UK.

At this point, however, the glass becomes half empty, as we debate the prominence of local television, particularly in Wales. In her speech, the hon. Lady tried to give the impression that I was somehow saying that Wales should be duly grateful for what we are giving it. I certainly would not seek to give the impression that I thought that S4C was somehow an idiosyncrasy. What I meant was that S4C is a unique channel for Wales. It represents something like £100 million of annual investment in Welsh language programming, much of which is of an extraordinarily high quality and is exported around the world. However, that leads to difficulties in trying to find an appropriate slot for local television.

When initial bids were being sought for licences, the slot was at channel 41. As a Government, we are keen to see local television succeed, and we want to see it move up the EPG rankings where possible. As slots have become available I am delighted that local television has moved up the rankings and that Scottish and Welsh local television channels have moved from channel 41 up to channel 26. But there is a debate going on about this matter—the hon. Lady is aware of the recent debate led by the hon. Member for Linlithgow and East Falkirk (Michael Connarty) on 18 December.

It is anomalous for local TV to have a different channel slot in different parts of the UK. It means that local television is less prominent in Wales and Scotland, and causes problems for local television in developing promotional activities collectively around a single channel number. But local television was not coming into a greenfield site. We need to balance the needs of important services that already exist in Wales and Scotland and currently occupy the channel 8 slot. There is also the importance of certainty in the EPG regime for commercial broadcasters so that they can maintain their levels of investment in programming.

We made it clear in our strategy paper “Connectivity, Content and Consumers”, which we published last summer, that it is important that public service content should have prominence on TV platforms, in order to achieve our wider broadcasting objectives, but the Communications Act 2003 makes it clear that Ofcom rather than Government should determine the appropriate level of prominence. The Government’s role is to determine which PSB channels should be included in the prominence regime, and local TV was duly designated to be included in 2011.

Ofcom’s code of practice on EPGs, which was produced as a result of the 2003 Act, requires EPG providers to comply with three general principles. One is that Ofcom will

“have regard to the interests of citizens and the expectations of consumers in considering whether a particular approach to listing public service channels constitutes appropriate prominence”.

That system has hitherto broadly worked well, but it is important to recognise that it is not for Government or Ofcom to require a channel to have a specific slot on an EPG, but for the EPG providers to draw up a fair policy on how to use free slots.

[Kevin Brennan]

The problem is that, as the Minister has quite rightly said, this idea is the Government’s baby—although it has had support from all parties—and he is rather neglecting its birth in Wales and Scotland. In the past, he has promised a consultation on the matter, and in a recent answer to a written question from me, his Department said that the consultation was due to start “shortly”, but it was due to start shortly before Christmas. Before he concludes his remarks, will he tell us exactly when the consultation will begin and whether in his view the channels should ultimately be in the top 10 on Freeview at the very least?

[Mr Vaizey]

I will conclude my point and then come on to when we are planning to publish the consultation.

It is important to stress that the situation is different in England and Northern Ireland, because the channel 8 slot used there for local television is used by BBC Alba in Scotland and by Channel 4 in Wales since the usual slot for Channel 4 is occupied by S4C in Wales. That is why the channel 8 slot is not available for local television services in Scotland and Wales. When we originally put together the policy on local television, the slot available was channel 45, so there have been significant changes.

I hate to give a response to the hon. Member for Cardiff West (Kevin Brennan) that he will almost certainly regard as inadequate, but I will have to answer in the same way as I have answered him before, which is that we are due to publish the consultation shortly. We have it drafted and have had discussions with Ofcom to clarify exactly what powers it currently has so that we can make it crystal clear in the consultation what powers we seek to change. The consultation will go for Whitehall clearance shortly, so we are on the verge of publishing it. I hope that will be in the next few weeks.

[Mrs Moon]

I will be brief. Will the Minister tell us whether that “shortly” will be short enough to let Made TV hang back from putting out publicity on which slot the channel will have, in the possibility that it will have an opportunity to move up to another slot before its launch in the summer? That is the dilemma being faced at the moment.

[Mr Vaizey]

It is important to emphasise that those people who have bid for local television licences—and we welcome the people who bid and who have been awarded the licences and will run those pioneering services—have gone into the process with their eyes open. They knew what the slot was when we began the consultation. They have seen the slot change as we have encouraged Freeview to push local television up the rankings when slots became available. The hon. Lady will have worked out that if we publish a consultation in March, there will be a period of consultation and then decisions about making changes will have to be taken. There is no way I can offer any kind of guarantee to Made TV or any other local television provider that changes will happen rapidly enough to move its slot up. It is, in any event, a consultation, and I cannot prejudge its outcome. I am sorry to disappoint her.

To return to my earlier theme, we should look at local television from the perspective of the glass being half full. It is a fantastic innovation that has brilliant cross-party support. We are going to see pioneers and innovators take to the airwaves over the next six months. I hope that the next debate we have on the matter will be celebrating the successful launch of a first for the UK broadcasting ecology.

Council Tax Banding

Tuesday 25th February 2014 Westminster Hall

16:30

[Mr Mark Spencer (Sherwood) (Con)]

I congratulate the Minister on his impeccable timing. I welcome this opportunity to set out my concerns about council tax banding. The topic may not fill the whole half hour, but it is too wide to explore in an oral question.

Sherwood is seeing an enormous amount of development, with new houses being built throughout the constituency. The new occupants are keen to see which band their house falls into when the local authority sends its council tax bill. They are usually fairly content with the band they are given, as long as it is consistent with those of their neighbours.

Council tax bandings are obviously subjective and are decided by the valuation office. Most people accept that they must pay council tax and accept the band they are put into, but when one of their neighbours in a similar or larger house is given a lower banding, that causes enormous frustration. That is happening to a great extent on a new estate in Hucknall in my constituency. Will the Minister tell us how the valuation office reaches its decisions and how we can obtain more consistency in the bandings so that my constituents understand the valuation office’s decisions?

There have been several successful and unsuccessful applications for changes to council tax bandings for properties on the housing estate just off Papplewick lane in Hucknall. Perhaps you will indulge me, Mr Walker, by allowing me to talk through some examples from my constituents. I have been contacted by Mr Paul Wennington of 11 Falcon way, Mr and Mrs Paine of 7 Falcon way and Mr Gary King of 8 Hobben crescent on the same estate.

Mr King’s case is particularly interesting because of several references to the locality of his property near social housing and whether that should or should not have an impact on the banding of a property. Mr King has come to a conclusion about that and there is a strong argument, which I will come back to, about social housing and its relevance. In the evidence, the valuation office was clear. It said that the listing officer’s representative contended that band E was correct for Mr King’s dwelling because it was in line

“with the established tone of value/band for such properties based on its size on the appeal property’s estate and the adjoining development built by Bellway Homes which also had social housing in the locality.”

There is nothing too controversial about that. The listing officer’s representative then said that in view of the evidence he

“considered that the tone for properties of the appeal property size supported band E notwithstanding the proximity of the social housing and asked the panel to dismiss the appeal”.

At that point the valuation office was clear that social housing in the locality of Mr King’s property did not have an effect on its value and the band it should be in.

Reference was later made to other properties on Peregrine road, where an appeal was allowed. The panel noted:

“Regarding the appeal property’s specific position on the estate…the views from the front of the property looked directly down Falcon Way and overlooked the social housing, which was only several houses away. The panel was of the opinion that this view disadvantaged the appeal property more than those which did not overlook it in a similar way. The panel also noted that all access to and from the social housing was past the appeal property”.

There seems to be some inconsistency: in one appeal, social housing next to someone’s property was considered to lower the value to band E, but on another occasion it was not. I am not here to discuss whether social housing in proximity to a property should or should not reduce council tax; there is an argument for saying that the landlord is irrelevant. What is relevant is how tenants conduct themselves, and I am sure that many owner-occupiers in very expensive properties could be considered to be antisocial neighbours. I am not sure whether having an antisocial neighbour is a consideration in deciding what band a property is in.

I am asking for clear guidance to the valuation office on the bands. I am aware that banding was set in 1991 and that it is difficult to compare various bands, but my constituent has gone to the trouble of researching properties with similar values back in 1991 in the Hucknall area and most of them come out with an average value of around £70,000, which instead of putting them in band E puts them nearer the top end of band C. One can imagine the frustration when my constituent’s bill and those of several of his neighbours arrived showing that their properties were in band E, particularly when some of his neighbours appealed against that decision and had their appeal granted, dropping to band D when other neighbours’ appeals were rejected and they were told that their banding would remain where it was.

When developers propose new properties, they come up with a plan and allocate names to the types of properties. A three-bedroom detached house will be given a style name and a value. A four-bedroom house will be given another style name and value. On the same estate, the developer built properties identical in every way, shape and form, including the design, type of bricks and type of tiles, yet some have been put into a different council tax band.

In summary, I want to draw the attention of the Department for Communities and Local Government to the frustration that my constituents feel at the council tax banding that the valuation office is implementing. If the Minister can do anything to give it more support and guidance so that its approach to banding is more consistent, that would be greatly appreciated. If that guidance were forthcoming, perhaps some of my constituents could re-appeal the decisions against their banding on a more level playing field.

16:39

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

It is a pleasure to serve under your chairmanship, Mr Walker. I thank my hon. Friend the Member for Sherwood (Mr Spencer) for securing the debate, as it provides an opportunity to discuss the council tax banding system and the processes of the Valuation Office Agency. My hon. Friend has, as always, fought hard in his speech to ensure that he gets the best result for the residents of Sherwood. I know that he does that on a daily basis across the House, lobbying myself and other Ministers. He is right to do so.

I want to be clear: I am keen that the council tax banding process is seen to be open, fair and transparent, and that council tax payers are clearly able to see and know their rights if they want to challenge those bands. It goes without saying that a person’s council tax bill should be based on the correct council tax band for their property. None of us could possibly want to argue against that.

I want to reiterate the Government’s position that we do not plan at the moment to make any changes to the banding system; I appreciate that that is not the point my hon. Friend was making. We are looking to do nothing of the sort, either by adding more bands or splitting them, but I appreciate that there has been a lot of talk about that. We are aware of media reports calling for extra bands to cover higher-value properties. Just a couple of weeks ago in the Chamber, Labour refused to rule out adding more bands and increasing council tax.

We have no plans to introduce anything such as a mansion tax or anything else, and we have made it abundantly clear that there will be no general revaluation during the lifetime of this Parliament, because that would be costly and increase council tax bills. We have seen how that worked in Wales in 2005, when four times as many people moved up the bands as down. Wholesale revaluation is simply not the answer; it just causes more problems.

[Jonathan Lord (Woking) (Con)]

Like the Minister, I congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing the debate. I am delighted that the Minister is ruling out any further council tax bands. Our hard-pressed council tax payers are paying quite enough as it is.

This debate is timely; in my constituency of Woking, we have a number of new developments—by the way, I thank the Minister for ensuring that some of the new homes bonus money is going to local authorities rather than to local enterprise partnerships. The debate is timely and important. Thousands of houses are coming on stream in Woking and there must be an absolutely transparent process that works, so that people are allocated to the right band and those bands are of equivalence to the other properties in my constituency.

[Brandon Lewis]

My hon. Friend makes a valid and fair point, particularly regarding transparency. It would be useful for me to set out how the system works, how bands are assigned—which will help deal with the direct point raised by my hon. Friend the Member for Sherwood—and what the taxpayer can do to challenge their banding.

In England, the main role of the Valuation Office Agency—or the VOA, as we all know it—is to provide the valuations and property advice required to support taxation and benefits. There are eight bands—A to H—and every single one of the 23 million properties in England that are subject to council tax is assigned one of those bands by the VOA. They are based on the open market value as of 1 April 1991, as my hon. Friend mentioned.

Each band has a range of values. For example, band D is for properties valued between £68,001 and £88,000 in 1991. That highlights that a property could have its value changed and still not change bands. It could be valued at £87,999 and be in band D, then it could be reassessed and revalued, and considered to be worth £70,000—more than a 10% change—but still stay in the same council tax band. That could be one reason why residents can see no change in band despite a review on value, but I shall come back to that.

The common valuation date of 1991 means that all properties, including newly built properties, are valued on a fair and consistent basis. That applies equally to all homes, regardless of general fluctuations in the property market since then. The banding system provides a link between the value of a dwelling and the level of council tax. Homes will vary according to a range of factors; some are obvious and some not so. If we think about the value of a property that any one of us may own, its age and size will all have an effect on the value, as might the level of modernisation and improvement. That can again lead to a variation in valuation between two properties that, at first glance, may look very similar— or, indeed, the same.

The VOA looks at the property details for a property, and then looks at sales that took place on or around the valuation date of 1991. Sales from around that time on comparable properties are the strongest indicator of value. As the bands cover a range of values, many different types and styles of property can fall in the same band. Equally, fairly similar properties can fall into different bands, depending on their value in 1991. For example, if the band level is £68,001, the property could be in a different band for the sake of being £10 or £15 apart in value, in theory.

When council tax was introduced in 1993, the Government of the day did not want to discourage people from improving their properties for fear of incurring additional council tax liability. Council tax is not, and should not be, a tax on home improvement or extensions, but such changes are taken into account when a property is sold. That is intentional and there are no plans to change it.

[Mr Spencer]

I am grateful for the Minister’s time and for his explanation. I hope that he recognises that I am talking about brand new properties on the same housing estate, built to the same set of drawings, using the same bricks and the same tiles—they are identical apart from the fact that they are 100 yards apart—that are in a different band. That is what is causing the frustration.

[Brandon Lewis]

I understand my hon. Friend’s point and I will turn to that specifically in a moment. Having said that, in various parts of the country, literally being a few yards apart on opposite sides of the road can make a difference in valuation, even for the same properties. I appreciate that that can be frustrating for residents, but it can have an impact—it is about the valuation. It is important to be clear about how the system works, as that will feed through to give a better understanding, enabling me to give a clearer answer to where we are and what my hon. Friend’s residents can do.

As my hon. Friend rightly pointed out, there can be inconsistencies. Taxpayers can at times find themselves living in properties, new or old, that seem identical or even smaller than a neighbour’s that is in a lower band. The property has a different band level because improvements have been made to it, or there are changes that are not clear at first. Even if it is only because it is on the other side of the road, there can be a difference in valuation.

It is clear from my hon. Friend’s comments that he has called today’s debate because there is a specific issue around new-build properties for his constituents, who find themselves in a situation in which the bandings are different for similar or, as he outlined, effectively identical properties nearby. I can understand why that would be frustrating not only for them, but for him in his work to represent them.

If council tax payers believe that their band is incorrect, they can contact the VOA with their concerns—I appreciate that there is an issue with that, which I shall come to—and the VOA will review a property’s banding and amend it if the evidence suggests it is incorrect. While I am here on the record—this is not so much for my hon. Friend’s benefit—I want to be clear that council tax bandings can be challenged in two ways. First, the council tax payer has formal challenge rights in the first six months of either becoming the taxpayer of a property, or against a change made by the VOA, or where a material reduction in the value of the property or locality has happened since council tax was introduced.

When council tax payers do not have those formal rights, taxpayers can have their band reviewed by the VOA for free, if there is something to suggest that the banding might not be right. The VOA uses its statutory duty to maintain fair and accurate bandings as the means to provide a free banding review service, which applies to all occupiers, whether or not they have proposals rights.

I make that point clear because I know that some agencies out there—an increasing number of companies acting as agents—are promising council tax payers that they can get their bands reduced. I want to be clear: although some of those are charging up-front fees, I am keen for taxpayers to know that they can approach the VOA directly to challenge their banding. Full details are on the VOA’s website.

There is also the ability to have the case appealed to the valuation tribunal when the taxpayer and the VOA cannot agree. It seems to me, from the comments made by my hon. Friend the Member for Sherwood, that that is where the crux of the issue in his area may lie. The valuation tribunal is independent from the VOA and will hear evidence from both sides before making a final decision. That can then be appealed to the High Court on a question of law, but that does not necessarily help the residents.

I say to my hon. Friend that after listening to what he said, he has outlined a potentially apparent inconsistency in the valuation tribunal decisions, rather than in relation to the VOA. I would like to invite him to come and see me, and I will arrange for him to have a meeting on behalf of his residents to look at that specific issue.

If there is an inconsistency, we want to make sure that that is driven out; if there is not, we want the residents to have a good understanding of why they have been banded differently. It may be for some of the reasons that I outlined in the past few minutes, about differences that are not necessarily apparent at first between properties. If there is an inconsistency, we can make sure we drive to the bottom of that and deal with it for my hon. Friend’s residents. I have also written to all billing authorities to remind them of their statutory duty to include the VOA contact details on council tax bills.

This is a complex system. It can be daunting and frustrating, as we have heard this afternoon. However, it is also very important. That is why I am so determined that we will ensure that it is as open and transparent as possible and why I very much welcome today’s debate and look forward to my hon. Friend coming and having a conversation with us about the specifics of his case.

Question put and agreed to.

16:50

Sitting adjourned.

Written Statements

Tuesday 25th February 2014 Written Statements

Tuesday 25 February 2014

ECOFIN

Tuesday 25th February 2014 Written Statements

[The Financial Secretary to the Treasury (Sajid Javid)]

A meeting of the Economic and Financial Affairs Council was held in Brussels on 18 February. The following items were discussed.

Annual Growth Survey 2014: Guidance on the implementation of priorities agreed at the December European Council on macroeconomic and fiscal matters

ECOFIN adopted Council conclusions on the annual growth survey. The Government support the Commission’s focus on fiscal consolidation, promoting economic growth and employment, and broadly agree with the Commission’s overall priorities. However, the Government consider that the European semester should focus on the core priorities of growth and jobs, and that these conclusions should not provide a mandate for a justice scoreboard.

Alert Mechanism Report 2014

ECOFIN adopted Council conclusions on the alert mechanism report (AMR) which marks the start of the macro-economic imbalance procedure cycle.

Preparation of G20 Meeting of Finance Ministers and Governors (Sydney, Australia, 22-23 February 2014)

The Council endorsed the EU terms of reference for the G20 Finance Ministers and Governors meeting in Sydney.

Discharge procedure in respect of the implementation of the budget for 2012

The Council, on the basis of a report from the Court of Auditors, approved the recommendation on the discharge to be given to the Commission in respect of the implementation of the general budget of the European Union for the financial year 2012. The UK, along with the Netherlands and Sweden, voted against the discharge of the EU budget and submitted a joint statement expressing disappointment that the Court of Auditors had been unable to give an unqualified statement of assurance for the 19th consecutive year and that the overall error rate had increased.

Budget guidelines for 2015

The Council adopted conclusions on the budget guidelines for 2015, which will be its overall reference for the budget year.

Implementation of the Single Supervisory Mechanism

The European Central Bank presented its first quarterly report on progress in the implementation of the single supervisory mechanism (SSM). The establishment of the SSM will help to safeguard euro area financial stability and is critical to restoring market confidence over the medium term.

Current legislative proposals

The presidency provided information on the ongoing work on financial services dossiers.

Single Resolution Mechanism

The presidency updated the Council on the trilogue process with the European Parliament. The UK welcomed the progress made on this file since the general approach was reached at ECOFIN in December 2013, and will be ensuring that it fully respects the unity and integrity of the single market.

Agriculture and Fisheries Council

Tuesday 25th February 2014 Written Statements

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)]

I represented the UK at the EU Agriculture Council on 17 February. Scottish Minister, Richard Lochhead, and Welsh Minister, Alun Davies, were also present.

Promotion of EU agricultural products

The Commission presented the main aspects of the new proposal: a focus on third country markets; ending national co-financing to ensure a level playing field; simplifying the scheme by removing the member state pre-selection process; and expanding the scope of the scheme to cover more products.

I was broadly in favour of the Commission’s proposal, noting that the scope should include national quality schemes. However, I stressed that for the budget increase to be justified, schemes would need to bring additional revenue into the EU. Many member states called for promotion to be allowed on the internal market; for national co-financing to be maintained; and for member states to continue pre-selecting projects to transmit to the Commission.

School fruit and milk scheme

The Commission presented its proposal to merge the existing EU school fruit and school milk schemes mainly on efficiency grounds. I and other member states noted that the proposal to transfer provisions on the fixing of aid rates for these schemes from the Council to the European Parliament would not be consistent with the Lisbon treaty. The dossier will now be discussed in detail at working groups.

Dairy sector

The Council discussed a presidency questionnaire on the future of the EU dairy sector following the expiry of milk quotas in 2015. In discussion, two groups emerged: those member states in favour of a “soft landing”—effectively an early end to quota, or a large reduction in quota penalty—and those who wanted market intervention tools which went beyond the recent CAP reform deal and the dairy package.

I spoke in favour of a stable market, noting the long-established position that quotas would end in 2015. To change the system at this late stage would damage the credibility of the EU to see through long-term policy decisions and give certainty to businesses.

The Commission recommended that the issues be taken to the special committee on agriculture, discussed with stakeholders and the European Parliament, and returned to Council ahead of the Commission’s planned report on the dairy sector in June 2014.

Any other business: CAP reform delegated Acts

In response to an AOB request from 27 member states, the Commission defended the latest CAP draft delegated Acts, arguing that they had taken on board member states comments wherever possible, but were constrained by the terms of the basic Act. I called for a more proportionate system of greening and cross-compliance sanctions, while welcoming the Commission’s commitment to secure a workable minimum activity requirement. Over half of member states intervened with a range of outstanding concerns but there was a widespread view that sanctions should be lower.

The Commission repeated its defence of progress and urged member states not to delay agreement of the Acts which should be adopted before the end of the current European Parliament.

African swine fever

There was widespread support from member states for Lithuanian measures to stop the spread of African swine fever. Poland also confirmed that an infected wild boar had been found 1 km from its border with Belarus. Member states urged the Commission to continue to do all it could to lift the Russian trade ban on EU pork products.

Severe weather: Slovenia

Slovenia outlined the impact of a severe snow storm on its agriculture and forestry sector in late January and confirmed that they were planning a call on the EU’s solidarity fund.

The last three AOB items were concluded quickly and without discussion. They were information from the Commission on the implementation of the innovation partnership for agricultural productivity, information from the Netherlands on the outcome of the third global conference on agriculture, food security and climate change, and a report from Lithuania on the conclusions of the 34th conference of EU paying agencies. On the latter item, the Commission underlined the increasing importance of the work of paying agency directors.

European Small Claims Regulation

Tuesday 25th February 2014 Written Statements

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

The Government have today decided to opt in to the European Commission’s proposal which amends the European small claims regulation.

The European small claims regulation was agreed in 2007 and has been in use since 1 January 2009. It provides a simplified EU-wide procedure to allow citizens and businesses to pursue cross-border claims with a value of €2,000 or less and to have the resulting judgments recognised for enforcement automatically in another member state. The simplified procedure aims to make dispute resolution for low-value claims cheaper and quicker.

Following an evaluation of the current regulation the Commission’s proposal aims to increase the knowledge and use of the procedure. The main changes recommended are: an increase in the threshold for a small claim from €2,000 to €10,000; a cap on court fees to 10% of the value of the claim; a broadening of what constitutes a cross-border case to include within scope more disputes; and a greater use of technology to decrease costs of service of documents and attendance at hearings—for example, through the use of video conferencing and telephone conferencing.

The Government do not agree with all of the Commission’s suggestions. They will argue, for example, that it is not appropriate for the EU to set rules on the level of court fees in each member state and they will want to ensure that the text reflects properly the cross-border restriction in article 81 of the treaty on the functioning of the European Union.

However, they recognise the value of a cross-border small claims procedure for consumers who have had difficulties when buying goods from other member states, holidaymakers wishing to resolve problems encountered when abroad or businesses trading across borders.

They accept that such a procedure can help the working of the single market and for that reason believe it is in the United Kingdom’s interests to opt in to the proposal.

High Court Judgment

Tuesday 25th February 2014 Written Statements

[The Secretary of State for Northern Ireland (Mrs Theresa Villiers)]

On 21 February, Mr Justice Sweeney ruled that an abuse of process had taken place in the prosecution of John Downey for offences relating to the Hyde Park bombing which took place on 20 July 1982. Mr Downey was part of an administrative scheme set up by the previous Government to deal with so-called “on-the-runs”, that is, people who believed they might face questioning or arrest in connection with terrorist or other criminal offences committed prior to the 1998 political agreement if they returned to the United Kingdom.

When he was arrested on 19 May 2013, Mr Downey was in possession of a letter from a senior official in the Northern Ireland Office dated July 2007 that read as follows:

“The Secretary of State for Northern Ireland has been informed by the Attorney General that on the basis of the information currently available, there is no outstanding direction for prosecution in Northern Ireland, there are no warrants in existence nor are you wanted in Northern Ireland for arrest, questioning or charge by the police. The Police Service of Northern Ireland are not aware of any interest in you from any other police force in the United Kingdom. If any other outstanding offence or offences came to light, or if any request for extradition were to be received, these would have to be dealt with in the usual way.”

It has subsequently become clear that this letter contained an error. Mr Downey was in fact sought for arrest by the Metropolitan Police at that time for charges relating to the Hyde Park bombing, in which four soldiers of the Blues and Royals carrying out ceremonial duties were murdered and seven horses were killed.

Tragically, later that same day another bomb at Regent’s Park resulted in the murder of seven members of the Royal Green Jackets. The Government remain clear that these were terrible terrorist atrocities that had absolutely no justification.

The judge concluded that the error had been made by officers of the PSNI. The Northern Ireland Office had sought confirmation before sending the letter that the appropriate checks had been made. It was assured by the PSNI that they had been. As has been made clear by the legal proceedings relating to Mr Downey, an administrative scheme to deal with so-called “on the runs” was in operation from around September 2000. It was devised by the previous Government. The details were not fully set out to Parliament, though the scheme was referred to in July 2002 in the answer to a parliamentary question given by the then Secretary of State for Northern Ireland, John Reid.

Following the failure of the Northern Ireland (Offences) Bill in 2005-06, the administrative scheme became the only mechanism for dealing with OTRs. Under the scheme inquiries from individuals wishing to establish if they were wanted for arrest over suspected terrorist activities were communicated, by Sinn Fein, through the Northern Ireland Office, to the Attorney-General, who then referred them to the prosecuting authorities and the police. The Government communicated back the response to Sinn Fein via a letter from the Northern Ireland Office.

On the information available to the police and prosecuting authorities at the time, individuals who were not sought for arrest were informed of this. They were also advised that should new information or evidence of wrongdoing come to light at any point in the future, then they would be subjected to normal criminal proceedings. There was, therefore, no immunity from possible future arrest.

The current Government looked again at the scheme and decided that any future requests should be referred to the devolved authorities in Northern Ireland, in line with the devolution of policing and justice. The Northern Ireland Office subsequently dealt only with pending cases for which requests had been received prior to the general election.

Our records indicate that around 200 individuals were subject to the scheme. Of those, approximately three quarters were informed by letter delivered through a Sinn Fein representative, that at the time they received the letter, they were not sought for arrest, questioning or charge by police; but that if any new information came to light that this was subject to change.

This procedure clarified the positions of these individuals who were otherwise unsure whether they remained wanted for arrest. In the light of the recent court judgment, my Department is working with the police and prosecuting authorities to check whether anyone sent a similar letter is wanted for an offence committed before the date of the letter. As policing and justice have been devolved issues in Northern Ireland since 2010, any further requests for the scheme, or clarifications on whether particular individuals remain wanted for arrest, should be directed to the PSNI and devolved prosecuting authorities.

The Government are looking carefully at the judgment of the court. It is right that time is taken to consider its full implications. The PSNI will wish to reflect on lessons learned from this case and the circumstances that led to the serious error which has occurred.

As has been stated on a number of occasions, this Government do not support an amnesty for people wanted by the police in connection with terrorist offences. We believe in upholding the rule of law. That is why both the coalition parties strongly opposed the legislation introduced by the Labour Government in 2005 which would have introduced what was effectively an amnesty for so-called “on-the-runs”.

Grand Committee

Tuesday 25th February 2014 Grand Committee

Tuesday, 25 February 2014.

Defence Reform Bill

Tuesday 25th February 2014 Grand Committee

Committee (4th Day)

15:30

Relevant documents: 17th and 21st Reports from the Delegated Powers Committee.

[The Deputy Chairman of Committees (Lord Geddes) (Con)]

My Lords, it is now 3.30 pm. As required, I must advise the Grand Committee that if there is a Division in the Chamber while we are sitting, which I consider unlikely, the Committee will adjourn as soon as the Division Bells ring and resume after 10 minutes.

Clause 13: Single Source Regulations Office (or “SSRO”)

Debate on whether Clause 13 should stand part of the Bill.

[Lord Tunnicliffe (Lab)]

I hope noble Lords will forgive me if I give a Second Reading introduction to this part of the Bill to make clear the Opposition’s general position. First, I declare an interest, although not a pecuniary one or any interest that I would be required to declare, to show the position I am coming from in terms of experience. I was a non-executive director of the Defence Logistics Organisation, the Defence Procurement Executive and a founder director of DE&S, so I tend to see these matters from the rather more sympathetic viewpoint of those poor professionals who are caught in the middle of the many debates about the efficiency of this process.

I shall speak briefly on Part 2 in general. The view of the Opposition is that this is an admirable attempt at an intractable problem. I commend the creation of Part 2 and congratulate the noble Lord, Lord Currie of Marylebone, on his excellent report and the MoD staff who have turned that report into legislation and regulations. I particularly thank the noble Baroness, Lady Jolly, Philip Dunne, the Permanent Under-Secretary of State for Defence, and their adviser, Jason Petch, for their time in taking me through the Bill line by line. The Opposition’s duty in this sort of legislation, which is largely apolitical—quite honestly, I am scratching around for any political points this afternoon—is to scrutinise the legislation line by line. I assure the Committee that we have done this but mostly off the Floor of the House. Therefore, we have before us a relatively modest number of groups and we hope to finish the Committee stage this afternoon.

My general thrust this afternoon will be to look at the independence and quality of the SSRO, the whole issue of transparency in its operation and its accountability to Parliament. I will also pick up on one or two concerns that have been put to us by industry. Where industry wants assurances, we should like to be able to read them into the record to meet its concerns. It is important to note that, although this debate takes place in the Moses Room with a modest number of us present, words spoken by the Minister will be extremely important to industry.

I should also make a point about procedure. Rather lazily, we have not crafted wickedly clever amendments with which to do our probing but are using the device of a clause stand part debate. I hope to brief the Minister in more detail than I have been able to about the questions that will arise from that. I have given her some briefing but I entirely understand that on some of the questions, which came up just as I made the final run-through, line by line, she may have to write to me. In this important area, it really is better to have accurate and considered responses, rather than hastily cobbled together ones, not that I suggest that the Ministry of Defence would have hastily cobbled together answers anyway. That is quite a useful procedure but if we are not satisfied with the responses and feel that they need to be read into the record, we will use Report to achieve that objective.

I turn now to the Clause 13 stand part debate and Amendments 18G and 18H. I wish to probe the key concept of the SSRO: its independence—not in its role, with which I am comfortable, but in its working. I start with the appointment of the chairman, the rules about which are in paragraph 1(1)(a) of Schedule 4, which states simply that the chair of the SSRO shall be,

“appointed by the Secretary of State”,

and gives no further guidance as to how that chair may be appointed. I first ask the Minister to expand on how the chair will be appointed. I caution her about too much reliance on reference to the Commissioner for Public Appointments, because the commissioner very recently put out a useful press release about appointments in which he clearly stated:

“Ministerial appointments to public bodies regulated by the commissioner must be made in line with the commissioners code of practice which sets out that appointments must follow an open, fair and merit-based process, overseen by a panel. In the case of chair appointments, the panel must be chaired by an independent public appointments assessor appointed by the commissioner”.

That is so far, so good. It goes on:

“The panel’s job is to judge the suitability of candidates and to provide a list of candidates who are ‘above the line’ i.e. they have the ability to do the job. It is then for the relevant Minister to choose which of these candidates to appoint”.

I read that to stress the point that the appointment of the chair is in the discretion of the Secretary of State. It is, in that sense, a political appointment. It is entirely within his discretion.

The complementary area that I shall now explore is the relationship that the chair and the board have with the Secretary of State. I go back to paragraph 2(2) of Schedule 4, which states:

“A person may not be appointed as an executive member without the consent of the Secretary of State”.

The first point is that the executive members will need the consent of the Secretary of State. It is clear from paragraph 1 of Schedule 4 that the Secretary of State appoints not only the chair but the non-executive chair of the SSRO. Moving on, paragraph 3(2) states:

“Appointment as a member of the SSRO is for a term of … not less than three years, and … not more than six”.

Sub-paragraph (6) of the same paragraph states:

“A person who ceases to be a non-executive member is eligible for reappointment”.

Returning to the commissioner’s press release, it states clearly:

“The Public Appointments Commissioner plays no part in a decision not to re-appoint someone at the end of their term of office. That is a matter for Government”.

That makes it very clear that reappointment is a matter for the Government. Looking further at the schedule, paragraph 6 sets out:

“The SSRO may, with the approval of the Secretary of State … pay remuneration and allowances to the non-executive members, and … pay or provide for the payment of pensions, allowances and gratuities to or in respect of a person who is or has been a non-executive member of the SSRO”.

Finally, in pursuance of that point, I move to paragraph 16, on “Finance”, which says:

“The Secretary of State may make to the SSRO such payments out of money provided by Parliament as the Secretary of State considers appropriate”.

Taking all these together, let us suppose, to make it simple, that I was to be appointed—it does not pay enough but we can put that to one side. Let us look at this relationship. The Secretary of State appoints me, reappoints me, determines my remuneration, controls my budget, appoints my non-executives and then approves the appointment of my executives. It is for the Minister to convince me that this is an independent organisation. I have been there; I have been the chairman of a nationalised industry and the chief executive. I have lived under these rules and I have to tell noble Lords that independence was not one of the things I felt. I felt from time to time that I had conversations with the Secretary of State where there was a degree of influence.

I repeat my request to the noble Baroness and invite her to convince the Committee that the SSRO is truly independent. What mechanisms will be put in place to assure us, the world, industry and so on that this independence is real? Can she give us some practical indication: for instance, will the Secretary of State or MoD staff be allowed to communicate with the chairman or SSRO staff?

SSRO staff are covered in paragraph 7 of the same schedule, which says, quite bluntly:

“The SSRO may appoint employees”,

and,

“may pay its employees remuneration and allowances. Employees of the SSRO are to be appointed on such other terms and conditions as the SSRO may determine … The SSRO may pay or provide for the payment of pensions, allowances and gratuities to or in respect of any person who is or has been an employee of the SSRO”.

Finally, paragraph 17(3) says, very clearly:

“Service as a member or employee of the SSRO is not service in the civil service of the State”.

I ask the noble Baroness whether, as it appears from the schedule, the appointment is at the sole discretion of the SSRO. Will there be no interference from the state in any way, from the MoD or the Cabinet Office? Will pay be unfettered and will the SSRO be able to pay what is necessary to achieve the quality of employee necessary? In other words, will it have the sort of freedom—as far as one can see from simply reading this, the complete freedom—to appoint people on terms and conditions that are competitive with industry and, indeed, as good as, if not better than, those that will be allowed to DE&S-plus?

I move on to a straightforward question about procedure. Paragraph 10 of Schedule 4 states:

“The SSRO may determine its own procedure”.

I do not know why draftsmen do that, because it then goes on to say,

“but this is subject to sub-paragraphs (2) to (6)”,

which pretty well say that everything of importance has to be done by a committee. That is what I think it says. Can the Minister confirm that those provisions in sub-paragraph (3) cannot in fact be made by the board of the SSRO itself but will be made through a procedure of the committee as defined in, I think, sub-paragraph (2) and with the particular caveats that are in the subsequent sub-paragraphs?

Finally, I wish to raise an issue that I know we all worry about in public office: revolving door syndrome. I invite the noble Baroness to comment on the extent to which there will be limitations on where the members of the board, the executives of the SSRO, come from or go to. In particular, I am concerned about the extent to which they may be leading lights in the industry and carry their industry heart with them into the SSRO or, conversely, come out of the SSRO into plum jobs in industry. Will there be some limitations?

We have a couple of amendments in this group, which are just to enliven the debate. In the first, I wish to bring some independence to these appointments and suggest that they should be ratified by the House of Commons Defence Select Committee. In the second amendment, I suggest that the committee to which I referred earlier should have a majority of members who are not employees of the SSRO. I beg to move.

15:45

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the noble Lord, Lord Tunnicliffe, for raising a number of questions to which I am sure my noble friend will seek to reply. They were interesting issues. I also liked the noble Lord’s comment that it was an admirable attempt at an intractable problem. Indeed, such an attempt is being made, which is really the point. Let us hope it is an issue that is cross-party and of no party, which could be seen as a good thing.

The other interesting point made by the noble Lord was that the words spoken by the Minister will be followed by the industry. That is the point about this debate: the words that are spoken and reported in Hansard are what the industry can see and take confidence from, as well as the amendments before us. I was also grateful that the amendments are not an attempt to wreck the Bill. The noble Lord’s final comment—that they would enliven the debate—was a pleasant way of looking at this matter.

Clause 13 in Part 2 is an important technical advance that attempts to bring sanity to single-source contracts. Clearly, the clause is necessary, and the Motion to remove the clause is purely a technical effort to debate it. The issue in Amendment 18G relates to how one ratifies appointments, which it suggests should be done by a Select Committee. I ask the Minister whether, if any ratification by a Select Committee takes place, it should have to interview the applicants. That would surely be beyond what was necessary and would end up involving a comprehensive interview process, which would be too much. The point made by the noble Lord was about how much influence and power would go to the Secretary of State, rather than to some other body of people. Although the Secretary of State must be allowed to have influence, he should not be the person taking the real decision as to who is supported.

When the Minister replies, I hope that she will also deal with a question not raised by the noble Lord, Lord Tunnicliffe. Should the Single Source Regulations Office be the sponsoring department? Should the sponsoring department be the MoD? What about the Department for Business, Innovation and Skills? I have raised this matter with the Minister on other occasions, not only in this context. Here we have a department, the Department for Business, Innovation and Skills, whose raison d’être is to sell and encourage business and industry, but the brief of the Ministry of Defence is also to engage in contracts, selling and so on. Indeed, that ministry sells overseas and I often wonder why we do not look holistically at how we deal with selling this country’s products. I wonder why, in the context of this amendment, the sponsor of the SSRO should be only the Secretary of State for Defence. Why should it not also or instead be the Secretary of State for Business, Innovation and Skills?

[Lord Craig of Radley (CB)]

The noble Lord, Lord Tunnicliffe, has raised in a variety of ways the issue of the independence of the SSRO from government. I raised one further point on that at Second Reading. I got a reply, but I was not absolutely confident that it provided the right answer. The point I made was that the SSRO has an interest in value for money, but so has the Treasury throughout government. I asked to what extent the SSRO stands free of, or is supervised by, the Treasury. For the record, it would be helpful to have that point covered once again. If I remember correctly, I got a very full answer from the Minister, the noble Lord, Lord Astor of Hever, but I was not absolutely happy that it gave a feeling of the pure independence of the SSRO from the Treasury.

[Baroness Jolly (LD)]

My Lords, I thank noble Lords for their comments at the beginning of this fourth day in Committee. In particular, I thank the noble Lord, Lord Tunnicliffe, and commend him for his preparation for the scrutiny in this Committee stage. I apologise in advance to noble Lords because some of my earlier speaking notes are quite lengthy, but they get shorter. The purpose of the length is that we need much of this on record.

Clause 13 is at the heart of the reforms to single-source procurement. It establishes the Single Source Regulations Office, a small, arm’s-length body responsible for keeping the new framework under review, monitoring adherence and providing expert determination between the MoD and single-source suppliers. It is therefore essential to the success of these reforms. Clause 13 also establishes in law the overriding aim of the SSRO to assure that good value for money is obtained in government expenditure on qualifying single-source defence contracts and that defence suppliers are paid a fair and reasonable price under those contracts.

The creation of an independent body is absolutely central to the success and longevity of the framework. I cannot say this too strongly. The purpose of this body is to be independent and transparent, thus giving confidence to both parties who need to play in this area. It was a key recommendation of the independent review conducted by the noble Lord, Lord Currie. The SSRO will replace the existing Review Board for Government Contracts, which, as the noble Lord, Lord Currie, identified, has, through no fault of its own, failed to evolve to reflect changing circumstances, largely because either party can block any change that it regards as contrary to its own interests.

Clause 13 brings into effect Schedule 4, which establishes the governance structure of the SSRO. In this we have closely followed guidance published by the Cabinet Office on executive non-departmental public bodies and have considered existing governance arrangements for similar bodies, such as Monitor. So we have not started with a blank piece of paper and, as the Committee will see, with the following key characteristics of the SSRO, the structure we have created is in common with other similar public bodies. It has a separate chair and chief executive and a board which has a majority of non-executive directors, which is aligned with best practice in the Financial Reporting Council’s UK Corporate Governance Code and Cabinet Office guidelines. Non-executive members of the SSRO should be appointed for a period of between three and six years to assure a staggered process of appointments to the key positions. There will be a process that allows the Secretary of State to remove or suspend a member from office on the grounds of failure to carry out his or her duties, incapacity, such as ill health, or misconduct, which rightly follows Cabinet Office guidance on the creation of public bodies. The SSRO will have the ability to appoint its own employees, which is consistent with Public Bodies: A Guide for Departments, produced by the Cabinet Office; and, in accordance with the Cabinet Office’s guidance on good corporate governance in executive NDPBs, the SSRO’s committee structure will be the body that makes key binding determinations, including where there is an appeal from one of the parties to a qualifying defence contract. We have listened to industry requests in this area, and have agreed that committees can contain members who are not employees or members of the SSRO.

The SSRO will also have separate responsibilities to the Secretary of State, the Auditor-General and Parliament. These, which are set out in Schedule 4, include the provision of annual accounts which are consistent with international finance reporting standards, which will be audited by the National Audit Office. These accounts will be prepared between three to six months of the end of the financial year. An annual report on its activities must be provided by the SSRO to the Secretary of State, who in turn will lay the report before Parliament.

As the sponsoring department of the SSRO, the Secretary of State will make payments to the SSRO to finance its operations. This is in common with Cabinet Office guidance on the funding of ENDPBs. There will be a framework agreement established between the MoD and the SSRO that sets its budget, in accordance with HMT’s guidelines in Managing Public Money and performance targets. The SSRO will be jointly funded by the MoD and industry, but we have agreed with industry that the MoD will pick up its costs over the first three years, as it is established and until we determine its precise annual running costs. The SSRO will be allowed to borrow money only on a temporary basis up to an overdraft limit set by the Secretary of State. There may be occasions where the SSRO has a higher number of adjudications or determinations that it is administering, where it may require additional resources to meet its objectives in a timely fashion.

We have given the SSRO the ability to pay pensions to its non-executive members. This is not because we intend to pay a pension to every non-executive member the SSRO appoints; rather, we have done this to give the Secretary of State the flexibility to recruit non-executive members from both the private and public sectors who may have existing pension arrangements. Other elements of Schedule 4 ensure that the SSRO will be a body that is subject to the Freedom of Information Act 2000, allow the parliamentary commissioner to investigate the SSRO, and ensure that its staff are not civil servants.

This clause is therefore crucial to the overall establishment of the SSRO and the functioning of the new framework. The SSRO will, over time, become an independent expert in defence single-source pricing, ensuring that we do not need to wait another 45 years for this framework to be reviewed again. It is therefore crucial that this clause is retained in the Bill.

Amendments 18G and 18H revolve around a concern, primarily expressed by industry, but also by the noble Lord, about the independence and impartiality of the SSRO. I assure noble Lords that we are committed to ensuring that the SSRO will be both independent and impartial. The credibility of the new single-source framework rests upon this. For example, the SSRO can act as an independent adjudicator in the event of disputes between parties and it is the appeal body to which industry can refer if we apply a civil penalty to it. Perhaps even more significantly, it annually recommends the profit rate and recommends changes to the framework as part of the quinquennial review process. It is the guardian of the new framework and its impartiality is at the core of the dual aims under Clause 13 of ensuring a fair and reasonable price for contractors and value for money for the Government.

If the SSRO was perceived as being partial, this would create great difficulties. If the perception was that it was too biased towards the Government, shareholders could decide that the defence sector was no longer worth investing in and our suppliers could be driven to leave it. If the perception was the other way—as too biased towards our suppliers—we would seek to change the framework entirely or we would exempt our contracts from it and thus lose the protections we are establishing in this Bill. Neither of these outcomes serves either the MoD or our single-source suppliers. It is the need for independence and impartiality that has led to our desire to set up the SSRO in the first place. The current framework requires consensus to change. This has meant that for 45 years, any change that one side has felt puts them at a disadvantage has been blocked. This is the principal reason why the old system has remained frozen in time for so long. Consensus will not serve us. The alternative, a statutory framework determined entirely by the MoD, would always be resisted by industry. There would be a risk that over time the framework would become steadily more one-sided and that industry would be driven out of the sector, so this option is also not desirable. What we need is an independent body, namely the Single Source Regulations Office.

16:00

Industry representatives have looked at some of the provisions of the Bill, which have given them some concerns that the SSRO will not be independent. Specifically, they have pointed to the fact that the chair and other non-executive members are appointed by the Secretary of State. They consider that this gives the Secretary of State considerable leverage over the SSRO. There are reasons for this process, and they do not stem from a desire to exert influence over the SSRO. We looked at the different models for arm’s-length bodies. We wanted to give the SSRO as much freedom as possible, including the ability to recruit its own staff. We did not want the SSRO to be a servant or an agent of the Crown and thus subservient to Ministers. These requirements have led to it being designated a non-departmental public body.

There has been considerable attention on NDPBs over the past few years, and one of the aims of this Government has been to reduce their number. In this case, the SSRO will be replacing an existing NDPB, the Review Board for Government Contracts, which through no fault of its own has not had the power to amend the current framework. However, noble Lords will be aware that there is substantial guidance around non-departmental public bodies. For example, they must be sponsored by a department which, given the functions of the SSRO, in this case is the MoD, and the Secretary of State of that department must appoint the chair and non-executives of the body. I think that that answers the question put by my noble friend Lord Palmer. The independence of the chair and the other non-executive members is essential, so forgive me if I now describe the recruitment process in some detail.

To ensure that this appointment will result in a suitable independent and unbiased person, we are running the recruitment process in full accordance with the guidelines of the Office of the Commissioner for Public Appointments. All the posts will be publicly advertised, with public selection criteria. The recruitment process for the chair is already well under way, with interviews for the post held within the last two weeks. The recruitment panel for the chair is headed by a public appointments assessor chosen for us by the Office of the Commissioner for Public Appointments. The panel has reviewed and cleared the advertisements, the selection criteria and the recruitment strategy. Also on the recruitment panel is a second independent person suggested by the Office of the Commissioner for Public Appointments and approved by the public appointments assessor. There are also two others on the panel, one MoD official and another person who has been suggested by industry, namely Paul Everitt, the chief executive officer of ADS, which is one of the industry trade bodies for the defence sector. Only one of the four members of the interview panel is from the Government.

The interview panel’s selection of suitable candidates will now be reviewed by the Secretary of State, who may not add candidates to or remove them from the shortlist, or appoint a candidate not assessed as appointable.

The same recruitment panel, with the addition of the chair, once appointed, will be used to select the other non-executive directors. There are additional requirements on suitable candidates. They must not have recently come from the MoD or a defence supplier. They must represent a balance of private and public sector experience, and they must have a variety of relevant experience—for example, legal, regulatory and private sector acquisition. Once appointed, the non-executives will appoint their chief executive officer and chief operating officer. Together, the board will then appoint what staff it needs.

This is a rigorous appointment process, and I am confident that the result will be an independent SSRO board. I do not think adding the need for the appointment of the chair and other non-executive members to be ratified by the House of Commons Defence Select Committee is a necessary additional step. The process of pre-appointment approval by Select Committee was introduced in 2007, and there has been discussion between the Government and the House of Commons Liaison Committee over which posts should be subject to such approval. Ultimately, it should be a matter for agreement between the Secretary of State and the chair of the Select Committee, and no such direction has been made for this post.

The SSRO is, for the most part, free to determine its own procedures, including making committees, which is the subject of the next amendment. The exceptions to this are where its procedures are laid out in the Bill or in the SSRO framework document with the MoD. This will, for example, require it to run a full public consultation in support of the quinquennial review.

All of this points to the considerable efforts we have made to ensure that the SSRO will be independent. The fact that the Secretary of State appoints the chair is not what will determine the independence and impartiality of the SSRO. It is its statutory aims, namely to balance the interests of value for money and a fair and reasonable price. It is the recruitment process of the chair and board, which I have just explained in some detail. It is the nature of its functions, which are set out in the Bill, and it is its freedom to determine its own processes and recruit its own staff. Finally, it is the checks and balances that the SSRO, like all public bodies, is subject to—for example, the Competition and Markets Authority and the National Audit Office. It is the fact that the SSRO’s chief executive officer will be an accounting officer, and that its chair can be brought before a parliamentary committee at any time.

Amendment 18H, the second in this group, also revolves around the independence and impartiality of the SSRO. Paragraph 10 of Schedule 4 to the Bill requires the SSRO to appoint a committee for the purpose of making any opinion or determination in response to a referral, and that such a committee must consist of three people, at least one of whom must not be a member or employee of the SSRO. Determinations are to be made on a majority basis, and this amendment would require that a majority of the committee must not be members or employees of the SSRO. In effect, this amendment would increase the number of committee members who must be external to the SSRO from at least one to at least two out of three.

I note that the current drafting does not prevent a majority, or indeed all, of the members of the committee being external to the SSRO should that be appropriate, for example to assist with capacity or specific additional expertise. Since no amendment is necessary to allow a majority of the committee to be appointed externally to the SSRO, I assume that the intent of this amendment stems from an underlying concern that the SSRO itself will not be an impartial body. I will return to this.

Matters that may be referred to the SSRO are almost all of a technical nature. The SSRO, as guardian of the framework, will hold an expert understanding of the issues that are brought to it, and an appreciation of the broader context of the framework within which the referral sits. It will be bound by its statutory aim of ensuring a fair and reasonable price and value for money. For these reasons, we consider the SSRO to be best placed to make these technical determinations. Indeed, it is one of the primary functions the SSRO is being created to fulfil.

Industry has, throughout our engagement with it over the past two years, continued to express its concern over independence and impartiality. I have addressed much of our response to this concern in my comments on the previous amendment, and while we understand the concern, we do not share it. The existing requirement that at least one member of the committee be external to the SSRO was specifically introduced in response to industry’s concern over the impartiality of the determination committees. For the many reasons already discussed, we believe that the SSRO will be independent and impartial. In the unlikely event that a committee displays partiality, the independent member of the committee may raise a red card. In the extreme, they could remove themselves from the committee, making it no longer quorate. We consider that this is sufficient to address that concern. Beyond addressing the perceived impartiality of the SSRO, we consider that requiring a majority of the committee to be external to the SSRO will be to the detriment of the efficiency and effectiveness of the SSRO’s function to provide expert determinations, without any change to the committee’s impartiality.

Requiring another member to be external to the SSRO will increase the cost of the committee as such external members would be expected to be more expensive than members or staff of the SSRO. It may reduce the experience and understanding of the technical framework under Part 2 that will be available in the committee’s deliberations. It is likely to impact on the effective governance of these committees as the pool of suitably experienced and qualified experts with an understanding of this technical framework is expected to be relatively small, so there may be delays in establishing committees and in their deliberations owing to the external commitments of members. Finally, all members of the committee, whether internal or external, will still be appointed by the SSRO chair. Unless we make the assumption that members and employees of the SSRO, who are subject to its dual statutory aims, are somehow less impartial than external appointees, there is no benefit to increasing the number of external appointments.

For all these reasons, we do not consider that this amendment is necessary and believe that it will reduce the effective operation of the SSRO’s function to provide independent and impartial determinations.

I shall move on to points made by noble Lords. The noble and gallant Lord, Lord Craig, asked about the independence of the SSRO from the Treasury. I will write to him to give him more detail on that.

The noble Lord, Lord Tunnicliffe, asked several questions. This may well repeat some of what I have already said, so please bear with me. Three of four on the appointment panel are non-MoD.The chair can be required to appear before parliamentary committees. We are well aware that the independence of the SSRO is still a subject of concern. I assure the Committee that the Government are committed to ensuring that it is impartial. If a new system is perceived as too biased towards the Government, suppliers could decide that they no longer wished to invest in the sector or in the industry altogether. If the perception was the other way around—that the system was too biased towards industry—we would seek to change the framework entirely.

On what the board does versus what must the committee do, the matters listed in paragraph 10(3) of Schedule 4 are inexplicable on their own, but I am sure the noble Lord has cross-referenced them to understand what they do. They are what must be done by the committee, but they apply only to referrals, determinations and opinions. They ensure the use of an independent person for the key decisions.

In response to the question put by my noble friend Lord Palmer, about whether the SSRO’s sponsoring body should be BIS, there is a requirement across government that all non-departmental public bodies should be associated with a specific department and that the Secretary of State for that department must approve the relevant board appointments. The functions being assumed by the SSRO are of most pressing interest to the MoD rather than any department. They are specialised in nature and require technical understanding of the specific nature of single-source procurement as undertaken by the MoD. No other government department has used the Yellow Book arrangements for many years, and therefore at the current time it would be impracticable to consider any department other than the MoD as the sponsor of the SSRO. With that, I urge the noble Lord not to oppose the clause standing part of the Bill.

16:15

[Lord Tunnicliffe]

While I commend the noble Baroness on her anticipation of my speech, I wonder whether, where she has not answered my direct questions, she will write to me.

[Baroness Jolly]

My Lords, I am sorry that I have not answered specific questions. I should have flagged up as many as possible as I was going through my brief. However, I am happy to write to the noble Lord.

Clause 13 agreed.

Schedule 4: Single Source Regulations Office

Amendments 18G and 18H not moved.

Schedule 4 agreed.

Clause 14: Regulations relating to qualifying defence contracts

Amendment 18J

Moved by

[Lord Tunnicliffe]

18J: Clause 14, page 10, line 22, at end insert “provided the stipulation in subsection (7A) below is satisfied”

[Lord Tunnicliffe]

My Lords, I am sorry that I did not make a closing speech because the idea of HMT having performance targets and a bonus culture does not fill me with enthusiasm. I may write to the Minister on that.

In moving Amendment 18J I shall speak also to Amendment 18K and to oppose that Clause 25 should stand part of the Bill. The issue here is essentially one of transparency. The offending subsection in Clause 14 is subsection (7), which states:

“The Secretary of State may direct that a particular contract to which subsection (3) applies is not a qualifying defence contract even though the contract otherwise meets the requirements of subsection (2)”.

One loves legislation that contains such clauses because they mean something like, “Never mind the whole of this document because the Secretary of State can decide it does not apply”, which roughly speaking is what this says. Amendments 18J and 18K recognise that there will be circumstances in which, frankly, this whole part of the Bill is excluded by the Secretary of State. It invites the Secretary of State to bring full details to Parliament and explain why the decision has been made. I should like the Minister to set out the circumstances in which subsection (7) would be used. I have asked the question privately and was given a general answer saying, “It is about the peculiarities of government-to-government contracts”. It seems to me that my amendments are entirely reasonable in those circumstances. It is entirely reasonable where there is some other assurance process, such as, “The Americans are going to do it for us” or that there is a treaty with the French which lays out the provisions to do this. That would be when this clause is used.

The Grand Committee is a small group today and we are discussing a very dry subject, but it is one that concerns the moving about of hundreds of millions and, indeed, billions of pounds. If a chunk of money of that order is moving about, Parliament should know under what circumstances it is being moved about, why the SSRO is not involved, and what assurances the public purse can be given by the Government as to what is being done. I expect that in her response the noble Baroness will talk about government-to-government contracts and I look forward to her touching on the detail of that.

The other area that came to light only when I delved into this with more care is the fascinating area of critical industrial capability. I am not sure whether that is the favourite way of referring to the concept these days, but I am sure that my meaning will emerge. Critical industrial capability is a concept whereby the taxpayer shovels out an awful lot of money to various contractors, a substantial part of which goes to BAE Systems, in order to keep workers on the books who are not doing work so that they are available to do work later. I am not even saying that that is wrong. I can see precisely why it makes sense. A more holistic view of the problem might be to schedule one’s procurement in a smoother way so that they are working continuously, but, conceptually, I can see why the former concept is necessary. However, it is important to realise just how substantial this is. We had a recent Statement on aircraft carriers. I read what the Minister said but the BAE Systems press release is in some ways even more interesting in that it is quite revealing. It states:

“BAE Systems has reached agreement in principle with HM Government on measures to enable the implementation of a restructuring of its UK naval ships business”.

The perception of BAE Systems is that this is about the naval ships business. The press release goes on to say:

“In 2009, BAE Systems entered into a Terms of Business Agreement (ToBA) with the Ministry of Defence that provided an overarching framework for significant naval shipbuilding efficiency improvements in exchange for commitments to fund rationalisation and sustainment of capability in the sector. The agreements announced today, together with an anticipated contract for the design and manufacture of the Type 26 Global Combat Ships programme, will progressively replace that ToBA”.

This is about maintaining capability. A couple of paragraphs later, it states:

“Under the new Target Cost contract the industrial participants’ fee will move to a 50:50 risk share arrangement”—

it is talking about carriers—

“providing greater cost performance incentives. The maximum risk to the industrial participants will continue to be limited to the loss of their profit opportunity”.

This clearly—at least in my view—is not compatible with Part 2 of the Bill. Apparently, Part 2 allows risk-sharing only under Clause 16, as far as I can see, and that in no part talks about limiting the loss to the profit component. It implies that the loss would go down the middle and deeper into it.

The press release refers also to the three offshore patrol vessels. Noble Lords may recall that the Secretary of State’s speech made it clear that these were pretty cheap because, frankly, they were being paid for by the industrial capability budget. The press release goes on:

“Following detailed discussions about how best to sustain the long-term capability to deliver complex warships, BAE Systems has agreed with the UK Ministry of Defence that Glasgow would be the most effective location for the manufacture of the future Type 26 ships”.

We should remember that the press release is written for shareholders, not the public, so it re-emphasises:

“The cost of the restructuring will be borne by the Ministry of Defence”.

It seems to me that these sorts of contracts do not come within the proposed framework that Part 2 talks about. In order for such a contract to be completed or negotiated in the future, Clause 14(7) would have to be invoked. Essentially, I am asking whether I am right in those presumptions. I am very happy to be written to because I accept that I have raised rather a new point. If that subsection is to be invoked, and if this capability and that sort of contract is to be involved, costing hundreds of millions of pounds, and probably the odd billion, it seems to me that the public and government should know about it in a rather more open way. Our amendments would require this to happen: the public should know and Parliament should know.

On Clause 25, essentially I am asking the Minister whether I am right that this is the only reference in the Bill to the issue that I have been talking about. Clause 25 seems to stand out as not being cross-referenced anywhere else in the Bill. It suddenly pops up on the subject of overheads and forward planning. I assume that this relates to the reporting structures. I should have said at the beginning that the reporting structures in the Bill are in many ways the essence of it, and the fact that I have no amendments on them is an acknowledgement that I commend the reporting structures and what they do. However, regarding Clause 25, I ask whether this relates to this concept of critical industrial capability and, if it does, in what circumstances Clause 25(8) would apply. Those of us who are required to study legislation always look for this paragraph:

“The Secretary of State may direct that a particular contract is not to be taken into account in determining whether the ongoing contract condition is met in relation to a financial year”.

In other words, if it gets very difficult, the Secretary of State can determine that it shall not be taken account of.

I hope that the Minister will be able to help with these questions and I am content that she may need to write to me. I beg to move.

[Baroness Jolly]

My Lords, I will consider Amendments 18J and 18K together and then move to the clause stand part debate.

These amendments relate to the Secretary of State’s power to exempt contracts from the new framework, provided for by Clause 14(7). Amendment 18J has no impact in its own right other than to add scope for a limitation to the Secretary of State’s exemption power. That limitation is provided by Amendment 18K. Subsection (7) gives the Secretary of State the power to exempt individual contracts that would otherwise be subject to the new regime. While it is not possible to foresee all future circumstances, this power is considered necessary for a number of reasons.

Before considering the limitation introduced by Amendment 18K, it might be helpful to noble Lords if I outline and give examples of the key circumstances in which we expect this power to be used. The first circumstance is where there is no market failure. The framework addresses the situation where a contract price is not subject to the competitive pressures of the market. If those pressures are evident in the contract price, the framework is not required. An example is the purchase of additional items that are readily available in the civil market, such as computers. To ensure compatibility with our existing infrastructure, we might want to use a particular manufacturer, so the procurement would be a single-source procurement. However, the item might have a price that has been established in a competitive market. In such cases, there would be no requirement for standardised reporting and open book rights to ensure value for money, because it would be self-evident from the marketplace. Applying the framework in such a case would not represent value for money, as the additional costs of making the contract a regulated contract would not be outweighed by the benefits of transparency.

16:30

The second circumstance is national security. The Bill provides for some categories of contract to be excluded from the framework automatically, and Clause 14(2)(c) provides for these categories to be specified in the single-source contract regulations. The draft regulations identify a few such categories, one of which is when a contract is for the purposes of intelligence activities. We intend that these exclusions will apply only if the whole contract is covered by one or other of the excluded categories. So in the case where a significant part, but not all, of the contract is for intelligence activities, the contract would not be excluded from the framework automatically. Since transparency is a significant part of the framework, this is unlikely to be appropriate, so the whole contract may require exemption by the Secretary of State.

The third circumstance concerns our relations with other nations. Transparency is one of the key elements of the new framework, and some of the standard reports would give us sight of a supplier’s plans for the key industrial sites sustained by MoD’s single-source procurement. We require that information so that we can monitor planned investment or disinvestment activity and compare it with our forecast capability requirements. However, that could result in a supplier having to reveal the forecast throughput assumptions of facilities that are predominantly used by a foreign Government, which could expose that country’s defence planning assumptions to our gaze. Needless to say, that is likely to be treated with considerable reluctance by the foreign Government.

In such a circumstance, we might expect a contractor to use the provision of Clause 27, identifying a “relevant restriction” over such information. However, this possibility applies only after the contract has been entered into, so the contractor and foreign Government may not be willing to rely on this provision. We would therefore first consider using the lesser exemption provided by Clause 25(8), which provides specific exemption from such reports while leaving in place the pricing and contract-specific reporting provisions. Despite all this, a complete exemption using the power under Clause 14(7) may still be required should the other measures not be sufficient to satisfy the concerns of a foreign Government.

Without the power to exempt individual contracts, the MoD could find itself in the uncomfortable position of having to choose between not being able to procure certain equipment or applying the framework in circumstances that do not provide value for money, risk the security of sensitive contracts or risk trying to force a supplier to provide information against the wishes of another Government. These situations are expected to be rare, but this is an essential power for the effective operation of the framework.

To summarise, we expect the Secretary of State to use his exemption power only in exceptional cases. The new framework will help us to get value for money, so we have no desire to limit its application, except where there is no market failure to correct, or it would be impractical.

To return to the amendments, we do not see a need for additional and specific parliamentary scrutiny over the use of this power. It will be subject to normal processes, as with other powers granted to a Secretary of State, and his decision to apply the exemption will ultimately be subject to judicial review. Where we are using the exemption for national security reasons, or where we judge that it would be potentially damaging to foreign relations if we did not exempt a contract, there may also be reasons why we do not wish to have a public and high-profile debate on the matter. I hope this explains our position, and I therefore urge the noble Lord to withdraw the amendment.

Clause 25 is about reports. The new supplier reports defined in it are a fundamental component of the new framework, and a very significant amount of the benefits case for these changes rests on the use that will be made of the reported information and the analysis that will be derived from it. This clause is therefore vital to the overall function of the new framework.

The new reports will provide the MoD with much greater transparency over the assumptions suppliers have made in proposing the cost-recovery rates that form such a vital component of the price in large single-source contracts. This transparency will allow us to understand much better the effectiveness of those agreed rates as a mechanism used to recover suppliers’ allowable overhead costs, estimated in total to be £2 billion pounds each year. Analysis of new standard-format cost data will enhance our ability to benchmark the business units we do business with, and better challenge costs we are asked to pay for in an objective and analytical way, backed by evidence. The requirement for all companies to provide information in a standardised way will enhance the MoD’s ability to compare and contrast costs and recovery rates though time, between business units and suppliers, and also against externally published data for both the defence sector and the wider industrial landscape.

Finally, the new reporting requirements will promote and inform very senior dialogue between industry and government around better alignment of long-term supply and demand, attempting to ensure that the MoD contributes only towards the maintenance of industry capacity it reasonably expects to need in the future. Most of the information in these reports will be available to commercial teams responsible for contractual negotiations and also to MoD project, finance, planning and cost-assurance teams.

Overall, when fully implemented and matured, the new reports will make a substantial contribution to making the MoD a more intelligent and informed customer. Over time, the information provided by the new supplier reporting requirements will make a very real end-to-end contribution to the process of agreeing, using and validating cost recovery rates and, in turn, where appropriate and justified, this will lead to lower contract prices. This clause, which enables the creation of these critical reports, will significantly improve the understanding and transparency of the costs the MoD has to pay and help us to become an even more intelligent customer.

To address some of the noble Lord’s points on the exclusion of government-to-government contracts, these contracts are already excluded by the single-source contract regulations under Clause 14(2)(c). The exemption power of the Secretary of State will not be used for these contracts. I have a lengthy response on transparency over strategic capability, and it is probably better if I set it down in a letter to the noble Lord; it runs to one and a bit pages. If the noble Lord is happy with that, I would be grateful if he would withdraw his amendment.

[Lord Tunnicliffe]

I take it that that was an offer to write to me with the one-and-a-half-page response.

[Baroness Jolly]

I am more than happy to read it to the noble Lord. Would that help?

[Lord Tunnicliffe]

It might help, because the noble Baroness will probably have to put it into the record anyway, on Report.

[Baroness Jolly]

The framework provides for a range of reports to be specified in the single-source contract regulations upon both specific contract costs and upon supplier costs that relate to wider capabilities and capacity. It is estimated that around a third of the costs of single-source contracts relates to so-called overheads. These account for some £2 billion a year of expenditure under single-source contracts. These costs do not relate to any one individual contract but, it is said, represent the costs of providing particular industrial capabilities and capacity. Not all of the costs of this capacity will be reflected in the costs recovered through single-source contracts. Some may be recovered through MoD contracts won competitively, or through non-MoD customers. However, in some sectors where single-source activity is particularly concentrated, these costs may represent the majority, if not all, of the costs of capacity.

The new framework has six reports relating specifically to these costs. These include reports on the estimated costs that are used to price contracts, the assumptions that underpin those estimates and the actual costs that are subsequently incurred. The requirement for suppliers to keep relevant records in relation to costs and the MoD right to examine those records also apply equally to these overhead costs, as they do to any other allowable costs. In addition to these transparency rights, the pricing principles set out in relation to allowable costs also apply to these overhead costs. Such costs must be appropriate in nature and reasonable in value.

The transparency provided by these reports, the access to records supporting them and the requirement to follow the pricing principles will further enhance the ability of the MoD to act as an intelligent customer when considering the cost of the capacity it requires. The single-source contract regulations will also provide for a further report that specifically considers the industrial capacity provided by our key suppliers. This report will supply senior individuals in the department with consistent information across suppliers when considering capacity requirements, contributing to the alignment between requirement and the industrial capacity we have to pay for. I hope that the noble Lord will now consider withdrawing his amendment.

[Lord Tunnicliffe]

My Lords, I thank the noble Baroness for that response. We have used different terms but I think she has gone half way to meeting my concerns over what I have called the critical industrial capability. I did not of course put down a clause stand part debate in order to not have a clause, but to understand it better.

However, one area still concerns me. The sort of deals that I described from the BAE Systems press release are very large, and I have great difficulty in seeing how you would fit them, in future, into Part 2, which is full of pricing mechanisms, profit share and so on. It is quite detailed and there is a framework. I am happy for the Minister to write to me rather than give me an answer now, but one of the questions is whether she envisages that such deals will be fitted into Part 2 or whether it will be necessary to use Clause 14(7) or some other exception—as the Minister has pointed out, there are other exceptions in that clause. Does the Minister envisage there needing to be an exception for those sort of deals or is it envisaged that future deals of this nature will be somehow compatible with Part 2 in ways that, at the moment, I am incapable of understanding? I would be very grateful for a response to that detailed question, although I would not encourage her to give me one now. With that, I am content to withdraw Amendment 18J.

Amendment 18J withdrawn.

Amendment 18K not moved.

Clause 14 agreed.

Clauses 15 to 17 agreed.

Clause 18: Contract profit rate: supplementary

Amendment 18L

Moved by

[Lord Tunnicliffe]

18L: Clause 18, page 13, leave out line 19 and insert—
“(3) Single source contract regulations may provide that, if the achievement of a fair and reasonable contract profit rate for a qualifying defence contract at the time of pricing was frustrated because the information supplied or made accessible by one party to the other at the time of pricing, and on which that contract profit rate was based in whole or in part, was materially inaccurate or incomplete, the SSRO—”

[Lord Tunnicliffe]

My Lords, in moving Amendment 18L, I will also speak to Amendments 18M and 18N. I find myself in the unusual position of a public sector socialist politician putting forward some amendments nakedly proposed by industry. However, it seemed that the questions being posed deserved a response and a discussion. I hope the Committee will forgive me proposing these amendments as a bunch of probing amendments for the Minister to respond to.

The industry argues that Clause 18(3) creates uncertainty as to the contract price. It enables the contract price to be challenged at any time after it has been agreed if the party considers that adjustments under steps 2, 3 or 6 of Clause 17(2) were not appropriate. When approving or signing a contract, a board of directors will require certainty of income against which it can assess its cost estimates and associated risks. It contends that the sense of uncertainty over price may have unintended consequences for shareholder value, group decisions on where to invest, and the perception in the wider marketplace that the UK remains a good place to invest in and do business. It believes that the parties should have a limited time period in which to challenge the adjustments made in steps 2, 3 or 6 to reduce uncertainty, and that a period of six months from the date of price agreement is more reasonable.

The industry also argues that the grounds for a challenge need to be included in the Bill. There needs to be a material basis for the challenge such as that the adjustment has caused harm or disadvantage to one party. An error or an omission that has caused harm or disadvantage, and if corrected would give rise to a material adjustment, would be a more reasonable basis. Without materiality or a de minimis threshold, challenges could be made for trivial amounts. I beg to move.

16:45

[Baroness Jolly]

My Lords, we are considering in this group of amendments three related changes to the power under Clause 18 for a referral to be made to the SSRO for a determination to adjust the price of a contract. On a minor drafting point, the proposed amendments address only the SSRO’s adjustment of the profit element of the price and, indeed, to only three of the six steps that set contract profit rate. However, I shall assume in my response that the intent of the amendments is also to limit the ability of the SSRO to adjust the cost element of the price as outlined in Clause 20 rather than the profit element alone.

The contention behind these amendments is, I believe, that this price determination introduces an unacceptable degree of uncertainty to the price of a contract, and so they seek to restrict the scope of the determination in three ways: by restricting the grounds on which a referral may be made, as set out in Amendment 18L; by restricting the period in which a referral may be made, as set out in Amendment 18M; and finally by restricting the determination that the SSRO may make. We do not consider that any of these restrictions are necessary or desirable, and placing such restrictions on the determination will significantly weaken compliance with the pricing rules of the new framework. I think it will be helpful if I outline the purpose and scope of the SSRO’s price determinations before we consider the individual amendments.

The new single-source framework is essentially a deal between suppliers and the Government. Suppliers get a fair and reasonable price and we get the protections we need to ensure value for money. This is a good deal for both parties. We have a duty to ensure taxpayer value for money and an efficient and thriving defence sector that gets a fair price, which is good for defence as a whole. It means that our Armed Forces get the equipment and support they need and the wider economy benefits from an efficient defence sector that can drive innovation and exports. Determining a fair price is thus a key component of Part 2, and Clauses 15 to 21 set out how this is to be done. They set out, for example, that the price must be determined on the basis of allowable costs—costs that are reasonable, appropriate and relate to the contract. They also set out that on top of these costs, the supplier is entitled to a fair and reasonable profit rate. Following these pricing rules will result in a price that is fair and reasonable. The rules on profit ensure that suppliers are adequately compensated for their expertise, and the rules on costs ensure that taxpayers do not pay more than they should. There would be no point in having these rules if they were not enforceable. Indeed, it would undermine the deal that is central to the framework.

This is the situation we have at the moment. Even though the current Review Board for Government Contracts annually recommends a profit rate, there is no obligation to use it, and it is being used less and less on our larger contracts. It may be asked why we need price enforcement provisions at all. Why would anyone sign a contract with a price that is not fair and reasonable? The answer stems from the market failures inherent in single-source procurement. This form of procurement is used when there is no alternative supplier. It means that we cannot walk away from the supplier without also walking away from the essential military capability that that supplier provides. This is not a strong negotiating position, as our suppliers are only too aware. In addition, we are sometimes under time pressures, so that any delay to signing the contract puts lives at risk. This compounds the problem, and partly explains why we may not always get the best deal.

Another reason why we might sign a contract with a price that is not fair and reasonable stems from the fact that in single-source procurement there is only one supplier pricing the work. The knowledge that there is no one who can put forward a cheaper, more competitive price puts a supplier in a highly unusual and privileged position. Instead of a healthy market incentive to price keenly, our single-source suppliers are under a direct financial incentive to do just the opposite, and the current framework encourages this. This is not to say that our suppliers always, or even routinely, do this. However, it cannot be denied that an environment where suppliers are rewarded for inflating their price is hardly conducive to getting value for money.

The MoD, of course, has a duty to challenge a supplier’s price estimates. As a brief aside, I will note that this price challenge has not been a level playing field historically. Suppliers’ commercial staff, for whom financial incentives are paramount, typically outnumber our commercial staff, and they employ specialist consultants to help them—which, under the current system, they can often charge back to us. Returning to the market failures of single-source procurement, a substantial difficulty in challenging suppliers’ costs is that they always know more about them than we do. Clearly we need to see their cost assumptions before we agree a price. This is what we should get under the current system, although it is not legally binding. Under the current system we can also challenge their price up to two years after the contract has ended, if we can prove that they did not show their assumptions to us.

This brings me to Amendment 18L. This seeks to introduce a single and specific ground for a price referral to the SSRO—namely, that the SSRO can amend the price only if the initial pricing assumptions were not shown to the MoD. However, seeing suppliers’ price assumptions is not sufficient. Suppliers are in a strong position and can present a convincing case—for example, by showing that their costs forecasts are aligned to historic expectations even if these represent poor value. It requires specialist knowledge and experience to challenge this. It is not enough for a supplier to show us their assumptions, and to put all of the duty on to the MoD to check that each and every one is reasonable, as with the current approach. This encourages a supplier to add extras to their price and hope that the MoD does not find them all. This is an appalling pricing incentive, far removed from a healthy market, and we must address it if we want to get value for money. Again, I do not say that this always happens but I am sure that it is not conducive to getting value for money.

We want suppliers to be encouraged to use good quality pricing assumptions in the first place; assumptions that are fit for purpose. If the cost is worth hundreds of millions of pounds, then they should do a certain amount of due diligence to support this estimate. If they do not, they should be at risk of a future price change when it transpires that outturn costs bear little resemblance to the original estimates. Equally, and just as importantly, I accept that the MoD has a duty to check these estimates. If we fail in our duty, any SSRO-determined price change will take this into account.

The SSRO price referrals, in the way that they are currently drafted, will replace the current misaligned pricing incentives with incentives that act as a proxy for the missing competitive pressures. We have chosen to give the SSRO, in its role as an independent expert of single-source procurement, the function of acting as an independent adjudicator in the event that these pricing rules are not followed. One alternative might have been the courts. However, the technical and specialist nature of single-source procurement means that this route might be more complicated and time consuming for both parties, and probably much more expensive.

So the SSRO, under Clauses 18 and 20, can make a determination that the price of the single-source contract must be adjusted. It will make this assessment if it considers, for example, that a contractor’s assumptions were misleading or not fit for purpose at the time of pricing; in other words, that they were not fair and reasonable.

The SSRO will not penalise either party for getting an assumption wrong—no one can be expected to know the future—but if it considers that a party provided misleading assumptions or withheld crucial information known to that party at the time, such as, for a supplier, known efficiency measures, then the SSRO can adjust the price. If the SSRO considers that the MoD should have asked more questions, it will also take this into account in its determination. Industry has raised concerns that this adds uncertainty into single-source procurement. My challenge back is that it is an uncertainty that can easily be mitigated. If you follow the pricing rules and keep an audit trail of your assumptions, then any uncertainty will be minimal.

Amendment 18L would reduce the grounds for referral to the SSRO. A referral could be made only if inaccurate or incomplete information had been provided by either party to the contract. If information was provided but was misleading or not fit for purpose, this amendment would prevent the SSRO reviewing and, potentially, adjusting the price of a contract. Similarly, if the adjustments had been determined without regard to the statutory guidance or there was an error of calculation, there would also be no ability to refer the matter. This amendment puts all the duty back on to the MoD to ensure that all the details of a price are fair and reasonable; all the supplier has to do is show its assumptions to us. It takes away from the supplier the duty to do its own due diligence and ensure its estimates are reasonable. This amendment is not an equitable arrangement, particularly given that suppliers have greater knowledge about their costs, and it frustrates our intent to put a proxy for market pressures back on to our single-source suppliers. I therefore urge the noble Lord to withdraw Amendment 18L.

Having provided a great deal of background for the first amendment, I will be brief with the next two amendments in this group. Amendment 18M seeks to restrict the ability of either party to a contract to make a referral to the SSRO for a determination. This amendment would limit the period in which such a referral could be made to the first six months after the price of a contract has been determined. As I discussed earlier, there are a number of reasons why an SSRO price determination might be appropriate: whether information was withheld from one party at the time of pricing, whether due regard was given to statutory guidance, whether the detailed calculations were performed correctly, or any other reason why the pricing assumptions may not have been fit for purpose. In all these scenarios, information will continue to emerge throughout the course of the contract. For example, the supply chain employed may be significantly different from that assumed at the time of pricing, and this may be a prompt to investigate whether information was appropriately shared or whether the pricing assumptions were fit for purpose. If a contract is for the design, manufacture and initial in-service support of equipment, this kind of information may not become apparent until several years into the contract. To restrict the period for this determination to six months is to restrict the ability to consider information that later comes to light, conduct investigations and assess whether an adjustment might be appropriate. We consider this an artificial and unnecessary restriction upon the SSRO’s aim of ensuring that the contract price is fair and reasonable and that good value for money is obtained. As before, any uncertainty can easily be mitigated by a contractor following the pricing rules and keeping an audit trail of its assumptions.

We however recognise that it is appropriate clearly to specify the periods in which opinions and determinations, including this determination under Clause 18, may be made. It was for this reason that we introduced in the House of Commons what is now Clause 41. This provides that the single-source contract regulations may specify time periods for all referrals to the SSRO, and the draft regulations do just that. The draft regulations are the subject of the ongoing consultation with industry, so we do not consider it necessary to single this one referral out to specify a period in the Bill rather than in the regulations.

17:00

Amendment 18N is the final amendment in this group. Unlike the previous two amendments, which would restrict the basis upon which a referral to the SSRO may be made, this amendment seeks to limit the determination that the SSRO is able to make by introducing the requirement for a price adjustment to be material. In most circumstances, the requirement for materiality is implicit in the overall process for this referral and determination. In order to arrive at a price adjustment, parties must first have recognised an issue, failed to reach agreement through discussion and negotiation, referred the matter to the SSRO, and the SSRO must consider that an adjustment is appropriate. The SSRO is not under a duty to make an adjustment in response to a referral. It may do so if it considers that the existing price is not appropriate. We would not expect to arrive at a referral to the SSRO over an immaterial matter, and would not generally expect the SSRO to determine a price adjustment if it were immaterial.

However, while in most cases any adjustment would be naturally expected to be material, there is also the important matter of compliance with the regime. Part 2 introduces a civil penalty compliance process, which deals with contraventions relating to the duties of a contractor once they have entered into a qualifying defence contract—duties such as keeping records and providing reports. That process does not directly address the pricing of a contract. That is dealt with by the determinations under Clauses 18 and 20 that allow for the SSRO to determine a price adjustment.

These determinations play an essential role in ensuring that a contract is priced in accordance with the principles set out in the Bill and regulations, and with regard to statutory guidance. Without these determinations, there would be rules relating to the pricing of these contracts, but no compliance process.

To limit this determination to material price adjustments would limit the power of the SSRO to make determinations based upon principle, irrespective of value, and in doing so to award appropriate costs. The determination may deal with important matters of principle but, based upon the balance of circumstances, the SSRO may consider that a nominal adjustment is appropriate, setting out its reasons for doing so. To prevent the SSRO from making such determinations would be an unfortunate restriction upon its freedom to make determinations in such cases. I therefore urge the noble Lord to withdraw Amendment 18L, and not to move Amendments 18M and 18N.

[Lord Tunnicliffe]

My Lords, I thank the Minister for her response, which I will study with great care. I am sure that those outside the House will study it with even greater care. In the mean time, I beg leave to withdraw the amendment.

Amendment 18L withdrawn.

Amendments 18M and 18N not moved.

Clause 18 agreed.

Clause 19: Rates etc relevant to determining contract profit rate

Amendment 18P

Moved by

[Lord Tunnicliffe]

18P: Clause 19, page 13, leave out line 32 and insert—
“(1) The Secretary of State shall by regulations, for each financial year, provide a determination of—”

[Lord Tunnicliffe]

My Lords, in moving Amendment 18P I will speak to the rest of the amendments in this group. The points I want to make are simple, but I look forward to the reply I shall receive to these simple ideas.

The group essentially refers to Clauses 19 and 20. Clause 19 addresses the issue of the contract profit rate and, essentially, the amendments would require that the rates must be set by regulation each year. Amendments 23A and 23E turn this into an affirmative-procedure process.

More interesting is Clause 20, “Allowable costs”. As the report of the noble Lord, Lord Currie, points out, we have over the years had a lot of debate, effort and negotiation into the contract profit rate which, typically, is 10%—pedantically, it is 9%—of the total price; and too little, one might argue with the benefit of hindsight, into the issue of allowable costs, which represent 90% to 91% of the total price. Therefore, Clause 20 properly addresses this issue.

Subsection (1) states:

“The SSRO must issue guidance about determining whether costs are allowable costs under qualifying defence contracts”.

Subsection (2) attempts to define allowable costs. It is important to emphasise that these are the big bucks. This is where the big money is in the contract. This is 90% or more of the total price. The guidance we get from the primary legislation is that they must be appropriate, attributable to the contract and reasonable in the circumstances. Much as I praise this part of the Bill—and I do as it is a really good attempt to address this extremely difficult issue—I cannot but be amused by these three descriptors of one of the most important elements. I remember that when I was privileged to be in the noble Baroness’s position, whenever an official used the word “appropriate” in my response, it meant we did not have an argument, so I dismiss subsection (2)(a) as pretty well irrelevant. I do not have a lot of time for paragraph (b) either, because if it is not “attributable to the contract”, who would in all conscience try to argue that it should be there? We are left with “reasonable”. Much as I applaud the concept of being reasonable, it is not a very full description. Therefore, inevitably, and quite properly—I am not unhappy about this—it will have to be left to the SSRO to develop guidance about it. However, surely this is so important that it should not be merely guidance but should be in regulations. Regulations of this importance should be exposed to public gaze and debate and should be accountable to Parliament through the affirmative procedure. I beg to move.

[Lord Palmer of Childs Hill]

My Lords, I, too, am worried about these words. I shall not repeat what the noble Lord, Lord Tunnicliffe, has said. It is really a question about what are allowable costs. As anybody in business knows, allowable costs can be described in so many ways. For instance, Starbucks does not pay any tax in this country because it charges its royalties from overseas against its costs in this country. Would that on a contract for a submarine be allowable costs? If the contractor is producing, let us say, one submarine, can it therefore charge all of its chairman’s, managing director’s and executive board’s salaries against the cost of that one submarine? If it is also producing a group of battleships or carriers, those executive costs, for example, would be spread over all the costs of all those items of equipment.

In her previous reply, the Minister spoke about an audit trail. The noble Lord, Lord Tunnicliffe, used the word “reasonable” and all the other adjectives. A contractor who wished to drive a coach and horses through this could do so by manipulating what could be administrative costs. It is very easy to say that if the mythical submarine requires a widget, that widget is applicable to that submarine. You can see that, but when you are dealing with, let us say, the premises for the submarine, if it is one submarine, is the contractor allowed to charge the whole of the premises costs against the cost of that submarine? If it was also building an aircraft carrier, it could charge some of that premises costs against it. I invite the Minister to come back, perhaps on Report, with some better reassurance about how allowable costs will be allocated and particularly about how to spread large costs if only one item of equipment is produced by that contractor.

[Lord Roper]

My Lords, I, too, was surprised to read these words. I had looked in the draft regulations to see whether there is anything within them which would help us. There is not. There is a reference to allowable costs in paragraphs 13 to 15, but that merely refers us back to Clause 20. It does not develop the concept of allowable costs, as I believe the noble Lord, Lord Tunnicliffe, rightly suggested it should. I wonder whether the Minister will be able to tell me that this could be looked at in the final version of the draft regulations.

[Baroness Jolly]

My Lords, Amendment 18P would have the effect of directing the Secretary of State for Defence to provide Parliament annually with a determination of the contract profit rate and, specifically, the process that is to be used to determine the profit rate. Before considering the amendment, it will be worth while outlining the existing process that the Bill provides for.

Under Clause 17, the contract profit rate is to be determined through six steps. Three of those steps will be determined with reference to rates that are to be calculated annually: step 1, the baseline profit rate; step 4, the SSRO funding adjustment; and step 6, the adjustment for capital employed by the contractor. Two of these steps are not new; steps 1 and 6 have their equivalents under the existing regime. The rates to be used in determining these three steps must themselves be determined annually as they will reflect the most recent accounts of companies and the SSRO in relation to the SSRO funding adjustment.

The process for determining these rates is provided for by Clause 19 and has several stages. First, the Secretary of State will issue statutory guidance containing the principles that should be used in determining the rates. Secondly, the SSRO must recommend rates, having regard to the Secretary of State’s guidance, by 31 January each year. Thirdly, upon receiving the SSRO’s recommendations, the Secretary of State must then determine and publish in the London Gazette no later than 15 March each year the rates to be used. In publishing the rates to be used, the Secretary of State must also publish the reasons for any differences from the SSRO’s recommendations.

I appreciate that at first sight this may appear to be an unnecessarily complicated process, but it has been carefully considered to fulfil a number of requirements: first, for the Secretary of State to be able to set out clear guidance on the principles that should be used in determining the rates; secondly, and crucially, for the SSRO as the independent and impartial body to be free to recommend rates in accordance with its statutory aim to set a framework that delivers a fair and reasonable price. While the SSRO must have regard to the principles established by the Secretary of State, it should also be free to consider any other matters that it considers relevant to the setting of the rates. It must be able to recommend the rates that it considers will provide a fair and reasonable return to contractors and value for money to the Government, even if that means not following the principles set out by the Secretary of State.

The amendment would require that the powers conferred by Clause 19 should be contained in regulations made by statutory instrument and therefore be subject to the same level of parliamentary scrutiny as the other regulations. While I appreciate that Parliament should exercise an appropriate level of oversight in these matters, I do not think that this proposal is proper in this instance. First, I note that this would form a potentially unhelpful precedent across government, since, as far as I am aware, none of the other regulatory bodies—such as for the railways or water—are subject to this degree of parliamentary scrutiny, even though they deal with issues of great national significance. Secondly, the Secretary of State for Defence is already subject to parliamentary oversight for his powers over the defence budget and is therefore accountable to Parliament for how he discharges these powers. The amendment would add an unhelpful degree of additional and overlapping scrutiny for this specific area of his responsibility.

In addition, this is clearly a very technical and complex issue and there is a risk that making this area subject to parliamentary debate would lead to the politicisation of profit rates which ought to be set through impartial and expert judgment. There would be scope for Parliament to be subjected to lobbying by the various interest groups, a factor that could result in pressure to set the rates either too high or too low.

17:15

Finally, I should point out that the Bill already makes provision for the SSRO to make an annual recommendation to the Secretary of State for the profit rate. The SSRO, as the independent body, is the appropriate body to provide the necessary expert oversight of the Secretary of State’s determination of the profit rates. The Secretary of State will have to publish in the London Gazette the rates to be used and must publish the reasons for any difference from the SSRO recommendations. This therefore provides an appropriate level of oversight and transparency.

Amendment 18Q is similar to Amendment 18P in that it seeks to set out matters in regulations rather than in statutory guidance, in this case relating to allowable costs. Clause 20 deals with allowable costs under the new framework. Those costs will account typically for some £5.5 billion per annum of government expenditure, or 90% of the total cost of single-source procurement, so the rules around determining the allowable costs are important.

There are three principles contained in the Bill for determining whether a cost is an allowable cost, and each of these must be met in order for a cost to be allowable. First, a cost must be appropriate. This relates to the type of cost, such as whether it is for labour or materials, insurance or pensions costs, or rationalisation and redundancy costs. Some types of cost are always appropriate, such as direct labour, and some never. For example, suppliers should never be able to pass on the costs of their charitable donations to the taxpayer. Secondly, a cost must be reasonable. This relates to the quantum of the cost, and a cost may be reasonable if it does not exceed that which would be incurred by a prudent person in the conduct of competitive business. Finally, a cost must be attributable to the contract. This may sound obvious, but without this principle a cost incurred by a supplier could be both appropriate and reasonable, yet be either wholly or partially related to work other than that under the qualifying contract. The amendment seeks to ensure that the single-source contract regulations will provide the detailed guidance to support these three principles, rather than the SSRO issuing statutory guidance as currently provided for.

As noble Lords are aware, the single-source contract regulations made by the Secretary of State will contain the further detail essential to the operation of the new framework. The Bill also provides for a range of statutory guidance, some to be issued by the Secretary of State, but most to be issued by the SSRO. Like the regulations, the statutory guidance has legal power. However, unlike the regulations, parties subject to Part 2 can deviate from statutory guidance if they have reasonable grounds to do so. Parties must have regard to the statutory guidance. For matters where it is difficult to set out rules that will cater for every possible set of circumstances, statutory guidance provides a means of setting rules that provide for the majority of cases but allow the flexibility to deal with unforeseen circumstances or grey areas. As we developed the framework, we considered whether guidance would be better put into the legally binding single-source contract regulations or whether to use statutory guidance with the greater flexibility that that provides. If statutory guidance is to be used, there is then a secondary question of who should issue that guidance—the Secretary of State or the Single Source Regulations Office.

For allowable costs, we judge that the best approach is to use statutory guidance, and that it should be issued by the SSRO. Using statutory guidance rather than regulations is a matter of practicality, and requiring the SSRO rather than the Secretary of State to issue that guidance is a matter of principle. If we were to specify binding rules for determining allowable costs in regulations, those regulations would need to be very detailed and extensive, catering for every possible scenario that may occur. Such regulations would probably run into many hundreds of pages, perhaps thousands, and it would require an army of people to monitor, police and review them. Noble Lords might be interested to know that this is currently the situation in the United States, where the Defense Federal Acquisition Regulations are more than 3,000 pages long and more than 1,000 accountants are employed to ensure that they are complied with. This may be a suitable approach given the scale of US defence spending, but we do not consider this approach necessary for the scale of our defence budget.

The alternative is to use statutory guidance. As it is possible for a person subject to the statutory guidance to deviate from it if they have sound reason to do so, the guidance can focus upon principles and the rules appropriate for the vast majority of cases. Where there are specific circumstances which reasonably justify an alternative approach, that approach may be taken while still being compliant with the law, although the person must be prepared to justify the approach they have taken. Given the broad nature of activity that will be covered under qualifying contracts—everything from research and development to test facilities, the design and manufacture of complex equipment and the provision of support services—the range of potential costs and accounting issues are innumerable.

I therefore consider statutory guidance to be a far more appropriate mechanism than regulations for dealing with this important, yet complex, area. It can be responsive, for example, to changes in international accounting standards, and flexible to deal with specific accounting complexities. It would not be appropriate to commit the department to using extensive and valuable resources to maintain a complex set of regulations. I hope noble Lords will accept that is a sensible approach.

In terms of who should issue this guidance, as the independent arm’s-length body charged with the dual aim of ensuring value for money and a fair and reasonable price, the Single Source Regulations Office is ideally placed. Were this amendment to be accepted, it would place an inappropriate power with the MoD, since the determination of allowable costs would then rest with one of the parties to the contract.

In summary, I believe that our approach, which is to set out in the Bill the three clear principles for determining whether a cost is an allowable cost, supported by statutory guidance issued by the Single Source Regulations Office, is the best approach to ensure a fair and flexible system that works in the interest of all parties.

I now turn to those amendments that relate to the parliamentary process for the regulations that would be introduced by Amendments 18P and 18Q. The Bill as currently drafted provides for the regulations that would be introduced by Amendments 18P and 18Q to be made by statutory instrument in the single-source contract regulations, or SSCRs, which are introduced under Clause 14(1).

On 20 December 2013, the Delegated Powers and Regulatory Reform Committee published its report on the Bill, which included recommendations on the parliamentary process to be applied to the regulations under Part 2. These included that the SSCRs should be subject to a first-time affirmative procedure and that the regulations to be made under Clause 14, which determine the scope of qualifying defence contracts to which Part 2 and the regulations will apply, should always be made by the affirmative procedure. We have accepted these recommendations, and the government amendments to be discussed later make the necessary changes to the Bill.

A further recommendation noted that Clauses 14(1) and 28(1) could potentially be interpreted as providing for the SSCRs to make general provision, which the committee considered would be too wide and imprecise a power to delegate. We agree that such a power would indeed be inappropriate, but it is the department’s view, based on legal advice, that these subsections are introductory in nature, and must be read in the context of the whole of Part 2, which contains a series of detailed and specific powers, and the usual power to make supplementary or incidental provision which is included in Clause 42(2). It should not be necessary to rely on these general clauses to make provision that is not otherwise permitted by the other powers in Part 2. I hope it is clear from the draft regulations placed in the Lords Library that we have not done so.

The final recommendation was that the determination of rates relevant to the contract profit rate under Clause 19 should be made in the regulations. This recommendation is the subject of Amendment 18P, which we have already discussed. I shall return to this recommendation shortly as it is also relevant to Amendment 23E.

Amendment 23A provides for the specification of which regulations should be subject to the affirmative process. This has a similar effect to government Amendment 23, which also provides a mechanism for specifying regulations to be made subject to the affirmative process. We therefore agree with the intent of the amendment, but it is not required if government Amendment 23 is accepted. Amendments 23D and 23E provide for regulations under Clause 19, covering rates relevant to determining the contract profit rate, and Clause 20, covering allowable costs to be subject to the affirmative procedure. The current Bill does not provide for regulations under either of these clauses, so the amendments rely upon earlier Amendment 18P for rates relevant to the contract profit rate and Amendment 18Q for allowable costs. The Delegated Powers and Regulatory Reform Committee did not recommend that guidance on allowable costs should be in regulations. It recommended in paragraph 12 of its report that the rates relevant to the contract profit rate should be in regulations, as we have already discussed under Amendment 18P. However, the committee did not recommend that the regulations should be subject to the affirmative procedure. As discussed earlier under Amendments 18P and 18Q, we do not believe that either of these matters should be in regulations, so clearly we do not agree that they need to be subject to the affirmative procedure. However, I will briefly consider each amendment in turn.

Amendment 23D relates to allowable costs. The guidance on allowable costs may need to change on a regular basis, for example, in response to changes in international financial reporting standards. If it was set out in regulations this guidance would be long and technical, and any changes are likely to reflect relatively minor changes in accounting practices. We do not consider that such matters justify the affirmative procedure. Amendment 23E relates to rates relevant to the contract profit rate. Even if in regulations, the Delegated Powers and Regulatory Reform Committee did not recommend that these should be subject to the affirmative procedure. The annual setting of the profit rate has similarities with the determinations made by price regulators, such as those in water, energy and rail. In all these cases, the regulators have considerably more power than the Secretary of State or the Single Source Regulations Office in that they set the overall revenue of the regulated industry, not just the profit rate, which typically accounts for only 10% of the price. However their determinations are not subject to direct parliamentary approval.

Parliament has oversight of the regulators through Select Committees and the Comptroller and Auditor-General, which is also the case for the SSRO. Parliament has already delegated to the Secretary of State overall responsibility for providing strategic direction on acquisition and allocating resources appropriately. The setting of rates relevant to the contract profit rate to apply to single-source contracts falls within this remit. Placing the provisions of Clause 19 in regulations following the negative procedure would already provide a far greater degree of parliamentary approval than that applied to other similar regulatory powers. To apply the affirmative procedure to these matters would, in the department’s view, be further out of proportion to the nature of the power. We do not consider that these regulations should be subject to the affirmative procedure. I hope this explains our position, and I therefore urge the noble Lord to withdraw his amendment.

I have a couple of further points to make. My noble friend Lord Roper asked whether allowable costs could be addressed in future drafts of the regulations. There is no provision in the Bill for this as it is going to be dealt with in statutory guidance, as set out in Clause 21. It would require an amendment. My noble friend Lord Palmer asked how overhead costs such as directors’ salaries, facilities and so on are spread or allocated to contracts. These are addressed through a process known as cost recovery rates. These are allowable costs which are subject to a requirement to follow the three tests under Clause 20 and are the subject of the reports provided for in Clause 25. These give all the powers and transparency necessary to ensure that overhead costs are fair and reasonable, and that we do not pay more than we should for them.

17:29

[Lord Tunnicliffe]

My Lords, I thank all noble Lords who have taken part in this debate. I congratulate the Minister on her spirited defence. Unfortunately, it failed. Our concern about the processes is real, and our overwhelming concern is the billions of pounds that are tied up in allowable costs. As we will go on to discuss, the various forms of contract are an important chunk of the real profits of the company. At the end of the day, this is a negotiating game. It is a matter of how much you can legitimately build into your allowable costs, with a profit rate on top of that. Allowable costs are at the centre of what defence contracts cost and what the taxpayer must pay. I do not feel that the Minister, despite her spirited defence, has addressed our concerns—not only my concerns, but those of other Members of the Committee—on allowable costs. I fear that we will be tempted to return to this on Report. As I believe this to be an apolitical issue, I encourage the Minister to ponder today’s debate and to see what she can add to it. We would all enjoy receiving a letter from her that would provide nuance to the Government’s position and I encourage her to do that. It is a matter of real concern to the Committee. In the mean time, I beg leave to withdraw the amendment.

Amendment 18P withdrawn.

Clause 19 agreed.

Clause 20: Allowable costs

Amendment 18Q not moved.

Clause 20 agreed.

Clause 21: Final price adjustment

Debate on whether Clause 21 should stand part of the Bill.

[Lord Tunnicliffe]

My Lords, I will speak to Clause 21 and to Amendment 23C. I must emphasise that our opposition to Clause 21 standing part of the Bill is not directed at the essence of the clause; it is to explore the clause. However, I fear that we must explore it fairly widely.

The concept in this clause, of a final price adjustment, comes out of the report by the noble Lord, Lord Currie. It addresses the key issue of profit that arises from the outturn. In my view, it is conceptually very sound. It is utterly meaningless without the regulations so I thank the officials and the Minister for sharing the regulations with me. After considerable effort, I think that I understood the early part of the regulations, particularly in relation to Clause 21(2), and they seem very sensible. They have a clawback of excessive profit of up to 75% and they support the supplier in a position of excessive loss at 50%, on the simplistic assumption that the profit rate is 10% of the allowable costs. There is quite a broad band, between 96% and 110%, where all variation falls to the supplier’s bottom line, which is a very strong incentive for the supplier to become more efficient and make more profit. I am not against suppliers increasing profit if that is achieved through efficiency. I am entirely in favour of it in this new open book, multi-reporting regime whereby the MoD can share in that experience through the reporting regime, understand it and help future suppliers understand how they can deliver at lower costs and more efficiently. It is a good regime.

Essentially, Amendment 23C simply argues that the regulations referred to in Clause 21(2) should be approved by Parliament using the affirmative procedure. Having recovered from the effort of understanding subsection (2), I gave up the ghost intellectually at that point and stopped reading the Bill. However, since then, I have started to read it again and I find Clause 21 a little difficult to understand, so I have a series of genuine questions for the Minister.

Clause 21(3) states:

“Provision made under subsection (2) must include provision for the amount of any adjustment to be determined … by agreement between the Secretary of State, or an authorised person, and the primary contractor”.

Does that mean that the regulations set out in subsection (2) may or may not be obeyed? In other words, can the Secretary of State agree to disregard the regulations under subsection (2), in which case it seems that the process of developing and publishing the regulations was valueless; or does it simply mean that the parties agree that the figures are right and so on? Is it a clause which simply invites the parties to agree, and if they do not agree the matter can be referred to the SSRO?

Given the precision of the regulations as I read them—I recognise that many thousands of man hours have gone into crafting them—I had some difficulty in understanding Clause 21(4), which states:

“Provision under this section may be expressed so as to apply … to particular kinds of qualifying defence contracts”.

What would be the differences and how would they apply? I genuinely have trouble envisaging what the different sorts of contracts may be like.

I assume that Clause 21(4)(b) is a simple de minimis provision—namely, that there should be a value below which you do not quibble because it is simply not worth doing so. I was fairly comfortable that it was a de minimis provision until I read Clause 21(5)(a) and (b), at which point I gave up the ghost because I could not understand what subsections (5)(a) and (5)(b) meant if subsection (4)(b) is a simple de minimis provision because subsections (5)(a) and (5)(b) seem to be super de minimis provisions. My general view of Clause 21 is that it is great in so far as I understand it, but I have to confess that I do not fully understand it and I seek enlightenment.

[Baroness Jolly]

My Lords, this is a crucial element of the Bill because it protects the taxpayer against contractors earning excessive profits while also protecting industry from excessive losses.

The basis of the Bill is that contractors should get a fair return on single-source work, and even better returns if they can drive cost efficiencies which deliver long-term benefits to the MoD. However, they should not be entitled to super-profits just because, despite best intentions and efforts, both parties happened to get the pricing wrong. Likewise, in the same circumstances, suppliers should not be expected to suffer losses. This clause offers protection to both parties. The clause enables a final price adjustment on completion of a contract if the actual costs of the contract turn out to be markedly different from those agreed at the time of pricing. The mechanism will be applied to all qualifying defence contracts priced at the outset on the basis of a firm or fixed price.

At Second Reading in the House of Commons, statements were made to the effect that provisions such as this are undesirable because an agreed contract price should be an agreed contract price and that clauses like this remove pricing certainty and dampen supplier incentivisation. There is some truth in the observation, but I believe the clause strikes a good and proper balance between incentivising suppliers and protecting the public purse in the way that the noble Lord, Lord Currie, recommended it should. It should also be noted that on a number of occasions in the past when suppliers incurred very substantial losses, such as on the Nimrod programme, they have come back to us for more money. Since we need the capability they provide, it is not in our interest to let a supplier go bankrupt by holding it rigidly to its contract price.

I must also tell the Committee that this clause does not introduce a new idea into single-source contracting. Provisions for a final price adjustment have been in place since 1968 under the existing Yellow Book arrangements, and a mechanism very like Clause 21 has been in place since 2004. It is in many of our single-source contracts and has already been successfully used to recover excess profits from our suppliers on some contracts. However, because the existing mechanism is contractual and needs to be negotiated, sometimes suppliers refuse to agree to its terms. This happened on a recent large maritime maintenance contract where commercial officers had to give it up in exchange for another provision we desired. That is why we want to legislate to provide this protection. If Clause 21 falls, a significant protection for both parties falls with it.

Clause 21 also states that any adjustments to the final price will be determined by the Secretary of State and the contractor. However, if an agreement cannot be reached on whether an adjustment is required or on the amount of that adjustment, the clause enables either of the parties to refer the matter to the SSRO for a binding determination. The clause will be used for particular types of contracts—firm and fixed-price contracts, which account for 60% of our single-source contracts—and the SSCRs will set out the minimum value for applying these provisions.

Finally, the clause gives the Secretary of State a power, on a case-by-case basis, to exempt a QDC from any final price adjustment as long as the value of that QDC is within the range to be specified in the SSCRs, which is expected to be between £5 million and £50 million. When deciding whether to make such an exemption, the Secretary of State must have regard to any matters which will be specified in the regulations. The clause is an important element in protecting both parties in defence contracts: the Government against suppliers’ excessive profits and industry from substantial losses, which ultimately would not be in the MoD’s interest. It is therefore crucial that it remains in the Bill.

Amendment 23C is part of a group of amendments which relate to the regulations that are to be made by statutory instrument under Part 2 and the parliamentary procedure by which those regulations will be made. We have previously discussed this in relation to Clauses 19 and 20 and Amendments 23A, 23C and 23D. Amendment 23C would provide for regulations under Clause 21 to be subject to the affirmative procedure. These regulations are for the final price adjustment and are currently subject to the negative procedure. The final price adjustment is expected to apply to around half of qualifying defence contracts—those which are firm or fixed price—and will have effect only when the costs incurred under these contracts are significantly different from those estimated at the time of pricing. The mechanism provided for by the draft regulations under Clause 21 is a relaxation of an existing mechanism that has been in place since 2004 and follows one of the recommendations by the noble Lord, Lord Currie. The Delegated Powers and Regulatory Reform Committee did not recommend that regulations under Clause 21 need be subject to the affirmative procedure and we, too, do not consider that these regulations warrant it. I urge the noble Lord not to move Amendment 23C.

Clause 21(4)(a) applies only to a particular kind of contract. The final price adjustment applies to all firm and fixed-price contracts, but with “pain and gain share” contracts, where the MoD and industry agree sharing provisions such as 50:50, it would not be appropriate to have two sharing mechanisms running simultaneously. Clause 21(4)(a) allows us to exclude “pain and gain share” contracts from the final price adjustment. The noble Lord queried the effect of Clause 21(4)(b). It is only to provide for a de minimis level. I am advised that the effect of Clause 21(5)(a) and 21(5)(b) is complex, and I will write on that.

Clause 21 agreed.

Clauses 22 to 25 agreed.

17:45

Clause 26: Duty to report relevant events, circumstances and information

Amendment 18R

Moved by

[Lord Tunnicliffe]

18R: Clause 26, page 18, line 40, leave out from beginning to “on” and insert “A primary contractor and the Secretary of State must notify the other”

[Lord Tunnicliffe]

My Lords, Amendments 18R, 18S and 18T are prompted by industry, which seeks to argue that there should be a mutuality in obligation and a test of materiality. The industry argues that there should be a mutual obligation on the primary contractor and the Secretary of State to notify the other of events, circumstances and information that are likely to have an effect on, or relevance to, a contract. The MoD will have information that is likely to have an effect in relation to a qualifying defence contract, whether that affects its price or performance. The MoD should have a duty to disclose relevant information to the contractor, which must be reflected in the Bill. I understand that this duty was confirmed by the Government in Committee in the House of Commons but I would value further affirmation.

As a result of the broad scope of events and circumstances that are likely to have an effect on, or relevance to, a contract covered by Clause 26(1), it is realistic that the contractor or the Secretary of State should be required to notify only when they believe there is a likely effect or relevance. Without this restriction, the obligation to notify is extremely broad. Further, it is argued that it is not necessary to refer to the effect on costs per se; the important aspect is whether there is an effect on price, such that Clause 26(3)(a) is unnecessary. I beg to move.

[Baroness Jolly]

My Lords, one of the flaws in the current Yellow Book framework is that it provides little transparency once on contract. A key objective of the new framework is that the MoD should be able to monitor the health of single-source contracts on an ongoing basis, receiving timely information so that it can take fast and effective action. This is very important. There have been too many examples in the past when the MoD has discovered cost or time overruns on single-source contracts far too late for remedial action to be taken. Receiving information throughout the course of a contract will give the MoD the opportunity to work with contractors to take early action to avoid or minimise the impact of issues as they arise. This clause is one of several that provide this transparency.

A supplier will always know more than the MoD about the issues affecting its their delivery of a particular contract. Some of our suppliers share information on an open basis, alerting us as issues arise so that decisions can be taken on a joint understanding of the best information available at the time, but not all of our suppliers do this.

The standardised reports that will be required under Clause 24 will provide periodic snapshots of contract performance. However, for contracts below £50 million in value, a report may be received annually or still less frequently, and even for our largest contracts a standardised report is only required quarterly. These periods are appropriate for standardised reporting, but three months can be a long time in managing a contract, especially complex contracts worth many millions, or billions, of pounds.

Clause 26 therefore supplements the regular contract reporting, placing a duty on contractors to let the MoD know, in a timely fashion, of matters material to the contract. Putting the onus on the contractor in this way means that the new framework can be “lighter touch” than it would otherwise be if the only means by which alarm bells could be sounded on a project was through periodic reporting and the MoD’s monitoring powers.

Amendment 18R would make the Secretary of State subject to the same duty, providing notifications to the contractor. Clause 26 will place a duty upon a contractor to notify the Secretary of State when the contractor becomes aware of the occurrence, or likely occurrence, of “events”, “circumstances”, or “information” that are likely to have a material effect on a qualifying defence contract. Applying this same duty would require the Secretary of State to notify the contractor of events, circumstances or information that are likely to have a material effect on the contractor’s costs—the subject of Amendment 18T—the contract price, or the contractor’s performance.

Let me first be clear that this does not concern changes to our contractual requirements. If the requirements of the MoD change, and this affects an existing contract, then we require a contract amendment to reflect those new requirements. This should be quite separate to the delivery of requirements already contracted for; if we wish to amend the contracted requirement, we will tell the contractor and begin the commercial process of amending the contract, and this is not a matter that requires legislation. The contractor is not forced to make the amendment, and they will charge us for any additional costs that might arise, or amend performance requirements if this is relevant. Until we seek a contract amendment, a contractor should be concerned with managing the existing contract.

For contracts which we are not in the process of amending, this duty would require the Secretary of State to assess the impact of events, circumstances and information across the department upon each contractor’s contracts. This is quite different from the duty placed upon a contractor when they are managing a contract in the normal course of business. It would require the Secretary of State to assess what might, or might not, affect a contractor’s cost or performance, to look beyond the contract and assess whether a contractor’s activities are likely to be affected. This duty would be impossible for any Government to discharge.

We agree that when a contract is being priced, the duty to share information should be reciprocal. Both parties should share their assumptions to ensure that the price agreed for the contract is both fair and reasonable and value for money. However, once a contract has been entered into, it is the contractor who must manage the delivery of the contract, and who is responsible for the performance of its business and costs. It is not the responsibility of the Government to second guess what is likely to have an impact upon how a contractor achieves their contracted requirements. We do not accept that Clause 26 represents an equal duty when placed upon the Secretary of State compared to a contractor. It would be inappropriate to place this duty on the Government and impossible for a Government to fulfil.

Amendment 18S is the second in this group, and it seeks to qualify the duty to notify by adding the requirement that, for each of the three elements under subsection (1), the contractor believes in the existence of the effect or relevance. Each element requiring notification under subsection (1) is expressed as,

“likely to have a material effect”,

or,

“likely to be materially relevant”.

This means that a contractor need only notify the Secretary of State if two tests are met: first, that an effect or relevance is likely; and, secondly, that an effect or relevance is material. If a contractor considers that an effect or relevance is not likely or not material, then no notification is required.

The effect of this amendment would be to add a third test: that an effect must be likely, material, and believed to exist. We do not think that an effect could be considered both likely and material and yet at the same time not be believed to exist. To put it another way, if it were not believed to exist, how could it also be considered likely to have a material effect? Without embarking on a debate on the nature of belief, it is not clear what this third test adds.

Where there is a disagreement between a contractor and the Secretary of State over whether a contractor should have provided a notification under this duty, the Secretary of State may issue a compliance or penalty notice. Ultimately, it will be for the SSRO to determine whether a notification should have been provided and, in doing so, it will consider the two conditions of “likely” and “material”. We consider that the two conditions already required for there to be a duty to notify are sufficient and that the third test of belief proposed by this amendment is unnecessary.

Moving on to Amendment 18T, Clause 26 provides for three matters that are the subject of the duty to notify; these are listed in subsection (3). They are the costs under the contract, the total price payable under the contract, and the contractor’s performance of material obligations under the contract. This amendment seeks to remove the first of these matters—the costs of the contractor under the contract. The effect of this amendment requires some explanation as there is some overlap between the first two matters—the cost and the price payable under the contract. For cost-plus and target-cost contracts, the costs incurred under the contract will directly affect the price payable under the contract, so there is a limited difference between the two matters for these contracts, which represent just under half of the single-source landscape. The rest are firm or fixed-price contracts under which the contractor’s costs may vary while the price payable may not. So it is firm and fixed-price contracts that would primarily be affected by this amendment.

The reason that we wish to be notified in relation to both costs and price under the contract is the same as the overall requirement for Clause 26—to ensure that the MoD receives timely warning of matters affecting contracts. If the costs of a firm or fixed-price contract are likely to materially change, this is still important management information for the MoD. It may indicate a significant risk to the project or signal future performance issues. Just because it may not affect the price payable does not mean that this is not important information. For example, a contractor could manage a contract for a year in between standardised reports being provided to the MoD. In that year, a significant risk could be recognised and material costs could be incurred in trying to manage the risk in the expectation that performance under the contract will not be affected. However, despite the additional costs incurred, it finally becomes apparent that performance is likely to be affected after all, at which point a notification would be required.

It is a characteristic of single-source procurement that there is only one supplier that can provide the capability we require. If the contract fails we lose the capability we need. This has led suppliers in the past to seek price increases even though we have agreed a fixed price. Where the cost increases are very large, this puts the MoD in a difficult position. Seeking to keep to the fixed price can lead a supplier into great financial difficulty, putting not only that contract but others with that supplier at risk. If the supplier fails, then we lose the capability we need. This is a real risk that has arisen in the past, and thus we need the same transparency over the costs of fixed-price contracts as we do for other contract types. We do not see a benefit to applying a different notification requirement to firm and fixed-price contracts, so that for these contracts notification is only required once performance is likely to be affected, while for other contracts notification would be required at the point that costs, and therefore price, are likely to be affected. This is not the early warning that this provision is intended to provide.

For all these reasons, I urge the noble Lord to withdraw the amendment.

18:04

[Lord Tunnicliffe]

My Lords, I thank the Minister for her response, which I will read with great care in Hansard. Others outside the House will read it with even more care. In the mean time, I beg leave to withdraw the amendment.

Amendment 18R withdrawn.

Amendments 18S and 18T not moved.

Clause 26 agreed.

Clauses 27 to 32 agreed.

Clause 33: Amount of penalty

Amendment 19

Moved by

[Baroness Jolly]

19: Clause 33, page 24, leave out line 21 and insert “single source contract regulations”

[Baroness Jolly]

This group of amendments relates to the regulations that are to be made by statutory instrument under Part 2 and the consultation and parliamentary procedures by which those regulations may be made. There are seven amendments in this group, and I will deal with the government amendments first.

The Bill currently provides for two separate sets of regulations to be made by statutory instrument. The first is the single-source contract regulations—SSCRs—which are introduced under Clause 14(1). The SSCRs would contain all the regulations with the exception of those made under the second set of regulations, the penalty regulations, which are introduced under Clause 33. The penalty regulations would provide maximum penalty amounts under the civil penalty compliance regime provided for in Part 2. Drafts of both these statutory instruments were placed in the House of Lords Library on 22 January 2014.

The Bill provides for different parliamentary processes for these two sets of regulations, with the SSCRs to be made by the negative procedure under Clause 42(4) and the penalty regulations to be made by the affirmative procedure under Clause 33(7). I have previously discussed the recommendations of the Delegated Powers and Regulatory Reform Committee’s report on the Bill. The recommendations that the SSCRs should be subject to a first-time affirmative procedure and that the regulations made under Clause 14 should always be made by the affirmative procedure have been accepted, and the government amendments in this group make the necessary changes to the Bill.

In order to make the recommended changes to the parliamentary process, it was considered that simplifications could be made in order to allow all the regulations under Part 2 to be made in one statutory instrument rather than the two currently provided for, being the SSCRs and the penalty regulations. Amendment 19 therefore provides for provision about maximum penalties to be made under the SSCRs rather than in separate regulations. Amendments 20 to 22 make some simplifying amendments to accommodate the fact that there is now just one set of regulations, not two, and Amendment 23 provides for the new parliamentary process by which the unified SSCRs may be made. I will now address each of these amendments in turn.

Amendment 19 is a simplifying amendment. It removes the current provision for the maximum penalty amounts to be made via a separate statutory instrument—the penalty regulations—and instead provides for this to be done in the SSCRs as with all other provisions for regulations under Part 2. There is no change to the scope of provision that will be made under Part 2 as a result of this amendment, but using a single statutory instrument for all regulations under Part 2 allows for simpler provision for the parliamentary process to be used for that one statutory instrument.

Amendment 20 follows on from Amendment 19. Clause 33(6) currently provides for the penalty regulations, as a separate statutory instrument from the SSCRs, to vary the maximum penalty amounts for two purposes: first, for “different purposes” and, secondly, specifically by reference to the value of contracts. As a result of Amendment 19, the maximum penalty values will now be included in the SSCRs, while Clause 42(2) already provides for the SSCRs to make different provision for different purposes, which is a standard provision for regulations. Therefore the part of the current subsection (6) providing for different provision for different purposes is no longer required. This amendment replaces the current subsection (6) to provide only that different provision for the maximum penalty amounts may be made by reference to the value of contracts.

Amendment 21 deletes Clause 33(7), which dealt with the parliamentary process for the penalty regulations. It is no longer required because the provisions for maximum penalty amounts will now be in the SSCRs rather than in a separate statutory instrument. So this will now be covered by the parliamentary process for the SSCRs under Amendment 23.

Amendment 22 simplifies Clause 39, which provides for the review of Part 2 and the regulations made under it by the SSRO and the Secretary of State. As there will now be only one statutory instrument, the SSCRs, Clause 39(1) can be simplified to refer only to the review of the SSCRs, rather than the more general “regulations under this Part”.

The first four amendments of the group that I have now outlined make simplifying provisions in order to make all regulations under Part 2 via one statutory instrument, the SSCRs. Amendment 23 addresses two of the recommendations of the Delegated Powers and Regulatory Reform Committee relating to the parliamentary process under which the SSCRs should be made.

To begin with, it removes the current Clause 42(4), which provides that the SSCRs should be subject to the negative procedure, and replaces it by a provision reflecting those recommendations on the parliamentary process for the SSCRs: first, that they should be affirmative the first time that they are made; secondly, that any changes to the regulations related to Clause 14 should always be affirmative, as this governs which contracts will be subject to Part 2 and thus sets the scope of Part 2; and thirdly, that the affirmative procedure will also apply for any changes to regulations made under Clause 33, which relates to maximum penalty amounts and was previously to be contained in the penalty regulations. These were always to be subject to the affirmative procedure, so there is no change to the procedure as a result of this amendment. Finally, the SSCRs will follow the negative procedure for all cases other than those just outlined.

[Lord Roper]

My Lords, I welcome the Government’s amendments to these various clauses. They are a very full response to the report of our Delegated Powers and Regulatory Reform Committee of last December, which was responded to by the noble Lord, Lord Astor, in his letter to the committee published earlier this year. It seems that in these amendments the Government have taken fully the points that were made by the report. We are very well served by that committee, which ensures that there is the technical scrutiny to ensure that parliamentary control is maintained when there are questions of delegated powers. I feel that the Government have responded fully to the proposals of the committee. I am not sure whether it has yet had a chance to respond to the letter of the noble Lord, Lord Astor, or if there are any further points that we may need to come back to on Report, but I understand that it is generally satisfied with these amendments.

[Lord Tunnicliffe]

My Lords, at this point I have no objection to the government amendments, but that may be partly because I do not understand them. I shall find them easier to read when the Bill is reprinted for the Report stage but, as I say, I have no comment or objection at the moment.

I may be about to contradict myself when speaking to Amendments 22A and 23B. Amendment 22A is prompted by the industry, which has argued that the regulations arising as a result of the review should be made and updated in an open and transparent manner. It argues that an industry-wide consultation should be undertaken, the Secretary of State should have regard to that consultation and the regulations should be laid before Parliament. Amendment 23B argues essentially that the penalties regulations should be passed by the affirmative procedure on every occasion. These are penalties which could have dramatic effects.

I think that this is the last time I will speak, so I should like to congratulate the Minister on her marathon performance. I recall from when I occupied her place that it can seem a bit futile, but I know that what she has read into the record will be held to be of great value by both parliamentarians and those outside. I thank her and her officials for their efforts, and I look forward to reading with great care the products of our discussions. I also look forward to her letters.

[Baroness Jolly]

I thank the noble Lord for his comments and I am sure that I will get my pen out and start writing as soon as I have consulted with the gentlemen sitting behind me. On a slightly more serious note, I am sure that we will have meetings with the Bill team and people from the MoD.

I turn now to the amendments. Amendment 22A would place a statutory duty on the SSRO when performing its review of the single-source framework to consult with industry and to publish the results of the consultation exercise. As noble Lords will be aware, many aspects of the single-source framework under Part 2 will lie in regulations rather than in primary legislation, and many of the clauses in this part give the Secretary of State the power to make those regulations. This is to allow the regulations to be periodically updated to take into account changes in procurement approaches, the defence sector and what is being procured, without the need for primary legislation. I reassure noble Lords that we are aware that the new single-source framework represents an important change to single-source procurement. We have been consulting closely with the industry throughout the development of Part 2, including the Bill and the detail of the regulations.

In October 2011, the noble Lord, Lord Currie, published his report and we subsequently ran a full public consultation which completed in January 2012. In April of that year we started a defence suppliers’ forum subgroup with our top 10 single-source suppliers. These included BAE Systems, Finmeccanica, Rolls-Royce, Babcock, Thales, MBDA, QinetiQ and others. Over the past two years we have met with them more than a dozen times to share our proposed approach and understand their concerns. Beneath this forum we also established a number of technical working groups on specific matters such as confidentiality, the SSRO and risk, and most recently on the regulations themselves. In January alone this year we spent four full days discussing the draft regulations line by line with industry, and we expect further such discussions before the summer. This is a substantial level of consultation, more than is typical for new government policy, and it has resulted in our making some important changes to our framework, such as introducing the new criminal offence to protect industry information.

It is certainly not in our interests to create an unworkable framework. For one thing, we pay for any additional overheads our suppliers will incur, which will be incorporated into their single-source prices, provided that they are reasonable. We also need the capability they provide and have no desire to make it hard to do business with the MoD. Indeed, it is out of a desire to ensure that the framework is as practical as possible that we have consulted with industry to the extent that we have. Industry cannot claim that it has not been consulted prior to the first regulations being made.

18:14

Returning to the amendment, we also want the new framework to be kept up to date. We do not want to end up again in the situation in which we find ourselves now: namely, with a framework that is 45 years old, clearly out of date and not fit for purpose. That is why we have introduced a statutory duty for the SSRO to keep the framework under review at all times, not just at the end of the five-year review period. This is set out in Clause 39.

In making recommendations, the SSRO will follow a rigorous process. First, it will draw upon its experience of monitoring and analysing single-source procurement. It will talk to suppliers, the MoD and other interested parties, such as trade bodies. It will draw up its recommendations and publish these. It will then conduct a full public consultation, following the relevant Cabinet Office guidelines and only then, once the results of all of this feedback are taken into account, will it formulate their recommendations.

This process will be set out in the framework document between the MoD and the SSRO. All executive non-departmental public bodies have a framework document which sets out detailed aspects of the relationship between the body and the sponsoring department, such as payment provisions. This framework agreement will be in the public domain and, as part of our ongoing engagement with industry on the SSRO, we will be sharing the draft framework agreement with industry prior to its publication.

I hope that the Committee agrees with me that the SSRO will be following an open and comprehensive consultation process in recommending changes to the regulations. I am aware that this is not written out in the Bill. However, this is a detailed procedural matter, so it is not necessary so to do. However, I assure the Committee that there is no intent to lay down regulations without consulting industry beforehand. I am confident that the SSRO will take its role very seriously, and consult with all appropriate parties. We did not feel it was necessary to put a statutory duty on them to consult with industry, any more than we did to require them to consult with the MoD. I hope I have reassured noble Lords that industry will always be appropriately consulted.

Amendment 23B would provide for regulations under Clause 33 to be subject to the affirmative procedure. Regulations under Clause 33 have always been subject to the affirmative procedure; they are under the current Bill drafting, and they remain so under government Amendment 23. We therefore agree with the intent of this clause, but it is not now required if government Amendment 23 is accepted. I hope this explains our position on this group of amendments, and I urge the noble Lord not to move Amendments 22A and 23B.

Amendment 19 agreed.

Amendments 20 and 21

Moved by

[Lord Astor of Hever]

20: Clause 33, page 24, line 34, leave out subsection (6) and insert—
“( ) The provision that may be made under subsection (1) by virtue of section 42(2) includes power to specify penalties of different amounts according to the value of the contract to which the contravention relates.”

21: Clause 33, page 24, line 37, leave out subsection (7)

Amendments 20 and 21 agreed.

Clause 33, as amended, agreed.

Clauses 34 to 38 agreed.

Schedule 5 agreed.

Clause 39: Review of Part and regulations under it

Amendment 22

Moved by

[Lord Astor of Hever]

22: Clause 39, page 26, line 38, leave out “regulations under this Part” and insert “single source contract regulations”

Amendment 22 agreed.

Amendment 22A not moved.

Clause 39, as amended, agreed.

Clauses 40 and 41 agreed.

Clause 42: Single source contract regulations: general

Amendment 23

Moved by

[Lord Astor of Hever]

23: Clause 42, page 27, line 33, leave out subsection (4) and insert—
“(4) A statutory instrument containing—
(a) the first single source contract regulations,(b) provision made by virtue of section 14(2), (6) or (8) (contracts to which single source contract regulations apply), whether alone or with other provision, or(c) provision made by virtue of section 33 (amount of penalty), whether alone or with other provision,may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.(5) Any other statutory instrument containing single source contract regulations is subject to annulment in pursuance of a resolution of either House of Parliament.”

Amendment 23 agreed.

Amendments 23A to 23E not moved.

Clause 42, as amended, agreed.

Clause 43 agreed.

Clause 48 agreed.

Clause 49: Commencement

Amendment 24

Moved by

[Lord Astor of Hever]

24: Clause 49, page 31, line 35, at end insert—
“( ) No statutory instrument containing an order under subsection (1) in respect of Part 1 (with or without provision under subsection (4)) is to be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”

Amendment 24 agreed.

Amendment 25 not moved.

Clause 49, as amended, agreed.

Clause 50 agreed.

Bill reported with amendments.

Committee adjourned at 6.21 pm.

House of Lords

Tuesday 25th February 2014 Lords Chamber

Tuesday, 25 February 2014.

14:30

Prayers—read by the Lord Bishop of Wakefield.

Introduction: Lord Richards of Herstmonceux

Tuesday 25th February 2014 Lords Chamber

14:38

General Sir David Julian Richards GCB, CBE, DSO, having been created Baron Richards of Herstmonceux, of Emsworth in the County of Hampshire, was introduced and took the oath, supported by Lord Armstrong of Ilminster and Lord Guthrie of Craigiebank, and signed an undertaking to abide by the Code of Conduct.

Businesses: Town-centre Parking

Tuesday 25th February 2014 Lords Chamber

Question

14:44

Asked by

[Baroness Williams of Trafford]

To ask Her Majesty’s Government what assessment they have made of town-centre parking policies and their impact on local businesses.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)]

My Lords, the Government’s assessment is that town-centre parking policies can have a significant impact on local businesses. If parking is too expensive or difficult, shoppers will drive to out-of-town supermarkets or just shop online, undermining the vitality of town centres and leading to “ghost town” high streets. The Government intend to support local shops in town centres by reforming overzealous and unfair rules on parking enforcement.

[Baroness Williams of Trafford (Con)]

I thank my noble friend the Minister for her response. Can she assure me that the Government will clamp down on the use of car parking as a means of revenue-raising for local authorities?

[Baroness Stowell of Beeston]

I thank it is worth offering your Lordships a little context in responding to my noble friend’s Question. Local authorities’ total income and net profits from parking more than doubled under the previous Administration and councils are still making net profits. We also know that there is public concern. The Transport Select Committee said in a report published last year:

“There is a deep-rooted … perception that local authorities view parking enforcement as a cash cow”.

All independent reports show that parking is affecting high streets and local businesses. Therefore, I am very pleased to be able to confirm to my noble friend today that the Government have just completed a consultation on new measures to tackle this problem, and are considering those responses before announcing what action they are going to take.

[Lord McKenzie of Luton (Lab)]

My Lords, with the Government’s renewed interest in tackling parking charges and easing the burden on local businesses, can the Minister explain why the three London councils with the highest parking charges and fines per person are Conservative? In fact, in London, Conservative boroughs took double the amount in parking fines and charges per residence compared with Labour boroughs.

[Baroness Stowell of Beeston]

As the noble Lord heard me say, this is a problem that we think started under measures introduced by the previous Government.

[Noble Lords]

Oh!

[Baroness Stowell of Beeston]

In fact, Labour’s Local Government Minister at the time, John Healey, called for councils to charge for more services, including parking. When Labour was in office, he said:

“Only one in five councils are using charging to the full potential”.

Labour’s current shadow Minister has admitted that the Labour Government too easily reached for increasing costs as a way to drive change on things such as car usage. It is this Government who are tackling that problem.

[Lord Bradshaw (LD)]

Is the Minister aware that in a typical city, buses and trains convey twice as many shoppers to the centre as come by car and taxi? The Government’s consultation paper, to which the Minister referred, obviously will make parking enforcement more difficult. It also will forbid the use of TV cameras to police the areas outside schools. Will the Minister ensure that the review that is being undertaken of the responses to the consultation document looks particularly at the effect on the efficient operation of bus services, road safety and nitrogen oxide emissions?

[Baroness Stowell of Beeston]

As my noble friend will understand from my earlier responses, we are carrying out this review because we think some of the parking measures already in place are having a negative effect on the vitality of our high streets and towns. The measures that we are considering are there to address the importance of parking. My noble friend mentioned specifically the use of CCTV cameras. I stress that we are considering the use of those cameras in parking bays, and what is important is that they are proportionate in their use.

[The Lord Bishop of Wakefield]

My Lords, I want to focus particularly on the impact on small towns, which may not necessarily have trains and buses bringing people into them. Where there are not just large-scale out-of-town developments but also small-scale shopping centres, where it is easy to park for nothing, the impact on the high street is significant. In Mirfield, in the diocese from which I come, free parking has had a very good impact. In Berwick-upon-Tweed, another town I know very well, there is no free parking and that is seriously affecting local businesses. Can we be assured that Her Majesty’s Government will encourage local authorities to look at ways of finding more parking spaces in small towns?

[Baroness Stowell of Beeston]

The right reverend Prelate is right to raise the issue of more free parking. In a recent report published by Deloitte, more free parking was the single biggest issue raised by people who responded. In examining some options, we are trying to ensure that local people have a greater say in the parking arrangements of their local areas—and, clearly, access to free parking should be one of those things.

[Lord Hughes of Woodside (Lab)]

My Lords, since the Minister chose in the first Answer to politicise this matter when she defended Conservative local government by saying that it was following Labour Party policy, will she invite her colleagues in Conservative local authorities to follow Labour Party policy in opposing the bedroom tax?

[Baroness Stowell of Beeston]

The point that I am making to the noble Lord is that parking is an issue that affects all areas and is of great importance, and that we are not afraid to address an important issue in a proper manner.

[Lord West of Spithead (Lab)]

My Lords, about 51 years ago Admiralty Fleet Order 150/63 was produced, which taught one how to treat snake bites. The first step was: kill the snake. Does the Minister believe that the snakes here are people who dislike and hate car owners? As the right reverend Prelate says, in small towns people have to use cars and there should be a concerted effort to ease restrictions in those sorts of places.

[Baroness Stowell of Beeston]

The noble Lord is right, and I am disappointed if my response to the right reverend Prelate did not give him the right impression. Clearly, access to free parking is an important matter for people. The Government are trying to make changes in order to ensure that, in particular in small towns and those that are not thriving in the way that they deserve, we are not blocking their progress.

[Lord Marlesford (Con)]

My Lords, does my noble friend agree that the purpose of parking meters is to allocate scarce space for parking, so that if at peak times one cannot find a place, it means that the charges are too low, and, if there are a lot of empty places, it means that parking charges are too high?

[Baroness Stowell of Beeston]

That is a rather philosophical question. The most important thing is that charges are appropriate, and the Government are trying to ensure that the charges imposed by local authorities are appropriate and are seen as fair and reasonable by the people who have to pay them.

Schools: Careers Guidance

Tuesday 25th February 2014 Lords Chamber

Question

14:52

Asked by

[Baroness Humphreys]

To ask Her Majesty’s Government what progress has been made in implementing the recommendations of the Ofsted report of September 2013 Going in the Right Direction? Careers Guidance in Schools from September 2012.

[The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con)]

My Lords, we want all schools to follow the example of the best and provide inspiring careers advice for young people, based on more real- life contact with the world of work. In response to Ofsted’s report, we are strengthening statutory guidance, particularly with respect to contact with the workplace, and in improving information on apprenticeships and vocational options. We are developing the role of the National Careers Service. Ofsted is ensuring that careers guidance and pupil destinations will be given greater priority in inspections.

[Baroness Humphreys (LD)]

I thank my noble friend for his reply. Ofsted reported that in more than three-quarters of the schools visited,

“the new arrangements for careers guidance were not working well”.

What specific guidance have the Government given to schools on what constitutes a comprehensive careers guidance strategy, which was recommendation 1 in Ofsted’s report? How will that ensure that all pupils receive appropriate and impartial guidance to enable them to make educated choices concerning their educational pathway post-16?

[Lord Nash]

My Lords, the revised guidance will make it clear that schools should have a strategy for the advice and guidance they provide to young people. The strategy should be embedded within a clear framework linked to outcomes for pupils rather than an ad hoc set of activities. It should reflect the school’s ethos and meet the needs of all pupils. We will share case studies so that schools can learn from the very best practice. The revised guidance will also set out clearly what schools can do to ensure that pupils have information about all the types of education and training they can pursue, and hear directly from different types of providers, including further education and sixth-form colleges, and employers delivering apprenticeships.

[Baroness Bakewell (Lab)]

My Lords, there is an ongoing problem of informing young people about apprenticeships. This is a long-running story, found to be inadequate by the Ofsted report, which said that the careers advice being given in schools is not addressing that. The dilemma is that when a teacher on the staff of a school is also the careers officer, their loyalty to the school inclines them to advise children to stay on in the sixth form. What can the Government do to generate a new national careers service energy, so that this particular problem is more swiftly answered?

[Lord Nash]

I take the noble Baroness’s point, although I think that more people staying on in school is hardly our biggest problem in education. Ofsted is very focused on making sure that guidance is given well. In relation to apprenticeships, we fund the National Apprenticeship Service that funds the Education and Employers Taskforce to deliver a programme of apprenticeship knowledge and employability skills to 16 to 18 year-olds. More than 70 advisers from the National Careers Service, the National Apprenticeship Service and Jobcentre Plus were stationed in the Skills Show in November last year, and the National Careers Service and the National Apprenticeship Service ran a jobs bus road show. A wide range of marketing materials and resources about apprenticeships are available on the National Apprenticeship Service website and it has also developed a free mobile app. So this is something we are very focused on.

[Baroness O'Cathain (Con)]

My Lords, can my noble friend tell the careers advice people that we must make sure that we get the right jobs for the right people? The mismatch at the moment is horrendous, particularly with ICT jobs. It is estimated that by the end of next year there will be something like 400,000 to 700,000 mismatched jobs. The competition in the BRIC and MINT countries is making hay when it comes to these jobs. What are we doing to try to rise to that challenge?

[Lord Nash]

My noble friend is quite right. The UK’s long-term economic future depends on high-level technology skills, and the Government are committed to strengthening the teaching of computing and in particular computer science in schools. That is why the new computing curriculum, which is to be taught from September this year, will be mandatory at all key stages. It has a greater focus on how computers work and on the basics of programming, as well as covering digital literacy and the application of information technology. It encourages pupils to design computer programmes to address real-world problems. The inclusion of computer science in the EBacc will help ensure that more pupils obtain a high-quality GCSE qualification.

[Baroness Lane-Fox of Soho (CB)]

My Lords, is the Minister aware of a report that came out of the EU two weeks ago valuing the internet app economy at several billion and stating that it will need one million jobs by 2020? Does he agree that the changing nature of the ICT world and of jobs needed within it is complex and should be reflected in careers guidance?

[Lord Nash]

I agree entirely with the noble Baroness. We cannot be competitive unless we take these points on board and I will take back what she says, particularly about the assimilation into careers guidance.

[Baroness Hughes of Stretford (Lab)]

My Lords, despite the Minister’s claims, Ofsted, the Education Committee, the British Chambers of Commerce and the CBI have criticised the Government’s hands-off approach to careers guidance. The CBI said recently that careers advice is on life support now in many schools in England. Does the Minister accept that it was wrong to give schools sole responsibility for careers advice but no money to deliver it? Will the Government now act to eradicate the postcode lottery in careers guidance and insist, as my noble friend said, on independent, face-to-face advice for all young people?

[Lord Nash]

I know that the noble Baroness and I share aspirations for what we expect for young people, but the answer to her question is a firm no. As noble Lords know, the fact that the country is short of money is not this party’s fault. However, I also think that the assumption that a face-to-face interview with a careers adviser is the gold standard is a very outmoded model. As noble Lords will see when we publish our guidance, I hope shortly, we have a very strong emphasis on employer engagement, which we believe is the secret to good careers advice. I give an example: Westminster Academy, which has built up partnerships with more than 200 employers, has 73% FSM and 75% A* to C, including English and maths. I can think of no better example or argument for employer engagement on the ground, giving pupils a direct line of sight to real-life workplaces rather than just career advisers.

[Lord Storey (LD)]

My Lords, my noble friend will know that one of the hardest things in career education is building up those networks, contacts and opportunities for work experience. It is particularly difficult for children from disadvantaged backgrounds—one has only to look at interns in Parliament itself. How do we ensure that children and young people from disadvantaged backgrounds have those opportunities?

[Lord Nash]

My noble friend is quite right. We have to ensure that work experience and internships are not just available from daddy’s or mummy’s friends. The Social Mobility Foundation has done a great deal of work in this regard, and I know that it is developing a focus on providing work experience and internships for pupils from backgrounds who would not normally be able to access them. Even it struggles sometimes to engage with schools, but that is something that we are very focused on.

Local Authorities: Local Plans

Tuesday 25th February 2014 Lords Chamber

Question

15:01

Asked by

[Lord Tyler]

To ask Her Majesty’s Government what steps local communities may take where a local authority has not prepared an up-to-date local plan; and what powers Ministers possess to encourage timely development of such plans.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)]

My Lords, local plans enable communities to participate in planning and are the best way to create great places and meet their needs. This Government have therefore put local plans at the heart of the planning system and will consult on introducing a statutory requirement on authorities to put plans in place. However, in the absence of a local plan, communities can still exercise a range of community rights, establish neighbourhood plans, and make their views known on all development proposed locally.

[Lord Tyler (LD)]

My Lords, I am delighted with my noble friend’s Answer—it is not often one can say that—but can she confirm that the Government recognise the urgency of this issue if there is to be a consistent pattern of district plans nationwide by the end of 2014? What steps can Ministers take now in advance of any statutory powers to ensure that a district such as the Cotswolds, which I know very well, of which 70% is in areas of outstanding beauty, does not drag its feet any longer? Does my noble friend agree that the absence of an up-to-date district local plan can make development control arbitrary, unfair and open to large-scale speculative development, threatening communities such as Tetbury and Chipping Camden?

[Baroness Stowell of Beeston]

My noble friend makes some interesting points. My first response to him is to restate that local plans are indeed the best way for local people to decide how best to meet their own planning needs. The Government are supporting local authorities to publish and adopt their plans, because we recognise that this is a complex process. We have trebled the number of local authorities with adopted plans since 2010. However, as I have said, because this is so important, we will consult shortly on whether to make adopting a plan a statutory requirement and, if so, by when.

[Lord McKenzie of Luton (Lab)]

My Lords, we know that a number of local authorities are frustrated in facilitating the provision of housing, particularly affordable housing, where there is inadequate land supply within their boundaries and neighbouring authorities are ignoring their duty to co-operate on housing growth. The needs of Stevenage and Oxford are just two examples. As the Minister is aware, local authorities are required to provide evidence that they have complied with the duty in their development plans if the plans are not to be rejected by the examiner. How many local plans have, to date, been sent back for that reason? Does the Minister not agree that the duty to co-operate is proving to be a totally inadequate policy, given the scale of housing provision that our country needs?

[Baroness Stowell of Beeston]

I do not have the specific data to respond to that question from the noble Lord, but I can say to him that 75% of local authorities have now published a plan and 52% have adopted that plan. As I have already said, this is a massive increase on where we were in 2010, so there is real progress. However, because this is so important, we may, as I have said, introduce a statutory requirement to ensure that this happens across the board.

[Baroness Gardner of Parkes (Con)]

Is the Minister aware that there is a conflict between the minerals plans that are being developed and the local plans? It is rather important, particularly in view of the previous question, which emphasised the need for housing, that the mineralogical, underground plans should be finished in time for the local authority to know that it is not going to build on top of what could be a huge local asset for the community. Having attended the mineralogical group, I think there is some problem of liaison because these two items are covered by two different departments. Can the Government liaise between these departments in such a way that the necessary first one will actually be completed first?

[Baroness Stowell of Beeston]

In drafting and publishing local plans for consultation, local authorities are required to produce those plans in line with Government policy with the planning policy framework. Clearly, if there is any specific matter, there are ongoing discussions on that, but I am pretty sure that the way things are working is adequate.

[Lord Foulkes of Cumnock (Lab)]

Will the Minister make clear which country she is talking about?

[Baroness Stowell of Beeston]

I am talking about England. If I were to talk about Wales, where the Labour Party is in government, things are a lot worse over there.

[Lord Avebury (LD)]

My Lords, in the case of planning for Travellers, the DCLG issued a paper requiring local authorities to provide, by the end of March 2013, a five-year supply of specific deliverable sites against targets based on up-to-date assessments of local need. Will my noble friend say whether the Government will ask local authorities to submit returns by the end of March this year showing how they have satisfied that requirement? If the answer is that hardly any have done so, will they embody the requirement in statute? Is there ministerial power to enforce it?

[Baroness Stowell of Beeston]

As my noble friend knows, the policy is clear that, through local plans, local authorities should plan to meet housing needs and the needs of Gypsies and Travellers. This Government do not impose or monitor targets, but the Planning Inspectorate is applying the policy robustly in examining local plans.

[Lord Teverson (LD)]

My Lords, someone well beyond my pay grade has suggested that villages should be able to expand with small and proportionate developments in order to ensure that we build housing in rural areas and make villages vital communities again. Would the Government agree with that?

[Baroness Stowell of Beeston]

The most important thing as far as planning is concerned—which is why we are so committed to local plans—is that all housing decisions be locally driven.

NHS: Patient Data

Tuesday 25th February 2014 Lords Chamber

Question

15:08

Asked by

[Lord Turnberg]

To ask Her Majesty’s Government what is their assessment of the proposal to establish a national collection of data about patients, in the light of the decision by NHS England to postpone its introduction.

[Lord Turnberg (Lab)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare my interest as scientific adviser to the Association of Medical Research Charities.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)]

My Lords, NHS England’s care.data programme takes forward the ambitions set out in the Government’s information strategy for health and care in England, The Power of Information, published in 2012, in particular elements of chapter 5 of the strategy. The Department of Health strongly supports NHS England’s decision to do more engagement work before data collection takes place. This is a vital programme which will bring real benefits to patients.

[Lord Turnberg]

My Lords, I am grateful to the noble Earl for his response. Few people doubt that there are enormous benefits to be gained from patient data, both for the care and treatment of patients at the moment and for research into treatment for future patients. However, does the noble Earl agree that NHS England has been remarkably unsuccessful so far in communicating both the benefits and the safeguards to confidentiality? Does he further agree that it is vital that NHS England uses the next six months, which is the delay, to develop some robust and convincing methods of communicating with the public?

[Earl Howe]

I entirely agree with the noble Lord. This is a vital programme which will bring real benefits to patients. It has major potential benefits for research and public health. It commands generally wide stakeholder support. However, there is no doubt that concerns over how this has been explained to patients have been raised and those concerns need to be addressed. I agree that the next six months will be crucial in pursuing that aim but it is essential that this programme commands public support.

[Lord Kakkar (CB)]

My Lords, I declare an interest as professor of surgery at University College London. What assessment have Her Majesty’s Government made of the proposed European data protection regulation which, if passed, has the potential to impact seriously on our national strategies with regard to health informatics and biomedical research?

[Earl Howe]

My Lords, we take that concern extremely seriously. The draft text that has been published by the so-called LIBE committee would, if enacted, pose serious obstacles for our research effort in this country. We are taking every opportunity and using every effort to persuade both the Parliament and the European Commission that the original text is the one we should go with. That work is on-going and the Ministry of Justice is leading on it.

[Lord Walton of Detchant (CB)]

My Lords—

[Lord Cormack (Con)]

My Lords—

[The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford) (Con)]

Let us hear briefly from the noble Lord, Lord Cormack, and then we can go to the other side.

[Lord Cormack]

Will my noble friend assure the House that the leaflet which was recently sent out, and which was far from satisfactory, will be replaced by something that really communicates what people need to know?

[Earl Howe]

My Lords, I am aware of concerns around the leaflet. Many people have said that they have not received it, which is clearly a concern. NHS England, which is leading on the development of the programme, will consider how to ensure that it engages fully with stakeholders and the public over the coming weeks and months and respond to the concerns that have been raised. The Government will also be engaging with stakeholders to see what we can do from a broader perspective.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I refer noble Lords to my health interests. Is not one of the problems that if a patient wants to opt out of the system they have to go to or communicate with their general practitioner? I am sure the noble Earl will have seen the report at the weekend from the Royal College of General Practitioners that GPs are sometimes rather difficult to find. Would it not give the public more confidence if they could opt out in a straightforward way rather than have to go to see their GP and then depend on the GP to enact that in practice?

[Earl Howe]

My Lords, I cannot agree with that. The GP surgery is where the records are kept and would seem to be the natural place for patients to go. They do not have to make an appointment to do that. If they are concerned, they can write a letter or send an e-mail to the GP practice and then have a conversation later if they would like to. I do not think this is a difficult process.

[Baroness Brinton (LD)]

My Lords, it is clearly illegal for pseudonymised data to be worked back and then aggregated with other available data. Can the Minister assure the House that the Government will consider increasing the penalties for infringing personal data, including prison sentences for serious breaches and a ban on the offenders and their organisations accessing any data for up to 10 years? This is because current organisations are often not taking seriously breach-of- data fines.

[Earl Howe]

My Lords, I have seen quite a lot of comment on this aspect of the issue in the press. At present, the Information Commissioner’s Office already has the power to impose a fine under Section 55A of the Data Protection Act and the current penalty is up to £500,000, which is quite a severe penalty. To amend that would require changing the Data Protection Act and, at the moment, the Government have no plans to do that.

[Lord Walton of Detchant]

My Lords, does the Minister accept that all appropriate steps are being taken to protect the anonymity of these data? In the light of that, is it not more important to the future of medicine in this country that the availability of this massive database should be taken advantage of in relation to medical research, which will in turn have the undoubted effect of giving huge potential for improvement in patient care?

[Earl Howe]

The noble Lord is absolutely correct. It is worth pointing out that the vast majority of medical research in this country relies on fully anonymised data. It does not require patient-identifiable data. An organisation making an application for information that is identifiable would be allowed to do so only if it had obtained patient consent or had been granted legal approval to do so, either by the Secretary of State or the Health Research Authority, or where there is a public health emergency of some kind.

Divorce (Financial Provision) Bill [HL]

Tuesday 25th February 2014 Lords Chamber

First Reading

15:15

A Bill to amend the Matrimonial Causes Act 1973 and to make provision in connection with financial settlements following divorce.

The Bill was introduced by Baroness Deech, read a first time and ordered to be printed.

House Committee

Tuesday 25th February 2014 Lords Chamber

Liaison Committee

Membership Motions

15:15

Moved by

[The Chairman of Committees]

House Committee

That Baroness Walmsley be appointed a member of the Select Committee in place of Lord Alderdice, resigned.

Liaison Committee

That Baroness Walmsley be appointed a member of the Select Committee in place of Lord Alderdice, resigned.

Motions agreed.

Citizenship (Armed Forces) Bill

Tuesday 25th February 2014 Lords Chamber

Order of Commitment Discharged

15:16

Moved by

[Lord Trefgarne]

That the order of commitment be discharged.

[Lord Trefgarne (Con)]

My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to speak in Committee or move a manuscript amendment. Accordingly, and unless any noble Lord objects, I beg to move that the order of commitment be discharged.

Motion agreed.

International Development (Gender Equality) Bill

Tuesday 25th February 2014 Lords Chamber

Order of Commitment Discharged

15:16

Moved by

[Lord McColl of Dulwich]

That the order of commitment be discharged.

[Lord McColl of Dulwich (Con)]

My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.

Motion agreed.

Leasehold Reform (Amendment) Bill

Tuesday 25th February 2014 Lords Chamber

Order of Commitment Discharged

15:17

Moved by

[Baroness Williams of Trafford]

That the order of commitment be discharged.

[Baroness Williams of Trafford (Con)]

My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.

Motion agreed.

Deep Sea Mining Bill

Tuesday 25th February 2014 Lords Chamber

Order of Commitment Discharged

15:18

Moved by

[Baroness Wilcox]

That the order of commitment be discharged.

[Baroness Wilcox (Con)]

My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.

Motion agreed.

National Insurance Contributions Bill

Tuesday 25th February 2014 Lords Chamber

Third Reading

15:18

Bill passed.

Northern Ireland (Miscellaneous Provisions) Bill

Tuesday 25th February 2014 Lords Chamber

Report

15:18

Amendment 1

Moved by

[Lord Empey]

1: After Clause 7, insert the following new Clause—
“Opposition status in the Assembly
(1) Schedule 6 to the Northern Ireland Act 1998 (standing orders: further provision) is amended as follows.
(2) After paragraph 4(2) insert—
“(3) The standing orders shall include provision in relation to the allocation of the Chairmanship and Deputy Chairmanship of the Public Accounts Committee.”
(3) After paragraph 5 insert—
“Opposition status6 (1) The standing orders shall provide for official opposition status to be allocated to any party with at least one seat in the Assembly which is not a part of the Executive.
(2) Official opposition status shall only be introduced under sub-paragraph (1) if approved by a cross community vote in the Assembly.
(3) For the avoidance of doubt, it shall not be possible for the Assembly to revoke the official opposition status accorded to members under the provisions of this paragraph without the consent of the Secretary of State.””

[Lord Empey (UUP)]

My Lords, perhaps I will be permitted a brief pause while your Lordships’ huddled masses leave.

As we discussed this topic in Committee and also had a significant debate on it at Second Reading, there will be no need to repeat many of the concerns that were expressed at that stage. However, the amendment approaches the matter from a different point of view. It was made clear that there was an anxiety that changing the effect of the 1998 Act through the miscellaneous provisions Bill could be seen as imposition of the idea of official opposition status over the head of the Northern Ireland Assembly. Under the amendment, the trigger for any action would be a request from the Assembly itself.

The noble Baroness will be well aware of my anxiety and that of a number of others that although of course the Assembly has powers to change its Standing Orders which could give effect to opposition status, the weakness in that argument is that what is given by the Assembly can be taken away by the Assembly. The danger is that, if an Opposition are established, it is on a grace and favour basis and will only have sufficient independence as long as that is the will of the other parties in the Assembly.

My purpose in moving the amendment, and that of my noble friend Lord Lexden, is to ensure that we move one step closer to providing additional accountability, so that the Executive can be held to account. Parties would have the option of achieving a status that will give them some additional speaking rights and supply day debates and provide for the very significant issue of the future chairmanship and deputy chairmanship of the Public Accounts Committee. In other jurisdictions within the United Kingdom, those offices are held by parties that are not in the Government, whereas under the current arrangements in Belfast, they are occupied by parties that are in the Government. So that issue is fairly self-explanatory.

One issue that has come to my attention is that some elements within Sinn Fein feel that if opposition status is granted to parties in the Northern Ireland Assembly, that might in some way encourage parties not to share power with them. Parties are not going to decide not to share power with Sinn Fein on the basis of whether or not they could have opposition status, they are going to make that decision on a bigger political picture, so that is an Aunt Sally of an argument. Nobody is going to refuse to share power with Sinn Fein simply on the basis that they could get opposition status, a couple of supply day debates and so on. That argument is not credible.

If your Lordships think that there is no need for looking at opposition status in the Bill, I draw your attention to the fact that last year, an attempt was made to take away powers of one of the Northern Ireland departments, the Department of the Environment. An eight-page amendment was introduced at the very last minute which had the effect of removing some powers from that department and moving it to another one. That was done without any consultation through the committee and at the very last minute, so therefore there was no opportunity to have proper scrutiny of that proposal.

In essence, that makes my case for me, because it is precisely to counteract that risk that I believe that we require to provide certainty and a guarantee that if the Assembly chooses to go down the route of providing for an Official Opposition, which I hope it does, that Opposition will be a proper, free-standing Opposition who will have certainty that they cannot find themselves hobbled later should they fall out of favour with the executive parties of the day. We must remember that we cannot look at this simply in the context of the current make-up of the Assembly. We are looking years ahead—that make-up may change over time. It is for those reasons that I believe we need to go a bit further than the Minister has indicated in the past. Will the Minister tell us if she agrees with the proposition? I believe, reading her response at the previous stage—in Committee—that she does, and that she believes that there is this issue, raised by some people, that, in the absence of a guarantee which is not confined to the Assembly, the opposition status would be left in a fairly weak position.

I have an open mind on the methods we might choose to deal with this. This is one proposal. If we look at the Northern Ireland Act, and Schedule 6 to that Act—which deals with the question of Standing Orders—there are indicative Standing Orders set out in relation to committees and other matters, so we are not proposing anything wildly different. I also re-emphasise that the trigger for this has to be the Assembly itself, so that we are not forcing something on the Assembly that it does not want. At the end of the day, we need to put in place a mechanism that ensures that, if an Opposition are formed, they are free, independent and not subject to pressure. I believe that that would be an extremely valuable element in improving accountability. I support the mandatory coalition arrangements—although one would like to see a day when that is not necessary, it is necessary and will be for the foreseeable future; I doubt very much that anyone in this House today will see the day when it is not necessary. We are not getting into the argument about whether we are trying to replicate the Westminster system—we are not. That argument should be set to one side. However, that does not mean that the system is not capable of being improved or evolving. I draw the attention of the House to some speakers at the previous stage who said, “Oh well, we cannot impose things and we cannot interfere”. Parliament has imposed and interfered, and in fact a later amendment in the name of the noble Lord, Lord Trimble, is a classic example of both interference and imposition. This Parliament has already interfered and imposed and it has done so with its eyes wide open. Indeed, in a debate in this House in 2006, the implications of pursuing the imposition were made clear—and that has proved to be correct.

Let us not hide behind the argument that you cannot look at an issue simply because it is not necessarily provided for in the current arrangements. Political deals have been done, and political deals have been imposed, and that is how the system works. We are not proposing that sort of methodology. As can be seen from this amendment, the trigger is the Assembly itself. It has to make the move, it has to ask, and it has to decide that it wants to go down this road. This amendment seeks to ensure that there is a guarantee and certainty that that Opposition, once established, will be free and able to pursue their objectives without let or hindrance from whichever happen to be the governing parties of the day.

Will the Minister comment in her response on how we can achieve these objectives, if she is not content with this proposal? I hope the Government understand that we are not here to impose; we are here to improve and to see the institutions evolve. I know that we are aware of the sensitive situation with regard to devolution throughout the United Kingdom. We know that eyes will be looking from Scotland at what we do here on this issue, and I understand fully that most of your Lordships do not want to give any hostages to fortune or provide any ammunition so that people in Scotland could say, “There you go. They are trying to impose something and if they’ll do it on Northern Ireland, they’ll do it on Scotland or on Wales”. I fully understand that argument, and the anxieties which those who hold those views feel over Scottish independence.

I do not want to provide ammunition to anybody in Scotland who seeks to break the union, but I repeat: the trigger for this has to be the Assembly itself, which takes it out of the realms of imposition. Between now and the next stage of the Bill, it ought to be possible to find a means of achieving these objectives without doing damage to the principle of non-interference. In that spirit, I beg to move.

15:30

[Lord Lexden (Con)]

My Lords, I supported my noble friend Lord Empey’s amendment in Committee and I support the current version of this valuable amendment with no less vigour. He has explained its aims and objectives fully and I have only a little to add from my own Conservative and Unionist perspective, which is identical to that of my noble friend, who is the chairman of the Ulster Unionist Party. The not unimportant constitutional issue which the amendment seeks to address is simple and straightforward. The Northern Ireland Act 1998, which created the devolved institutions through which the Province is largely governed today, made no provision for the establishment of an Official Opposition with the appropriate rights and privileges. My noble friend has explained the reasons for that omission and this amendment would fill that constitutional lacuna.

It contains, as my noble friend has emphasised, no element of dictation or compulsion. It makes soundly based constitutional provision for the establishment of an Official Opposition, while leaving the Northern Ireland Assembly entirely free to judge when it would be appropriate to invoke this valuable addition to the constitutional order under which it conducts its affairs. In other words, by inserting provision for an Opposition into the 1998 Act, this amendment would supply the one element which is missing from Northern Ireland’s remarkable constitutional dispensation that followed from the Good Friday agreement, and so complete that dispensation. It therefore has great significance but it would do something else of importance as well. It would signal this Parliament’s support and encouragement for the evolution of Northern Ireland’s devolved institutions in the direction that public opinion in the Province increasingly favours: towards a state of affairs in which the Government are challenged in detail, day by day, by an Opposition who fulfil the great constitutional function prescribed for them of providing,

“a standing censorship of the government, subjecting all its acts and measures to a close and jealous scrutiny”,

as one leading late 19th-century authority on the constitution put it in resounding language.

Is it not right—is it not indeed the duty of the Parliament which brought into being Northern Ireland’s unique constitutional order—to support and encourage its evolution so that the devolved institutions that operate under it can carry out their work with ever growing success as the years advance? Your Lordships might consider what beneficial effect an Official Opposition could have had if they had been in existence today. They could have prevented the restrictions that limit so worryingly the operations of the new National Crime Agency in Northern Ireland—a matter that aroused grave disquiet when we discussed it in Committee. An Official Opposition might also have made it unnecessary for us to hold the debate on defamation which is to follow shortly.

Some say, “Leave the Assembly entirely free to follow its own course. Do not trouble it with advice from Westminster. Do not disturb it by strengthening the constitutional basis on which it operates by making statutory provision for an Opposition and placing that provision at the Assembly’s disposal for its introduction”. That does not seem to me the right, constitutionally sound approach. As my noble friend has explained, the Assembly could establish an Official Opposition under its own Standing Orders. However, that, in his own striking phrase, would be a grace and favour Opposition, existing through the good will of the Executive with their commanding majority in the Assembly. To work well, an Opposition would need stability and confidence. If they rested on a statutory basis under this Parliament’s legislation they could not be removed precipitously or capriciously. Let us now take the Northern Ireland Act 1998 to the point that is now needed by adopting this amendment.

In replying to the debate in Committee the Minister said:

“It is important that a formal Opposition should have sufficient status if they are to be effective in holding the Executive to account. The Government will reflect on what has been said in the debate and we will certainly return to this on Report”.—[Official Report, 3/2/14; col. 22.]

I hope at the end of this debate my noble friend will be able to tell the House that the Government will either adopt this amendment or will bring forward something similar at Third Reading.

[Lord Trimble (Con)]

My Lords, when the noble Lord, Lord Empey, tabled his amendment on this matter in Committee I added my name to it. I make clear that the absence of my name from this amendment today does not mean that I have changed my mind. I agree with what the noble Lord has said and I hope he gets a very positive response from the Minister.

[Lord Alderdice (LD)]

My Lords, in Committee I made it clear that I was very supportive of the principle of establishing an Opposition in the Northern Ireland Assembly. I remain of that view. In fact, I think it could be a very helpful improvement and evolution of the constitutional arrangements. It is clear that Standing Orders in the Assembly can accommodate this. When the Assembly was first established it had a very flimsy little pamphlet of Standing Orders. It was very important that the Assembly on all sides agreed to a process of negotiating and ultimately passing Standing Orders with cross-community support in the Assembly. That meant that all Members of the Assembly felt they were their Standing Orders. I would prefer to try to find that way forward. I do not accept the proposition that the noble Lord, Lord Empey, referred to about this being an imposition. I agree with him that this is not about imposition; it is about facilitation. The dilemma is, as he described, that it requires the larger parties in the Assembly to buy into the proposition before his amendment, even if passed, would come into operation. It is a bit of a Catch-22 situation. To achieve the things he and the noble Lords, Lord Lexden and Lord Trimble, want to achieve will require a process of negotiation between the party or parties that wish to have the possibility of being an Official Opposition and the current parties of government. Of course, these things can change—they have changed since the agreement, with the size of parties and their influence and so on.

Is there any leverage? I think there is considerable leverage. For example the Ulster Unionist Party, which is no longer as substantial in this House as it once was, has a substantial number of Members of the Northern Ireland Assembly and indeed has ministerial positions. It would be possible to negotiate with the two largest parties in the Assembly on the basis that, as vacating ministerial presence on the Executive to take up opposition status would be to the advantage of the other parties, appropriate recognition as the Opposition would be sought in return.

This leads me to two areas where I feel some dissatisfaction with the specifics of this amendment. First, there is the suggestion that a party with one Member could become the Official Opposition. I would rather see a slightly higher bar than that in the Northern Ireland Assembly. The idea that a single Member could form a party of their own and have the status of Official Opposition seems unwise. There should be some more substantial number; it is going to be a bit arbitrary whatever it is, but one is both arbitrary and unwise. I can think of many individual Members of the Assembly who might choose to adopt that status and create merry hell for everyone, including themselves and the Speaker. I would rather that there were more.

The second is related to that: the special position that is accorded in the chairmanship of committees, as suggested in the amendment. Again, for a very small party of one or two people to be able to corral those significant positions seems unwise. However, I emphasise again that the principle that is being supported by the noble Lords, Lord Empey and Lord Lexden, and indeed the noble Lord, Lord Trimble, is one that anyone who wants to see the evolution of the Assembly should espouse, and if there are things that can be done by the Secretary of State and our own Minister here or by others in your Lordships’ House to move that forward, we should certainly do so. However, I remain to be persuaded that this amendment is going to take us in quite the direction and for quite the distance that its proposers might hope.

[Lord McAvoy (Lab)]

My Lords, in Committee there was a broad consensus—that is the key word—that the creation of an Opposition, or the allocation of opposition rights to parties in Stormont, lay within the scope of the Assembly and could be achieved through its Standing Orders. That consensus is again confirmed today. The Assembly’s Standing Orders have the power to grant informal recognition to non-executive parties in the Assembly on a proportional basis. There was also unanimous agreement as to the value of opposition and the additional effectiveness that an Opposition would bring to scrutinising the Executive and holding it to account. In fact, “consensus” appears to be the key word in this discussion.

In Committee, several noble Lords raised concerns about the vulnerability of any arrangements that were determined solely by Stormont. Concerns were also raised about the efficacy of the Assembly’s committees, particularly the chairmanship and deputy chairmanship of the Public Accounts Committee. The current amendment represents an understandable attempt to overcome those anxieties. By placing the creation of Standing Orders that grant opposition status within the Northern Ireland Act 1998, and by making it impossible for the Assembly to revoke official opposition status, the independence of an Opposition would appear to be guaranteed. Through this amendment, any Opposition would not be dependent on the continued good will of the Assembly for their status and associated rights. Bearing in mind the word of the noble Lord, Lord Alderdice—“evolution”, which is particularly relevant—that might not be welcomed.

We all wish to see the continued normalisation of politics within Northern Ireland. Great strides have been made. It is a rocky road at times but it is still a great road to be on. However, as I have said before, the situation and structures in Northern Ireland are unique. It is for this reason that I and the Official Opposition share the doubts mentioned by the noble Lord, Lord Alderdice. Is this the way ahead? Unless you are sure about something, you should not support it in Northern Ireland.

After so much division, the 1998 agreement established an Assembly and Executive in Northern Ireland that would be inclusive and make decisions consensually. These very same principles apply to the creation of an Opposition within the Assembly today. It is not a case of hiding behind the mantra of devolution. Devolution has a capital “D”. It is not a mantra. It is an effective way of delivering power and devolving power down in a very centralised society, which the United Kingdom can be at times.

In June 2013 the Assembly and Executive Review Committee concluded that, as yet, no cross-community consensus had been reached. This followed a government consultation in 2012 that reached the same conclusions.

15:45

A consensus must be reached in Northern Ireland before we can accept this amendment. This must precede legislation; it surely cannot be forged afterwards. While the principle of the proposed amendment—I again quote the noble Lord, Lord Alderdice—is one of which we, as Westminster politicians, see the benefits, the doubts that some have expressed show that the timing is not yet correct to accept it. If the Assembly were to pass Standing Orders to create an Opposition and the Executive were to ask the Secretary of State to consider legislation, then it would be right to give the proposed amendment serious consideration.

In the Assembly, John McCallister MLA is contemplating presenting a Private Member’s Bill on the issue of opposition in the coming months. This should be seized upon as providing a prime moment for a forward-looking discussion around this issue within Northern Ireland. This amendment acknowledges the powers of the Assembly regarding an Opposition, and behind it is an understandable concern to prevent the Assembly withdrawing anything it were to grant. However, I repeat that, unfortunately, this does not seem to be the time to accept this amendment. The Assembly must reach a cross-community consensus on the creation of an Opposition before Parliament can consider legislating in this way. The impetus to the creation of an Opposition within the Assembly must come from within Northern Ireland and cannot be imposed—yes, I am using that word—from here at Westminster. Consensus cannot be created retrospectively as this amendment would seek to do. It is for the Assembly to make the first moves towards creating an Opposition: only then can Parliament legislate on the basis of a request from the Assembly.

[The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson) (LD)]

My Lords, I am grateful to the noble Lords, Lord Empey and Lord Lexden, for tabling this amendment. As I have acknowledged previously, they have done us a service in raising the profile of this important issue and they are to be strongly commended for that. I think that we have agreement at the very least on one thing across the Chamber this afternoon: that is, an Opposition is an important part of democracy. The Government agree that the creation of an Opposition would be a welcome step on the road to rigorous scrutiny of the Northern Ireland Executive and an important part of the democratic development of Northern Ireland.

This afternoon several noble Lords—the noble Lord, Lord Alderdice, for example—emphasised the development of the Assembly as a democratic institution and the importance of that development. I myself, from my own experience as a Member of the Welsh Assembly, recall that the original Welsh Assembly as set up did not have a strong Opposition embedded within it. It did not have the institutions of an Opposition, and the positions to which the noble Lord, Lord Empey, refers in his amendment, were not necessarily there for the Opposition to take up.

As the Opposition grew within the Welsh Assembly, one could see—day by day and month by month—the effectiveness of scrutiny growing within the Assembly. To my mind, therefore, there is no argument about the importance and desirability of an Opposition. The key thing we have here is a discussion as to whether that should be done, as the noble Lord, Lord McAvoy, suggested, through the internal standing-order processes of the Assembly—the noble Lord, Lord Alderdice, suggested the same approach—or whether it should be something that has safeguards imposed from outside. There we have the issue of the development of Standing Orders within an organisation.

The personal experience I just referred to includes being chair of the Welsh Assembly’s Standing Orders Committee, which I always regard as one of the more challenging roles that I have taken in politics. Clearly, as the organisation develops, the Standing Orders become more sophisticated and more difficult to overturn. If the approach within the Northern Ireland Assembly is taken via Standing Orders, that of course does not necessarily mean that they are likely to be overturned—although I recognise entirely the example given by the noble Lord, Lord Empey, of the challenge last year to the power of the Department of the Environment, and the point that there are unsettled moments in the development of Northern Irish democracy.

Therefore, as I set out in Committee and as has been referred to this afternoon, the Government previously consulted on the issue of an Opposition in the Assembly and concluded that there was a lack of broad support between the parties in the Assembly for changes to the current legislative framework.

[Lord Kilclooney (CB)]

The Northern Ireland Assembly is losing credibility across Northern Ireland and is passing very little legislation. I am very worried that the turnout at the next election will be poor. The Minister says—and the spokesman for the Opposition said the same—that the initiative must come from the Northern Ireland Assembly itself, but if all five main political parties are now in the Government, what incentive is there for any of those parties to resign from the Government and become the Opposition?

[Baroness Randerson]

The noble Lord makes a very important point. However, because there may not immediately be an obvious incentive to do so, that does not necessarily mean that in other circumstances one or more of those parties might not find it appropriate to go into opposition. In the history of party politics in general, from time to time a party believes that the time has come to renew itself, and the party also might believe that the time has come for it to take a stronger role of scrutiny. It is important that we do not regard the current situation in Northern Ireland in terms of the balance of political parties as one that will necessarily exist in decades to come. There have been remarkable changes in Northern Ireland among the political parties since the establishment of devolution, so we should not think that the current situation will necessarily always continue as it is.

I return to the point I was making. Noble Lords will be aware that the Assembly can in effect facilitate an Opposition at present through its Standing Orders, as has been referred to here this afternoon. However, as I said earlier, I recognise the concerns that those Standing Orders could be overturned at the behest of the larger parties in the Assembly. In response to the question asked by the noble Lord, Lord Empey, the Government understand the desirability of sufficient protection being afforded to an Opposition against such a threat if it is to be truly effective in holding the Executive to account. It is important that the Opposition are enabled to do their work without feeling that their position is under threat. However, of course it is also possible to protect an Opposition internally, through Standing Orders.

However, as the noble Lord, Lord McAvoy, highlighted in Committee and again this afternoon, this is about the Assembly’s internal procedures. I disagree with the noble Lords, Lord Empey and Lord Lexden. It would not be appropriate for the Secretary of State to have authority over the Assembly’s internal affairs, as the amendment suggests. In the view of this Government, it is not appropriate for the Secretary of State to intervene internally in the processes of the Assembly. We also believe that it would be inappropriate to impose a requirement for the Assembly to make particular provision in this field. Indeed, we ought to show great circumspection, given that there has been no opportunity for consultation on these matters with the Northern Ireland Assembly in recent months. However, we will reflect further on the issue in the light of today’s debate. I make no promises of particular action, but we commit to considering whether there is more we can do within the constraints of the Government’s view that we should not intervene directly within the Assembly. Above all, I hope that the parties in Belfast are listening and will think carefully about amending Assembly arrangements in the light of what has been said today. With that in mind, I hope that the noble Lord, when he comes to reply, will feel able to withdraw his amendment.

Perhaps I might add a word about another issue, since otherwise we will not have an opportunity to consider it today. In Committee, concerns were expressed about the current provision in Clause 6 to make the reduction in the size of the Assembly a reserved matter. I would like to respond in more detail to some of the concerns debated in Committee. The current provision would enable the Assembly to legislate, with the Secretary of State’s consent, to reduce the number of Members returned to it for each Westminster constituency. The noble Lords, Lord Alderdice, Lord Empey and Lord Bew, expressed reservations about the current provision in that it did not provide sufficient protection, notably for smaller parties in the Assembly. In their view, the Secretary of State’s ability to withhold consent from such an arrangement was not a sufficient safeguard.

The Government recognise those concerns. There is a significant body of opinion that favours some reduction in the Assembly’s size, but it is certainly not our intention that it should become a radically smaller institution. When it was established, it was the intention that it should be a widely inclusive body, and that remains an essential element of the Northern Ireland settlement. Accordingly, we propose to bring forward an amendment at Third Reading that would limit any reduction in the Assembly’s size to five Members per constituency. The amendment would make clear that such a reduction would require cross-community support in the Assembly.

We will, of course, return to the detail of this amendment at Third Reading, but I hope that I have given a clear indication of the Government’s intentions and reassured noble Lords. Following my comments on this amendment and in the light of my reassurance that we will consider further the issue of our position in the Assembly, I hope that the noble Lord, Lord Empey, will feel able to withdraw his amendment.

15:59

[Lord Empey]

My Lords, I welcome the debate that we have had. As Members of this House will be well aware, when a miscellaneous provisions Bill passes your front door, a variety of things inevitably appear in it. Of course, at the end of the day the Government brought the Bill here, so it is their fault that all these issues are being raised.

Throughout this process we have been trying to raise the profile of this issue. Earlier, I made the point that changes have been made to the architecture of the Assembly without the consent of the Assembly, without the consent of all the parties and, indeed, without any consultation with all the parties. It is against that backdrop and in that context that these amendments are being brought forward.

I am sure that I speak for my noble friend Lord Lexden when I say that we have no particular allegiance to this amendment vis-à-vis another. We are trying to achieve an objective, which is to allow the Assembly to evolve. I take the point made by the noble Lord, Lord Alderdice, that there is a Catch-22 situation. If you want the Assembly to have the trigger mechanism to seek an opposition status, to some extent you are giving it a veto. Equally, the only alternative to a veto is an imposition, but it has already been said around the House that that is not where we would seek to go.

I thank the noble Baroness for saying that she wishes to reflect further on the issue without commitment. We are open to finding a way to evolve the situation, whether that is through consultation with the parties, led by the Secretary of State, or by another mechanism or other means. All we want is to see progress.

The noble Lord, Lord Kilclooney, raises a very important point. I have been a lifelong supporter of devolution, as have many noble Lords here, but credibility is being lost. Sometimes things need to be refreshed and people need to see change and delivery. It is important that we do not confuse the facts. For instance, my noble friend Lord Lexden and I have brought forward this proposal but that does not mean that the party that I represent necessarily wishes to seek a status for itself now. It may very well be that other considerations, such as the stability of the institution, have to be taken into account. However, we have to look to the future and, as the noble Baroness said, the future generations of politicians need the best structure that we can give them.

With regard to the Minister’s point about the size of the Assembly and her intention to bring forward an amendment on that, I would just suggest that in the mean time she does an exercise on the impact that it would have had on the Assemblies that have been elected so far to see what it would have produced. The noble Baroness is a great advocate of proportional representation; her party sought to introduce it for this House and the other place. However, whenever people talk about it, I get the impression that they do not fully understand its implications. I suggest that people have a look at the figures to see what PR would have produced in the context of the Assembly elections in 1998, 2003, 2007 and 2011—what those elections would have looked like and what impact it might have had.

We had a proposal to reduce the number of constituencies in the United Kingdom Parliament. That would have been a perfect solution to the situation in Belfast because a reduction in the size of the Assembly would have been taken care of without the Assembly having to get involved; 12 seats would have disappeared and the Assembly would have gone down to a more reasonable size.

However, we are where we are and, on the basis of the noble Baroness’s assurances that she wishes to reflect without commitment, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Clause 10: Civil Service Commissioners for Northern Ireland

Amendment 2

Moved by

[Lord Empey]

2: Clause 10, page 9, line 7, at end insert—
“(3) Subsections (1) and (2) shall only enter into force after the remaining provisions of this section have been complied with.
(4) The Secretary of State shall establish a body corporate called the Northern Ireland Civil Service Commission (“the Commission”).
(5) The Commission must publish a set of principles to be applied for the purposes of recruiting persons on merit on the basis of fair and open competition.
(6) Before publishing the set of principles (or any revision of it), the Commission must consult the Secretary of State.
(7) Northern Ireland Civil Service management authorities must comply with the recruitment principles.”

[Lord Empey]

My Lords, this is a very simple amendment. In Committee we discussed at considerable length the fact that we were seeking to ensure that the principles of merit and of equality of opportunity were always at the forefront of Civil Service recruitment. I take the point that in this case we have the anomaly that civil servants effectively are answerable to the devolved Parliament, whereas the Civil Service Commission is not. I believe, too, that if we cannot agree on the principles of merit and equality in terms of the Civil Service Commission, we are in severe difficulties.

I refer to the letter that the noble Baroness sent to us and to the fact that in Committee many people praised the Civil Service for its work in very difficult times over a prolonged period. Many civil servants conducted almost political negotiations on behalf of Ministers, in some cases at great risk to their personal safety. We owe them a debt of gratitude in that regard. The point was made that the situation in the 2010 Act gave the Whitehall Civil Service Commission one status, whereas the Civil Service Commission in Northern Ireland has a different one. The amendment was drafted to deal with that anomaly. I am interested to know how the Minister has reflected on these matters since Committee and whether she feels able either to support the amendment or to bring forward her own. I beg to move.

[Lord Bew (CB)]

My Lords, I support the amendment. The shadow of history lies over it. When the Northern Ireland Civil Service was established in 1921-22, something like 60 appointments were made without any normal procedures of recruitment being applied. Over a period of time a struggle to achieve a professional Civil Service began. The time between 1925 and 1944 when Sir Wilfrid Spender was head of the Civil Service was key. In the memoirs of a Catholic civil servant, Patrick Shea, who reached the top of the Northern Ireland Civil Service, one can see the degree to which great efforts were made to institutionalise procedures that reflected what Sir Wilfrid thought were the best procedures in Whitehall.

That backdrop explains why, when direct rule came, Ministers of all parties—I do not just mean Conservative, Labour or Liberal Democrat Ministers who had dealings with the Northern Ireland Civil Service, but Ministers who leant to one particular side or the other in Northern Ireland—always found that the Northern Ireland Civil Service delivered excellent and objective advice. If one looks at the non-controversial nature of north-south relations, which is of particular importance at the moment, it is clear that the big political decisions in such a context were made by the noble Lord, Lord Trimble, who is in his place today.

It is also the case that the work done by the Northern Ireland Civil Service in looking at areas of viable co-operation between north and south is a very important reason why the settlement is so stable. As the noble Lord, Lord Empey, has said, we owe a debt of gratitude to the Northern Ireland Civil Service. As I have argued, that integrity and professionalism has been hard won. The pressures of localism do not go away: it is not 1921 anymore. At this symbolic moment, it seems to me that noble Lords who supported this amendment want to say that a stronger message is desirable in terms of defining the principle of merit and of fair and open competition. That essentially is the idea behind this amendment: that that signal should be sent in a firm way.

[Lord Alderdice]

My Lords, whatever reservations I might have had with regard to the previous amendment I have none at all about putting my name to this one as it is very important. There was some talk in the debate on the previous amendment about the imposition of the will of the Westminster Parliament or Westminster Government on Northern Ireland. In a sense, this amendment and the next one refer to two clauses where it is almost as though the Westminster Parliament and Government are intentionally withdrawing their involvement and moving from excepted to reserved matters that were rather carefully put in the excepted category. Why? Many of us were conscious of the fact that over a substantial time in the historical period referred to by the noble Lord, Lord Bew, the United Kingdom Parliament and Government were less involved in that part of the United Kingdom than might have been advisable, and things went awry.

It does not seem to me that we have learnt from that. Indeed, some indications over the past two or three years are that people on this side of the water, relieved to some extent that Northern Ireland is less in the headlines than it was for 20 or 30 years, are just hoping that everything will go on all right. The noble Lord, Lord Kilclooney, has rung a warning bell that maybe things need attention, and I think he is right on that score. I have heard no demand in Northern Ireland for the issues referred to in this amendment or the next to be changed, so I am a little puzzled why these propositions have come forward in the first place. If they do proceed, they must be addressed properly.

I have two concerns. First, while I accord entirely with the positive remarks of the noble Lords, Lord Empey and Lord Bew, about the Northern Ireland Civil Service, and from my positive experience in most circumstances over some years, nevertheless, particularly as I was trying to get the Assembly up and running, it became apparent that many of the more senior civil servants were operating off a kind of Civil Service rulebook from 20 or 30 years before. They really had not kept up with the kind of developments of Civil Service culture on this side of the water. There was nothing malign about it but it seemed that things took rather a long time to get across the Irish Sea in terms of cultural change. So, one of my concerns is that if we simply offload and do not put appropriate rules in place, those cultural changes that take place on this side of the water may not be picked up as quickly back at home, and I do not want to see that.

Secondly, when appointing senior civil servants it is suggested that the Civil Service as a whole, and the basis on which it recruits, is entirely a devolved matter. That is clearly legally true. However, I ask my noble friend to consider—she may not be able to respond immediately—whether, if it became apparent that the merit principle did not apply and proper recruitment was not happening in Northern Ireland, would that not be a matter of concern to this Parliament? If it became apparent that there was discrimination, inappropriate appointments were being made or that the merit principle was not the key principle, is it seriously being suggested that this Parliament would have no locus, interest or legitimate concern, and that the Secretary of State who was responsible for negotiating the resources that those civil servants would spend, and who might have a legitimate concern for the propriety of appointments, could say nothing about it? I am not entirely persuaded that that argument stands up. I do not necessarily say that we would ever get to that position but if we talk ourselves into the notion that this Parliament and the Government have no say in the overwhelming majority affairs in Northern Ireland, that is a recipe for neglect, benign or otherwise. I do not want to contribute to that.

I support the amendment not only because, technically, I think it is important, and historically it is appropriate, but because it gives us the opportunity again—as the noble Lord, Lord Empey, said, they do not come by too often—to raise the issue of Northern Ireland and the responsibility of this place and the Government here on what is a devolved institution, not an independent one.

14:25

[Lord Butler of Brockwell (CB)]

My Lords, in Committee the Minister sought to reassure me about why the opportunity was not being taken in this Bill to introduce the defences of Civil Service impartiality in Northern Ireland that exist for the rest of the United Kingdom under the 2010 Act. She said:

“It is the Government’s intention that we would be moving to devolution with safeguards that would have the kind of statutory enforcement that exists for England”.—[Official Report, 3/2/2014; col. 36.]

I take that to mean that that statutory enforcement would be introduced before devolution takes place. Can the Minister explain how that is to be done? Since the only further legislative move that is necessary before devolution takes place is a statutory instrument introducing it, is that the means by which she says the statutory defence of Civil Service impartiality will be introduced? That is my first question.

My second point is the reason why I support this amendment now. If and when that statutory instrument comes before the House, we will have a chance to vote only for or against the whole statutory instrument. That is a less satisfactory means for the House to deal with it than if we were able to debate this sort of amendment to the Bill before it comes into force.

[Lord Lester of Herne Hill (LD)]

My Lords, I was not intending to take part in the discussion of this part of the Bill, but I would be grateful if my noble friend the Minister could clarify whether the existing legal regime in Northern Ireland forbids any form of discrimination within or by the Civil Service. It was my understanding that that was the position under the Northern Ireland Act as it stands. I know that in Northern Ireland there is some backwardness in amending equality law. It still has not, as we have done, produced a single Equality Act. That is most regrettable. It is true that it was Labour that first sought to initiate that reform. But in terms of the Civil Service and public administration, I understood that not only in common law but under the Northern Ireland Act any form of arbitrary discrimination, direct or indirect, would be unlawful. I would be very grateful if that can be clarified.

[Baroness Smith of Basildon (Lab)]

My Lords, I suspect that the noble Baroness has a sense from the tone of this debate, as in Committee, of how strongly your Lordships’ House feels on this issue. The noble Lord, Lord Alderdice, made the point that we have devolution, not disengagement, and there is a responsibility here for your Lordships’ House.

The noble Lords, Lord Alderdice and Lord Bew, made the point about the differences—not just cultural but practical—between the Northern Ireland Civil Service and the Westminster Civil Service. As a Northern Ireland Minister, I was struck by the far higher profile that senior civil servants have in Northern Ireland than they do here in GB. This is partly because, particularly when the Assembly has been suspended or there have been different governance arrangements, it has often been a civil servant who has undertaken the role that Ministers have here in defending or promoting policies and engaging with the public. So the difference is cultural and practical.

The timing of the Minister’s letter on this issue to noble Lords, dated yesterday and which I received today, is rather unfortunate. I appreciate that we have just had a recess, but it would have been helpful to have had the letter earlier; it may well have informed more of the debate today and the amendment that is being put forward.

There are a couple of points in the Minister’s letter on which I would like some clarification. I think that there is some confusion about what has been devolved and what is excepted. In her letter, she mentioned the debate in Committee and said that,

“many of the points made in debate related to the impartiality of the Northern Ireland Civil Service as a whole, which is of course a transferred matter”.

But the reason why there was a debate around impartiality was that we were discussing the role of the Northern Ireland Civil Service Commission, which is not an excepted matter. It was the role of the commission that brought about that debate. I think that people fully understand that the Northern Ireland Civil Service is devolved, but it is the role of the commission and its responsibility in ensuring the independence and impartiality of the Civil Service.

The point of the amendment and the whole tone of the debate is that, when the Northern Ireland Civil Service Commission is transferred, it is with the statutory understanding that it retains its remit for ensuring impartiality in appointments to the Northern Ireland Civil Service. I do not think that there was any misunderstanding in the debate in your Lordships’ House about what was transferred or excepted, but the reassurance was required, which was not really explicit enough in the Committee debate, that before being a devolved organisation there would be statutory protection on its remit for impartiality.

The Minister said in her letter that there would be further parliamentary scrutiny in both Houses, but the point made by the noble Lord, Lord Butler, is relevant here—it would be secondary legislation. But she also says that she intends to bring forward an amendment at Third Reading. I think that it is a great shame that we do not have the amendment before us today, because it would have been helpful to your Lordships’ House to be able to discuss it today. What we will seek from her today is to understand exactly what that amendment would say. If the earliest time we see that amendment is at Third Reading, it is rather late in the day, and I am disappointed that we do not have that government amendment before us today. If she could clarify exactly what it will say and what the process of debate and vote will be, that would be extremely helpful to your Lordships’ House and might allay some concerns. I hope that she is able do that—but, to put it on record again, it would have been helpful to have that amendment today.

[Lord Brooke of Sutton Mandeville (Con)]

My Lords, I mean no disrespect to the shadow spokesman for the Opposition in speaking immediately after her. I hesitated to speak in the debate because I had played no part whatever in the proceedings so far, but I detected some mild anxiety in the exchanges between the government Front Bench and the advisers behind me. Therefore, I reckoned that uttering for a moment might provide enough time for any matters of that sort to be resolved with total confidence.

Like many in your Lordships’ House, I was alerted to this problem by the original letter expressing concern about the difference between Northern Ireland and the rest of the kingdom at the moment in these regards. For reasons that are in no remote sense the responsibility or fault of the Minister, I was unable to attend any of the briefing meetings that she very generously provided for people interested in this Bill. It is possible, because I have not taken any part, that I have not received correspondence that may have come to other noble Lords.

Having listened to the debate this afternoon and read the debate that occurred in Committee, I have a sense of unease. I do not have a sense of confidence that all is well. We are rather late in the proceedings of this Bill to be dealing with these sorts of concerns. I hope that my noble friend the Minister will be able to give a significantly clearer position of exactly where we are and why at this particular moment.

[Baroness Randerson]

My Lords, I thank the noble Lord for his amendment. I know from Committee, and this afternoon, that this issue gives rise to considerable debate, in which of course there is very wide interest. I am grateful to the noble Lord for bringing the matter back on Report.

The noble Baroness, Lady Smith, criticised the timing of my letter. My letter was dependent on knowing on which aspects I had not been able to satisfy noble Lords following the debate in Committee. There were a number of other issues of debate that have not come back to us because clearly the debate produced a satisfactory response to what I had said. I was therefore picking up those issues which had been raised in amendments by noble Lords or which had been raised with me directly in that noble Lords had told me that they intended to table amendments on those issues. Therefore, having got a picture of what noble Lords were interested in and concerned about, I wrote in the hope that, by giving some advance notice, I would enable your Lordships to prepare your points for debate with an eye to what I was planning.

Returning to the points made this afternoon, noble Lords will be aware that this amendment is the same amendment that the noble Lord tabled in Committee. As I outlined then, while we have much sympathy with the concerns that underlie it, to which the noble Lord, Lord Brooke, has just referred, the Government cannot accept it; first, on the basis that it is technically problematic; and, secondly, because it will pre-empt a public consultation on the future devolution of the Civil Service Commissioners.

It is worth emphasising again that Clause 10 is concerned only with the appointment of the Civil Service Commissioners and not the wider Civil Service. There have been a number of references today, as there were in the previous debate in Committee, to the issue of the Civil Service as a whole. That is, however, a devolved issue, and therefore it is important that we bear in mind that we are talking only about the appointment of the Civil Service Commissioners.

Clause 10 does not change the current procedure for the appointment of Civil Service Commissioners for Northern Ireland. Appointments are currently an excepted matter, and the Bill proposes to make them a reserved matter, as is currently the case with the commissioners’ functions and procedures. But the Bill opens the possibility of responsibility for the appointment of the commissioners and their functions and procedures to be devolved at a later stage.

I recognise that noble Lords have concerns that the principle of appointments to the Northern Ireland Civil Service should be made on merit and through open and fair competition, and that this should be protected, as is the case with the Home Civil Service here. In Committee I made it clear that the Government are certainly open to the possibility of new statutory safeguards being put in place in the context of devolution. But as I indicated previously, attempting to write them in now would pre-empt a consultation on the future devolution of the commissioners, not least in Northern Ireland itself.

In any event, we do not have the time to put in place provision on the complex issues involved during the remaining stages of this Bill. Some of these matters, as I have said, are anyway a devolved responsibility on which we should not legislate without the consent of the Northern Ireland Assembly. It is unnecessary to make such provision at present because the House, along with another place, would have the final say over whether devolution should take place when an order to that effect was proposed.

On the point made by the noble Lord, Lord Butler, about the opportunities for the House to vote on a statutory instrument prior to devolution and that it would be a yes or no vote, the process for this is that the Secretary of State would bring an Order in Council to the House and the House can decide whether there are sufficient safeguards in place. If there are not, presumably the House would vote against that order.

16:30

[Lord Butler of Brockwell]

I am grateful to the noble Baroness but I am afraid that she is not assuaging my concerns. In Committee, she gave me a precise undertaking. Today she has said that the Government were open to the idea of introducing the same kind of statutory safeguards for the Northern Ireland Civil Service as exist in the rest of the United Kingdom. In Committee she went much further than that and said that we would be moving to devolution with safeguards that would have the kind of statutory enforcement that exist for England. Is that going to happen before devolution or not?

[Baroness Randerson]

I hope to come to that in the latter part of my response. I was attempting to respond to the noble Lord, Lord Butler, on the specific issue of the process. Prior to the intervention I was saying that the House would have the final say on whether devolution should take place when an order to that effect was proposed. However, in responding to the comment of the noble Lord, Lord Butler, I should make it clear again that the Government are committed to protecting the independence of the Civil Service Commissioners and that we fully understand the concerns expressed about the future independence of the Northern Ireland Civil Service.

We recognise the significant and important role played by the Civil Service in Northern Ireland and, in the light of the concerns expressed, the Government propose to bring forward an amendment at Third Reading which would require the Secretary of State to lay a report before both Houses on the independence of the Northern Ireland Civil Service prior to bringing a devolution order. In her report the Secretary of State will be required to set out her view of the effect of devolution on the principle that persons should be selected for appointment to the Northern Ireland Civil Service on merit and on the basis of fair and open competition. That approach flags up the importance your Lordships attach to the question. We would wish the House to be reminded of that at a later date when and if a devolution order is brought forward.

The noble Lord, Lord Lester, asked whether discrimination is possible at this point in time in the Civil Service. There are extensive safeguards in Northern Ireland law and in the 1998 Act against discrimination in employment and, more generally, against discrimination by public authorities. I am sure that on this issue it would be more significant if I responded to the noble Lord in detail, possibly by letter, which I could place in the Library.

[Lord Lester of Herne Hill]

I am extremely grateful to my noble friend for her reassurance. I want to make it clear that my understanding, as a matter of law, is that if the commission were not to recruit on merit, on the basis of fair and open competition, that would already be unlawful both by statute and common law. The House may need that reassurance in considering whether the proposal now being made, for a report in the future, would be sufficient safeguard against abuse. If the Minister finds it more convenient to confirm that in writing, I would be grateful for that.

[Baroness Randerson]

As an issue of principle, my understanding is that that is the situation. However, in order that noble Lords might understand it in more detail, I will ensure that a letter is sent to my noble friend and a copy placed in the Library in order that we can make the current situation clear. As I listened to this debate and read the Hansard report of our previous one, it became clear that this is a complex issue in which we are, in practice, moving between the appointment of the Civil Service Commissioners on a fair, equal and open basis and the standards by which we would expect the Civil Service in Northern Ireland to operate. Some of these issues are devolved but it is important to be clear about which safeguards are already in place, at which level, and which points are devolved. I give way to the noble Baroness.

[Baroness Smith of Basildon]

I am grateful to the noble Baroness. She is trying to be very clear and I wish I could be equally clear at this point. The noble Baroness used two phrases that give me concern. At some points she talked about the independence of appointments to the Northern Ireland Civil Service Commission but in her letter, and at other times, she referred to the independence and impartiality of appointments to the Northern Ireland Civil Service for which the commission is, at some levels, responsible. That is where there is some confusion.

We are just a few days away from Third Reading and I would be very concerned if an amendment were tabled quite late in the day and the only discussion we had was on the Floor of your Lordships’ House. Would it be possible for the Minister, before tabling the government amendment at Third Reading, to discuss it with noble Lords who have raised concerns to ensure that they are content with its wording and feel that it does what they are asking for it to do? The noble Lord, Lord Brooke, is quite right. We are very late in the day to be at this stage with the matter not resolved. It would be very helpful if the Minister could agree to circulate the amendment and discuss it with noble Lords prior Third Reading.

[Baroness Randerson]

One our problems is that the Bill refers to the appointment of Civil Service Commissioners but the amendment goes beyond that because, as has been pointed out, this is a miscellaneous provisions Bill and things are put into it which add to its scope. In attempting to respond to the debate, we have all been discussing the qualities of the Civil Service in Northern Ireland—its free and open appointment and independence. We have therefore been ranging well beyond the point in the Bill. I am absolutely happy to organise a meeting with noble Lords who are concerned about this issue. It is essential to have a full discussion of any proposed amendment and ensure, as far as possible, that noble Lords are satisfied with the direction of the amendment.

As the noble Baroness has pointed out, there is an issue with timing. We have Third Reading next week so it is essential that we move on under a realistic timetable. The Government are absolutely committed to having public consultation before making fundamental changes to the appointment of the Civil Service Commissioners. We are not considering devolution of anything without wide public consultation and the agreement of the Assembly. We have a relatively limited period of time in which to produce an amendment that works within those parameters.

[Lord Alderdice]

I hesitate to intervene, but will my noble friend clarify something else? She talked about the importance of public consultation. I do not ask her to clarify this now, but perhaps she could do so in writing before the Bill’s next stage. The noble Baroness on the Opposition Front Bench said that culturally and socially there is a difference in the roles of the heads of the Civil Service departments in Northern Ireland. It is my recollection that there is a legal and constitutional difference from this part of the world as well. I recollect that the heads of Northern Ireland government departments are the civil servants, not the Ministers, which is a different position from that in the rest of the United Kingdom. I am not certain that all noble Lords are aware of the fact that it is a quite different position. Therefore, sensitivities that some of us have on these matters are all the more acute. I see my noble friend Lord Trimble nodding his head, and that ought to be confirmation sufficient for me, but I ask the Minister to confirm between now and the next stage precisely what is the position and, in particular, the status of heads of department as civil servants.

[Baroness Randerson]

My noble friend is correct in his general point, which is that the Civil Service in Northern Ireland has a different status from that in the rest of the country. The situation changed in 2010, when additional safeguards were introduced for the rest of the country.

I suggest that the best way in which I can deal with the detailed approach for which my noble friend is asking is to add it to the letter that I originally said that I would write to the noble Lord, Lord Lester, because it is very much in the same field and at the same level of detail. Then we can have the precise legal and historical background to the different situation that exists for the Civil Service in Northern Ireland. My noble friend makes an important point that we are looking historically at a different situation.

I draw your Lordships’ attention to my proposal of an amendment that the Secretary of State should bring forward a report. I think that our approach flags up the importance that your Lordships clearly attach to this very important question. Requiring a report will feed back into the consultation process that we have committed to undertake on the question of whether the responsibility should be devolved and in which circumstances. I hope that your Lordships will agree that such an amendment goes much further than the current clause. We will of course return to the detail of these amendments. It is obvious that we are going to have ongoing discussion on this and we will return to it at Third Reading. I hope that this will provide the noble Lord with the necessary assurances and that he will consider withdrawing his amendment.

16:45

[Lord Empey]

My Lords, when this amendment was tabled, I thought it was going to be a fairly simple, straightforward matter—but as very often happens, that has not proved to be the case at all.

The Northern Ireland Assembly has not asked for any powers to be devolved with regard to the Civil Service Commissioners. Indeed, as we look at the next amendment, it has not asked for any of those powers to be devolved either. Contrary to the rumours, the people on the Newtownards Road do not speak of little else. My point is that this proposal has come from the Government of their own volition. It has not been sought. I have never heard anybody raise the issue at all.

The noble Lord, Lord Brooke, referred to the letter that some of us received in January from the chief commissioner. If I may be permitted to quote a little from it, it says:

“We have a similar role to that of the UK Civil Service Commission chaired by Sir David Normington, which regulates appointments to the Home and Diplomatic Civil Service. However, unlike Sir David’s Commission, the Northern Ireland Commissioners do not have the benefit of formal legislative provisions”.

It goes on further:

“Rather, our role continues to be governed by a Prerogative Order in Council”.

The noble Baroness is suggesting new proposals. We know that there is a clash between what is devolved and what is not devolved, but what is not devolved is currently excepted. As the noble Lord, Lord Alderdice, said, a number of issues were deliberately left as excepted issues because they were potentially so sensitive. They went to the core of areas where people felt that things had not been well handled in the past, and it would be better for the long term to leave them to the one side.

The other point to bear in mind about the Civil Service in Northern Ireland is that the statutory role, function and power lies with the department, not the Minister. There is a complete difference. If the Minister is not there for whatever reason, the department can continue to apply policy that has already been decided. The law states that the Minister directs and controls the department, but in the absence of the Minister, the department itself has the power to continue implementing policy. That is a very distinct difference.

[Lord Trimble]

I must apologise as my memory is not clear enough on whether the noble Lord was present at a discussion I am going to mention. However, he will recall the time when, for political reasons which are not relevant to this point, I had resigned and I was proposing that my other Ministers would also resign. There was a discussion of senior officials about what we do in this situation. I cherish the comment made by someone who I will not identify, who said, “We must be very careful because we don’t want people to find out that we can take decisions without Ministers”.

[Lord Empey]

The noble Lord is perfectly correct. I recall being at a number of meetings where that issue was discussed. The law states that the Minister directs and controls the department when the Minister is there, but the power is vested in the department. That is why this is such a sensitive issue. We are in the House of Lords but the department Permanent Secretaries were known as the six barons in the direct rule years, because it was to them that people turned for resources and other things. There is a very distinct difference, and that is why this is such a sensitive issue. As I have said, the Civil Service Commissioners themselves clearly have anxieties. The Assembly has not asked for this but the Government, for their own reasons, have decided to bring it forward. If they were prepared to drop it, I am quite sure that Members here would be more than content. However, in view of what the Minister has said and in view of her letter, and the fact that she intends to hold further consultations, I believe it appropriate that I now beg leave to withdraw the amendment.

Amendment 2 withdrawn.

Clause 11: Northern Ireland Human Rights Commission

Amendment 2A

Moved by

[Lord Alderdice]

2A: Clause 11, page 9, line 8, at end insert—
“( ) In subsection (2) of section 68 of the Northern Ireland Act 1998 (The Northern Ireland Human Rights Commission), for “approved by the Secretary of State” substitute “nominated by the First Minister and Deputy First Minister and confirmed by a vote of the Northern Ireland Assembly”.
( ) In subsection (3) of section 68 of that Act, for “appointments” substitute “nominations”.
( ) In subsection (3) of section 68 of that Act, for “Secretary of State” substitute “First Minister and Deputy First Minister”.
( ) In subsection (2) of section 69 of the Northern Ireland Act 1998 (The Commission’s functions), for “Secretary of State” substitute “the Northern Ireland Assembly”.
( ) In subsection (3) of section 69 of that Act, for “Secretary of State and the Executive Committee of the” substitute “Northern Ireland”.”

[Lord Alderdice]

My Lords, this amendment follows on in a sense from many of the principles of the previous amendment, but there are also some significant differences. The question of human rights and how to maintain them has been a long-standing interest and concern of mine. My first formal involvement in the issue occurred in my late teens and early 20s when I was a youth representative in the human rights commission of the Irish churches. However, I have never been a human rights fundamentalist. I remember one of the senior clergy in that commission describing the question of human rights in a way that I have always found helpful. He said that “human rights” is an important and helpful disturbing notion. In other words, it is something which should always make us ask certain kinds of questions, but on its own it does not determine all human behaviour—in particular, the balance of human rights and human responsibilities.

As I say, human rights has always been a matter of concern to me. When I got involved with Liberal International, which is the worldwide organisation of liberal political parties, I found that its only standing committee—apart from the bureau, executive and congress—is the one on human rights. I got involved with that committee and became its chairman, and I was the chairman for some time. As I tried to help that organisation move forward, I thought that it would be a good idea to consult an old friend and colleague from Ireland, Mary Robinson, who at that point was the High Commissioner for Human Rights at the United Nations. When I went to discuss this in her office in Geneva she said, “If you’ve got an issue and you have a campaign, and if you are successful in your aims, you will have achieved success in one campaign; but if you can put in place a structure or an organisation, or an institution which has longevity and good people in it, then you will address not just one issue but one issue after another”. She encouraged me to encourage my colleagues in different parts of the world to set up parliamentary human rights committees, ombudsmen and, importantly, independent human rights commissions and institutions, and I spent quite a number of years trying to do that.

However, it is not just about human rights commissions but about independent human rights commissions. In particular, these commissions need to have an independence from the Executive in those countries. It is enough that they frequently find themselves dependent on the Executive for funding; it is even worse if they are wholly dependent for their nomination and appointment on the Executive. One of my concerns about this proposal to open up devolution of the Northern Ireland Human Rights Commission, with appointments made by the First Minister and Deputy First Minister, is that it would undermine this question of independence. I am puzzled about it because the other area of devolution that we are conscious of is not just Wales—with respect to my noble friend on the Front Bench—but also Scotland. What is the situation in Scotland? The Human Rights Commission there is responsible to the Scottish Parliament, not to the Scottish Government or Executive. I was completely unsurprised to find that when the Northern Ireland Human Rights Commission was asked to respond to the Northern Ireland Affairs Committee in another place, it said, “If the Government want to move ahead on this, that is all very good. But it would conform much more closely to the Belgrade principles if it were accountable to the Assembly and not to the Northern Ireland Executive”.

I have therefore tabled this amendment. It is not a complete amendment or an amendment which I intend to press—it is entirely a probing amendment. I urge colleagues not to get involved in finding flaws with it because that would be much too easy a job. I am simply setting down the principle that, if and when the Government move forward with this proposal—and perhaps my noble friend can even give me some encouragement that at Third Reading there might be an amendment that will address this question—the Northern Ireland Assembly is the key body to which the Human Rights Commission is accountable, and the Assembly and not just the Executive should have a say in the appointment of Northern Ireland Human Rights Commission members and chair. In practice, it may well be the Office of the First Minister and Deputy First Minister that makes nominations. In political terms, it is hugely important that the members are accountable to the Assembly, perhaps with a vote for their appointment and the tabling of an annual report to it.

There are many ways in which the Human Rights Commission already involves itself with the Assembly; for example, it advises the Speaker, when he requests it, on the human rights compliance of legislation before it comes to First Reading and before it leaves the Assembly. That is not the issue. It is the question of principle. If it is to be and to remain an independent body there should be a clear significance of that by it being accountable to the Assembly and not just to the Executive. I beg to move.

[Lord Lester of Herne Hill]

My Lords, I support the object of my noble friend’s amendment and I want to explain why. I have practical experience in Northern Ireland. Between 1975 and 1977 I had the privilege of being the special adviser to what was then called the Standing Advisory Commission on Human Rights in Northern Ireland. At that stage the commission was examining the highly controversial question of whether the European human rights convention should be given direct effect in UK law or in Northern Ireland law. The Northern Ireland Office, like others within that Government, was strongly opposed to the idea of incorporation at that time. I regret that there was undoubted interference behind the scenes with the commission by the Northern Ireland Office. A member of the Executive was present throughout and reported back to them. At one stage there was an attempt to remove me because they saw the way that the body was going, and when we produced the report in November 1977 three members of the commission who had been—in my view—on the right side were removed summarily in a way that I thought was quite wrong.

I agree with my noble friend about the great importance of the independence of the commission from the Executive, and I wish that this was not a devolved function at all. I think that the commission would be better protected if it was not being devolved. However, given that it is to be devolved, and in accordance with the Paris principles and the Belgrade principles, it is vitally important that it is seen to be independent and properly buttressed. In supporting the amendment, I do not know whether the particular solution would be the right one because I can envisage a situation in which the Assembly might be guilty of improper interference. However, I am certain that the independence of this body is vital. The Joint Committee on Human Rights has been in frequent touch with the Human Rights Commission in Northern Ireland and we have been very concerned about the need for its independence to be properly protected.

[Baroness O'Loan (CB)]

My Lords, I had not intended to speak to this amendment. I have not been present in previous discussions on this Bill in your Lordships’ House. I simply wish to endorse all that the noble Lords, Lord Alderdice and Lord Lester, have said about the importance of the independence of the Northern Ireland Human Rights Commission. The separation of that commission from the Executive is profoundly important not least because it gives assurance to people that the commission itself will act independently. We still have very profound constitutional issues at stake in Northern Ireland and I urge your Lordships to support the noble Lord, Lord Alderdice, in this matter.

17:00

[Lord Empey]

My Lords, I have great sympathy with the point that the noble Lord, Lord Alderdice, has made. It is another of these proposals that have not been asked for but have been arbitrarily put forward. One could almost have the sense in the back of one’s mind that the department was pushing these things out just to get them off its desk and out of its file and pass them on, and that would be a mistake. As the noble Lord said at the outset of his remarks today, certain issues were deliberately not included, and this is one of them.

We know that the Executive and the Office of the First Minister and Deputy First Minister have had difficulties with the appointment of other commissioners. It set out to appoint one victims’ commissioner, I think it was, but after a prolonged period of time we ended up with four. At this stage, there is not a good track record.

My own personal view is that matters should be left alone. I do not know where the demand is for this; it is not there. To pile more pressure on the Office of the First Minister and Deputy First Minister over other sensitive issues at this time is not particularly helpful, to be honest. As it is, that office is struggling to get decisions out on a whole range of issues, and I cannot see any rational reason why we would deliberately add to that, particularly when no one has sought this power. It is almost the inverse of the argument that was being made in respect of opposition: we do not want to impose something, but here we are shovelling things out that have not even been asked for. The best solution to this would be to leave well alone.

I had the privilege of serving on SACHR for a couple of years. It was a wonderful forum at times when things were really difficult. Let’s face it, it is very difficult to separate the politics from the appointments, and especially to separate the two from the budget. These are all things that come together. You know what people say: you get someone in the long grass. It might not be straight through the front door but there are other ways of doing it. I support the amendment and my personal opinion is that the Government should leave this alone; it is not worth the risk.

[Lord McAvoy]

My Lords, I understand the concerns that have led the noble Lord, Lord Alderdice, to table this amendment. The discussion of human rights has played an important part in the establishment of devolved structures within Northern Ireland. Today the Northern Ireland Human Rights Commission continues to play a key role in maintaining these institutions. Throughout the Assembly’s legislative process, the Human Rights Commission can intervene at any point to prevent the governing parties from creating legislation that does not conform to proper international standards of human rights. Given the importance of the commission to the legislative process, there is an understandable need to preserve its independence and impartiality.

The noble Lord, Lord Kilclooney, echoed by the noble Lord, Lord Empey, mentioned that there seems to be an air of lack of faith in the Assembly in Northern Ireland. There is certainly anecdotal evidence in conversations to justify that complaint, or at least to make a valid one. I urge all representatives from Northern Ireland and noble Lords and noble Baronesses here to use what influence they can to try to move things along. If the public start to lose faith in the Assembly, we are all in trouble, so we should all be trying to inspire faith in it. The noble Lord, Lord Kilclooney, was absolutely right to refer to that.

In Northern Ireland, the devolution of the relevant power to the Assembly would appear to offer a firm guarantee of the commission’s continued independence. While recognising the valid intent of the amendment, I think it would be a mistake to accept it at this time. As acknowledged by the noble Lord, Lord Alderdice, a very valuable service is being performed by having this discussion.

The actual powers concerning the Human Rights Commission have not yet been devolved. Prior to the actual devolution, the Government have committed to carrying out extensive consultation and encouraging debate within Northern Ireland. It will not be until after this that the actual form that the devolution of these powers will take will be decided. Only then will it potentially be necessary to consider an amendment such as this.

Everyone agrees about the fundamental importance of human rights to the exercise of devolved government in Northern Ireland. It is also agreed that this is ensured through the independence of the Human Rights Commission and the impartial nature of its work. The preservation of this impartiality will be foremost in discussion when we come to actually devolve these powers. However, since the precise model for the devolution of these powers has not yet been agreed—and it will only be agreed after consultation within Northern Ireland, which will hopefully include a large say for the public—I feel that at this time the amendment has been quite rightly described as a probing amendment and the Official Opposition cannot support it.

The noble Lord, Lord Alderdice, made a strong case that the devolution of these responsibilities should be to the Assembly, as is the case in Scotland. The point was made in Committee that the impartiality and independence of the commission is crucial and must be both retained and maintained. Therefore, we welcome the Government’s commitment to ensure that proper consultation and debate on this takes place in Northern Ireland before a vote is taken to devolve these responsibilities. I conclude by thanking once again the noble Lord, Lord Alderdice, for the service that he has provided the House.

[Baroness Randerson]

My Lords, I hear strong echoes in this debate of the concerns raised in the previous debate. The Government have a similar potential solution to assuage the concerns of noble Lords. I am grateful to my noble friend for tabling this amendment and I understand his concerns in relation to the independence of the Northern Ireland Human Rights Commission should it be devolved in future. I make that point to my noble friend Lord Lester: it is by no means a foregone conclusion that the Human Rights Commission will be devolved in the future. It will be subject, of course, to consultation and discussion.

Indeed, let me say at once that we share the concerns that several noble Lords have expressed today and we are clear that they must be addressed before devolution. For that reason we will propose amendments at Third Reading that will ensure that they are addressed, albeit not quite in the way suggested in my noble friend’s amendment. It is worth reminding the House that Clause 11 of the Bill moves certain functions relating to the commission from the excepted to the reserved category.

The Government made a commitment in their response to the Northern Ireland Affairs Committee’s pre-legislative scrutiny report on the draft version of this Bill to consult formally on any future devolution of responsibilities relating to the commission and the other arm’s-length bodies discussed, prior to any devolution taking place. I want to reiterate that commitment today. The concerns expressed in the debates here will obviously inform that consultation. We will also ensure that the commission retains its responsibility for the scrutiny of non-devolved matters relating to Northern Ireland—such as national security and terrorism—in the event of any future devolution of responsibilities for the institution.

My noble friend raised the issue of the Belgrade and Paris principles. The Government are fully aware of the huge significance of those principles and we are absolutely committed to the idea that they are fundamental to the future independence of the Human Rights Commission. Nothing we do in future will challenge that. We know the importance that the commission attaches to the high regard in which it is held internationally.

At this stage we are not considering in detail the model for how eventual devolution will look. The Bill would simply move certain policy areas from the excepted to the reserved field so that devolution could take place by order later. That would require a vote in the Assembly to accept the new powers. Ultimately it would be for the devolved institutions to determine the structures and lines of accountability they wanted in operation. However, it seems obvious that if there are already models in operation which seem to work well they could provide a suitable starting point when these issues are considered in detail. In Scotland, for example, the devolution is to the Scottish Parliament, which has proved to be a very successful model.

As I said, the model of devolution needs to be determined in the light of the public consultation. There are many detailed questions to be addressed about the devolved arrangements, if it is eventually decided to devolve. We obviously have to take the views of the Human Rights Commission itself into account, those of others in the community, those of the receiving institutions, the Assembly and the Executive. Your Lordships will have an opportunity to debate those detailed arrangements at a later stage. Any proposal to devolve requires a vote here, as well as in another place and in the Assembly. However, we believe that it would be right to put on record now the view of the House that those questions require close scrutiny.

The noble Lord, Lord Empey, expressed the view several times during the debate today and previously that the Government are deliberately pushing things off the desk. I say to him and to others who go along with his viewpoint that there is another way of looking at this. The Government see this as part of building a broader base for devolution in Northern Ireland. As the noble Lord, Lord McAvoy, said, it is part of moving things on in Northern Ireland and creating a more normal political model. It is hoped that by broadening the base of devolution in Northern Ireland it will be made firmer and stronger as a result. However, to noble Lords who expressed concerns about this, I acknowledge that the Government are very sensitive to the issues of timing and very much aware that the progress of devolution in Northern Ireland is not always as trouble-free and speedy as we would wish to see.

In recognition of the concerns expressed about that issue, the Government intend to put forward an amendment at Third Reading which makes clear that the future independence of the commission is something that needs to be guaranteed at the point of eventual devolution. Accordingly, the amendment will propose a requirement on the Secretary of State to lay a report in both Houses prior to bringing forward a devolution order. The Secretary of State would be required to set out in her report the effect of that devolution order on the commission’s independence.

We will of course return to this at Third Reading, but I hope that my noble friend is reassured that the Government take the matter seriously, and that he will be willing, as he has indicated, to withdraw his amendment.

17:15

[Lord Alderdice]

My Lords, I am very grateful to my noble friend Lord Lester, the noble Baroness, Lady O’Loan, the noble Lords, Lord Empey and Lord McAvoy, and my noble friend the Minister for their very constructive and positive contributions. Noble Lords may recall that in Committee I spoke in opposition to the Question that Clause 11 stand part of the Bill, so I started from the same position as my noble friend Lord Lester and the noble Lord, Lord Empey, that “‘twere better it weren’t here at all in the first place”. That did not find favour.

I have therefore brought forward a probing amendment to encourage the Government to do the right thing, which is at least to ensure that if this comes forward there will be very clear requirements. I welcome the assurance—perhaps even reassurance—from my noble friend the Minister that there will be an amendment at Third Reading. However, she said that it will not be the same solution as the one that I propose. Let me just remind the House of some of the things that the Belgrade principles actually set out. They include the principles that:

“Parliaments should ensure the financial independence of NHRIs”—

national human rights institutions,

“by including in the founding law the relevant provisions”;

that:

“NHRIs should submit to Parliaments a Strategic Plan and/or an Annual Programme of Activities”;

that:

“Parliaments should take into account the Strategic Plan and/or Annual Programme of activities submitted by the NHRI while discussing budget proposals”;

that:

“NHRIs should report directly to Parliament”,

not to the Executive; and that:

“NHRIs should submit to Parliament an annual report on activities, along with a summary of its accounts, and also report on the human rights situation in the country and on any other issue that is related to human rights”.

There is nothing about the Executive because it is about holding the Executive and others to account. The reference is to “Parliaments”.

The Belgrade principles are not something from the distant past; they were agreed in February 2012. NHRIs produced these principles along with academics from the United Kingdom, one of the 10 jurisdictions involved. It will not be good enough if we decide that these are good principles for other places but not for ourselves. I want to make it clear that, while reassurance will certainly be helped by a report from the Secretary of State, the problem about the approval of this House and another place, as was pointed out with regard to the previous amendment by the noble Lord, Lord Butler, is that it is a bit of a nuclear option. By the time it comes to the House, it is a question of voting yea or nay, and the House, quite properly, is very reserved about using that power. Therefore, it is either about sorting the matter out before it comes to this place or it is a real problem getting it sorted out.

I made it clear that this is a probing amendment and I look forward to the amendment that my noble friend will bring forward at Third Reading. But I should make it very clear that this is no marginal matter. The issue of human rights is a fundamental one in general terms, but in my part of the country it has very particular important resonances. Any sense of disengagement or diminution of the importance of such an issue by making it subject to the whims and wishes of the Executive would be a serious error. I find it difficult to see how it would fit with the Belgrade principles if it were not made accountable to the Northern Ireland Assembly, much as is the case in Scotland between the Human Rights Commission there and the Scottish Parliament. However, with those concerns and reservations, and with genuine appreciation of the efforts of my noble friend and the amendment which she promises us at Third Reading, I beg leave to withdraw the amendment.

Amendment 2A withdrawn.

Amendment 3

Moved by

[Lord Lexden]

3: After Clause 25, insert the following new Clause—
“Defamation
(1) Section 17 of the Defamation Act 2013 (short title, extent and commencement) is amended as follows.
(2) In subsection (2), after “Wales” insert “and Northern Ireland”.”

[Lord Lexden]

My Lords, I brought forward this amendment in Committee. I am reintroducing it because of the immense importance of the issues that it seeks to address and because of the urgent need to make progress with regard to it in Northern Ireland. My interest in Northern Ireland is of very long standing, stemming from the days when I lived there while teaching at Queen’s University in Belfast in the 1970s.

On 1 January, a new Defamation Act came into effect in England and Wales. By common consent, it will confer great benefits. Those benefits were three years in the making, they have the full support of all three main political parties, they were subject to careful scrutiny by a Joint Committee of both Houses and a full public consultation took place across the whole United Kingdom. The new, widely welcomed libel law has perhaps been more carefully thought through than any other piece of legislation in recent years, and your Lordships will immediately think of many other pieces of legislation that could usefully have been thought through with the care given to the new Defamation Act.

There is practically universal agreement that the new law strikes the right balance between protecting individual reputations and upholding freedom of expression. The benefits of this major, far-reaching reform will be enjoyed fully throughout England and Wales but not in Northern Ireland. For the first time ever, Northern Ireland now has a different libel law—the old law, which belongs firmly in the past because it cannot provide properly for the needs of the present, let alone the future.

In this immensely important area of our law, which directly affects so many people and so many publications, Northern Ireland has been split from England and Wales. The union of our country has been weakened. A common jurisdiction has been divided into two—not after careful consideration of the effects of such a rupture but without any inquiry whatever into the consequences. Whereas the new law in force in England and Wales was prepared with great care, the old law has been retained in Northern Ireland without any explanation being offered by the Northern Ireland Executive, who are responsible for its retention there.

The Executive do not even seem to have held a collective discussion on the matter, despite its importance. It was only through the persistence of journalists that it finally emerged last year that a single Minister was responsible for the Executive’s inaction because he had withdrawn a proposal that would have led to collective discussion in the Executive. Not a word of all this formally reached the Assembly, to which the Executive are accountable. It is an extraordinary state of affairs. I have the words of my old friend the noble Lord, Lord Kilclooney, about the danger of declining faith in the Assembly ringing in my ears.

The Northern Ireland Executive’s inaction is fraught with risk and peril for the community whom the Executive exist to serve. More than 6,000 people work in publishing and the broadcast media in this part of our country. Their jobs are now at risk. The costly hazards of the old law could drive out the media companies which provide those jobs. New investment by international companies at the cutting edge of the digital revolution—so badly needed to bring down unemployment and enlarge the Province’s shrunken private sector—will be seriously imperilled. The impact on ordinary people using the internet could be severe. The new defences to an action enshrined in the new law will not be available to our fellow countrymen and women in the Province. They could find themselves facing huge bills, long-running court cases and financial ruin for what they believe to be a piece of harmless content on the web.

Consider, too, the position of those who might have to use the law to protect their reputation. Fortunately, it is rare that people have to take out injunctions on grounds of a potential libel to protect their reputation, but it does happen and it can often mean the difference between protecting and destroying someone’s life. A man or a woman in Northern Ireland faced with such a prospect would, in order to make an injunction work, now have to take one out in four jurisdictions under very different laws: one in Northern Ireland under the out-of-date common law; one covering England and Wales with a modern regime; one covering Scotland; and potentially one covering the Republic of Ireland, where the law is different again. Failure to do so would mean that the injunction is not worth the expensive paper on which it is written. Such a prospect, and the huge costs involved, would be beyond the ability of most people other than the super-rich. Therefore the action—or rather, inaction—of the Northern Ireland Executive is, in effect, not only exposing ordinary people to great risk but removing the ability of ordinary people to use the law to protect themselves.

The old libel law that the Northern Ireland Executive has retained without explanation can have literally fatal consequences. Last July a senior NHS cardiologist told a committee of the Northern Ireland Assembly that a large American company had used the old law to prosecute him and suppress his research evidence that revealed serious problems with one of its products, used to close holes in the heart. He told the committee that while he was gagged by the old law some patients who had been forced to have faulty heart devices surgically removed had died as a result. He said that Northern Ireland must ditch the old law to stop such outrageous instances of the suppression of freedom of speech.

Yet the Northern Ireland Executive ignore such powerful evidence of the need for change. All they have been prepared to do is to seek a review by the Northern Ireland Law Commission, but all the relevant information is in the public domain already. A review could take a very long time. The Executive should back the Private Member’s Bill introduced at Stormont by the Ulster Unionist leader, Mr Mike Nesbitt, to replace the discredited old law with the new one. That they have so far failed to do. Freedom of speech, human rights and the integrity of the law itself: those three fundamental elements of our democracy and our free society stand at the heart of the crisis—I do not think that that is too strong a word—that my amendment seeks to address.

This issue cannot be evaded by maintaining, as the Labour Front Bench has sought to do, that devolution removes from the Government and this Parliament the duty or the responsibility to take action. My amendment is about freedom of speech above all. While devolution is a core value of modern British constitutionalism and the Sewel convention is the central principle within our current devolutionary arrangements, freedom of speech is an even more fundamental value of our constitution.

In conclusion, I have three questions for the Government and I would be grateful for my noble friend’s comments. First, will the Government secure from the Northern Ireland Executive a clear, public explanation of their inaction, which they have so far failed to provide? Secondly, will the Government establish and place on public record what, if anything, the Northern Ireland Executive now intend belatedly to do? Thirdly, if the Executive prove unresponsive, what further action will the Government take? I beg to move.

[Lord Lester of Herne Hill]

My Lords, I was unable to be present for the earlier stages of the Bill, but I have read all the debates, including the discussion on 3 February about the amendment then moved by my noble friend Lord Lexden, with the powerful support of the noble Lords, Lord Bew, Lord Black of Brentwood and Lord Empey, and now moved again by my noble friend Lord Lexden, with my support and that of the noble Lords, Lord Black and Lord Pannick. I noted then the welcome support from the Minister for the aim of the amendment, even though she was unable to support the amendment itself.

I have a particular interest—I say this with some trepidation, as I sit opposite the noble Lord, Lord Carswell, in case what I am about to say in any way disturbs him—in that my experience as leading counsel for the Irish News in the Northern Ireland Court of Appeal in the Convery case brought home to me, as nothing else had, the importance of persuading Parliament to strike a fair balance between the right to protect a good reputation and the right to freedom of expression.

The Irish News was sued for libel for a review written by Caroline Workman, an experienced food critic. She was highly critical of the quality of the food, drink, staff and smoky atmosphere at the Belfast Italian restaurant, Goodfellas. The owner, Ciarnan Convery, claimed that the article was a hatchet job, and the jury agreed. After a lengthy trial, he was awarded £25,000 damages and four times that amount in legal costs. Caroline Workman was subjected to detailed and lengthy cross-examination about the accuracy of her article. The experience was so traumatic that she gave up her profession as a journalist. Everyone at the trial was confused about the difference between truth, fact and honest opinion. We succeeded in the appeal but the state of the common law remained unsatisfactory. That is one of the factors that caused me to think that it was about time Parliament intervened.

17:30

I was therefore surprised to read a polemic by Mr Mick Hume in the Belfast Telegraph on 7 February under the headline:

“It may not be perfect but keep your oar out all the same”.

It continued:

“Northern Ireland’s libel law is an affront to freedom of expression. But the House of Lords should keep their fingers off plans to reform it”.

The article described the state of libel law in Northern Ireland as,

“an execrable affront to freedom of expression”,

but said that,

“it is none of the House of Lords’ business”.

Mr Hume is a British journalist and former editor of Living Marxism. He is also author of a book, There is No Such Thing as a Free Press… and We Need One More Than Ever, published in 2012 in response to the Leveson inquiry. It is a splendid polemic for the freedom of the press with which I largely agree. One might have expected Mr Hume to have welcomed the work done by the coalition Government, with support from the Opposition and Parliament, in scrutinising proposals to reform the common law of libel, which, as the noble Lord, Lord Lexden, explained, has historically applied to Northern Ireland as well as to England and Wales. As the noble Lord, Lord Lexden, said, that work was informed by wide public consultation. Newspaper editors, broadcasters and journalists all welcomed the Defamation Act 2014 that came into force on 1 January. Both Houses of Parliament include Northern Irish politicians. The Joint Committee on the Government’s draft Bill and my own Bill was chaired by none other than the noble Lord, Lord Mawhinney, and included the noble Lord, Lord Bew. It received evidence from right across the United Kingdom.

One might have expected the Northern Irish coalition of opposites—the Democratic Unionist Party and Sinn Fein, in particular—to have been keen to see the Defamation Act applied to Northern Ireland. The DUP is in favour of the union and Sinn Fein has good reason to support free speech. Years ago, I attempted unsuccessfully, with the noble Lord, Lord Pannick, to challenge the Home Secretary’s ban on Sinn Fein broadcasts. Alas, as the noble Lord, Lord Kilclooney, has said, there is a total political impasse in Northern Ireland, so one can expect nothing of this Government of opposites.

Free speech is the lifeblood of democracy. People are more ready to accept policies, decisions and ideas that go against them if they can seek to influence them. It is also a safety valve. It acts as a brake on the abuse of power by public officials, by exposing errors in governance and in the administration of justice. The press are public watchdogs—the eyes and ears of the public, informing them of matters of public interest and importance.

During the debate in Committee only the noble Lord, Lord McAvoy, shadow spokesman for Northern Ireland as well as Scotland, said that he was opposed to the amendment moved by the noble Lord, Lord Lexden. He said:

“We have devolution, and devolution is the principle that we have to go by”.—[Official Report, 3/2/2014; col. 70.]

That is not a very good principle: in this context it is flawed. Unlike in the United States, for example, we do not have a federal, overarching principle of free speech. In the United States, if the American Supreme Court says, as it has done, that the states of the union may not enact, nor may the common law declare, principles of libel law inconsistent with the First Amendment, all the states of the union and the courts must obey the federal rule.

Under the flawed devolution scheme, which is not federal, the only safeguards are the power of the Secretary of State to be able, under Section 26(2) of the Northern Ireland Act 1998, to require the Northern Ireland Government to take action because she thinks that it is necessary to comply with free speech under the European convention. There is a political override power in the flawed Northern Ireland Act that she could exercise, but she would no doubt hesitate long before doing so for fear of inflaming opposition.

Alternatively, it can in a particular case be left to the poor old courts—the Northern Ireland courts and, if necessary, the Supreme Court of the United Kingdom—to try to solve the following problem. What are they to do when a newspaper or other periodical is published across the United Kingdom and they find themselves confronted by an archaic, uncertain, unsatisfactory, chilling old common law of libel, of the kind that I exemplified in the Goodfellas restaurant case, applying to Northern Ireland, and meanwhile in England and Wales they find a modern, well balanced, new defamation code? What are the courts to do? It is unfair on the judiciary to leave it to solve the problem because Parliament will not solve it itself.

I understand why the Secretary of State is unwilling to use the power conferred in the Northern Ireland Act. But if freedom of speech is to be enjoyed in London and Cardiff to a greater extent than in Belfast—where the common law is unsuited, in another kind of example, to the internet—we have a ludicrous situation. This will lead to litigation, to which in principle I am opposed, even though my profession would no doubt be delighted by the opportunity for litigation.

The Minister may argue in her reply that the amendment of the noble Lord, Lord Lexden, would breach the Sewel convention. But that is just a convention. It is not enshrined in the Northern Ireland Act and has not been approved by Parliament. Parliament as a sovereign body retains full legal power to legislate on devolved matters. Normally the power would not be exercised in relation to a devolved matter without the consent of the Northern Ireland Assembly, but we are not dealing with a normal situation.

Since the Secretary of State will not use the power given by the Northern Ireland Act to require legislation on defamation to comply with the convention, it seems to me—the Minister will correct me in her reply—that the only course left is for Parliament to pass this amendment, or for the Northern Ireland authorities to do what they are supposed to do, which is to exercise their public powers in accordance with freedom of speech and the right to protect a good reputation.

Almost 50 years ago, when Parliament was debating the Race Relations Bill in 1965, two Conservative MPs tried to persuade the then Government to include religious discrimination in the Bill and to apply it to Northern Ireland. The Home Secretary—I think that it was Sir Frank Soskice—explained that the Northern Ireland Government had opposed the application of the Bill. Robert Chichester-Clark, the then Member for Londonderry, claimed that the safeguards against religious discrimination in the Government of Ireland Act 1920 were, in his words, “completely adequate”. Another Ulster MP, Captain Orr, insisted that Parliament had,

“set up a subordinate Parliament representing the people of Northern Ireland. Surely that is the place to test the matter”.—[Official Report, Commons, 3/5/65; col. 971.]

I do not want to dig up unhappy memories of those 50 years and their consequences in the Province, but I suggest that we have to learn from that experience. If the Minister is unable to accept the amendment or to use the power conferred by Section 26(2) of the Northern Ireland Act, I would ask her to indicate what possible measure she proposes instead to guarantee the right to free speech as well as the right to a good reputation across the Irish Sea.

[Lord Pannick (CB)]

My Lords, I have added my name to this amendment. I agree entirely with everything that has been said by the noble Lords, Lord Lexden and Lord Lester of Herne Hill. There may, of course, be some justification for the reluctance of Northern Ireland politicians to bring the law of libel into the 21st century; there may possibly be something unique about free speech and reputation in Northern Ireland that demands the retention of laws that purport to address communications but were developed before the internet, blogs and tweets and, in many cases, before the invention of radio and television—but I doubt it. No credible explanation has been provided as to why Northern Ireland law should remain in the dark ages. I very much doubt whether the Minister will be able to offer any substantive reason why changes in the law thought necessary across the House in relation to England and Wales are not equally necessary in Northern Ireland. In those circumstances, I am unimpressed by the argument that Parliament should do nothing because this is a devolved area. The Northern Ireland Executive and Assembly have had ample time to act and have done nothing.

In libel trials, counsel habitually refer to the biblical statement that a good name smells sweeter than the finest ointment. I have to say that I detect an unpleasant odour in the law of Northern Ireland, and I very much hope that the Minister will be able to tell the House that she is going to do something about it.

[Lord Black of Brentwood (Con)]

My Lords, I must declare an interest in this subject as the executive director of the Telegraph Media Group and draw attention to my other media interests in the register.

I have been involved in this issue throughout the process, since it first became apparent that there was a real problem in the debate that my noble friend led on this last summer, at the launch of the Private Member’s Bill by Mike Nesbitt in Belfast in September and in Committee on this Bill. Throughout that time, some powerful arguments have been put forward in favour of change, both here in Parliament and by civil society organisations in Northern Ireland, the media and academia among them. There have been strong arguments about the impact on jobs, to which my noble friend referred and about the impact on ordinary people who, in the phraseology of the mortgage adverts, could find their home at risk for something that they have simply written on Twitter or Facebook. There is the damage that could be done to the creative economy in Northern Ireland and to academic freedoms in higher education as well as the real dangers of media plurality.

We have heard many other arguments advanced today by my noble friend Lord Lester about the difficulties that the judiciary will face, and my noble friend Lord Lexden made reference to the difficulties that litigants will face, and those seeking to protect their reputation. So there have been many powerful arguments that in my view, given the gravity of the situation, should be met with equally strong ones as to why the new Defamation Act should not apply in Northern Ireland, particularly as this issue impacts on the most fundamental human right—free speech. If there are arguments, we should hear them today, but all we have had is a deafening silence: silence from the Northern Ireland Executive and silence from the political establishment in Westminster, which I fear simply wants to shy away from the issue on the basis, as the noble Lord, Lord Pannick, says, that this is a devolved matter. In Committee, my noble friend the Minister majored on this point, comparing the situation in Northern Ireland with that in Scotland, missing the fundamental point that there is a different libel law in Scotland. That has nothing to do with devolution, but is to do with development of the common law that dates back many centuries. False comparisons such as that will not do. Deafening silences will not do, because freedom of speech for an important part of our United Kingdom is at stake.

17:45

Everyone respects the devolution settlement contained in the Northern Ireland Act 1998, and we all respect the logic of the Sewel convention, although it is, as the noble Lord, Lord Lester, said, just that—a convention, not a tablet of stone. Under the Northern Ireland Act, one of the excepted matters—those issues of extreme importance to the United Kingdom—is the constitution. This issue is at heart a constitutional matter because it impacts on the integrity of our legal system, on free speech—which is a fundamental constitutional right—on media plurality and on the ability of citizens to achieve redress of grievance. All those are undermined by the inexplicable actions of the Northern Ireland Executive.

Unless we recognise that point—that this is not a matter of legal arcana but an issue fundamentally about the integrity of policy and long-established freedoms—I fear where it will end. Already Northern Ireland is becoming an anarchic force in UK-wide media policy. It is opting out of defamation laws which in many ways will punish ordinary people and is clinging to an oppressive, outdated regime. It has, as we have heard, given no reasons for doing so. It has already opted out of the royal charter on press self-regulation, yet no reasons have been given. I can think of many reasons the Northern Ireland Executive might want to opt out of it, but no reason has been given by them.

A pattern of behaviour is appearing of a pick-and-choose approach to fundamental constitutional issues. I ask my noble friend the Minister what would happen if, when next we look at the issue of data protection, the Northern Ireland Executive decide not to adopt vital changes that have been made to that regime but instead legislate in a way which would undermine investigative journalism, on which democracy in Northern Ireland depends. Would the Government intervene at that point? What would happen if the Northern Ireland Executive decided to introduce a system of statutory press controls that would be wholly inimical to free speech? Would the Government intervene then?

I could continue with a list of these hypotheticals, but I think I have made the point that, by appeasing the Northern Ireland Executive on such a vital policy matter, the Government are sliding down a slippery slope that will help destroy Northern Ireland’s creative economy, destroy jobs and grievously undermine free speech. This issue is too important for the Government and, with respect, the Labour Party simply to say it is a devolved matter. If we maintain that approach, that will come back to haunt us in ways which we cannot imagine. The most regrettable thing of the lot is that it is the people of Northern Ireland who will pay the price.

[Lord Browne of Belmont (DUP)]

My Lords, defamation, in common with other civil-law matters, is a devolved area, so the law in Northern Ireland is indeed a matter for the Northern Ireland Assembly. As the Minister stated in Committee, it is essential that we all respect the devolution process—and part of that process is that you have different laws in different parts of the country.

Devolution in Northern Ireland permits the devolved legislature and Executive to develop policies that differ from those in the rest of the United Kingdom. Therefore it is only right and proper that the Northern Ireland Executive should have the opportunity to consult on whether or not the Defamation Act 2013 should apply to Northern Ireland. Indeed, the Minister of Finance and Personnel, Mr Simon Hamilton MLA, has already asked the Northern Ireland Law Commission to assess the Defamation Act 2013. The Northern Ireland Law Commission is an independent body and will undertake a complete public consultation on the issue so that the people of Northern Ireland will have an opportunity to contribute to the discussion. I am sure that noble Lords who have contributed to this debate will make a robust submission to the Law Commission.

As we have heard, currently Mr Michael Nesbitt MLA has said that he is to introduce a Private Member’s Bill. To date he has launched a consultation on the issue but as yet no detailed analysis of the responses he has received has been published. I understand that he is willing to pass these responses on to the Northern Ireland Law Commission. The law commission is a fully independent body and is not subject to the direction or control of the Assembly or Government. The Northern Ireland Finance Minister has made it abundantly clear that, as with any other law commission report, all recommendations will have to be thoroughly assessed with a view to making final policy recommendations.

It is only right and proper that the Northern Ireland Executive and Assembly be allowed time to receive this report and I trust that they will act in a responsible manner after receiving its findings.

[Lord Carswell (CB)]

My Lords, the Defamation Act 2013 was wholly admirable legislation which righted and rebalanced the law of libel and slander in a thoroughly excellent way. It needed to be done and had been required for some time and I applaud the efforts of those who supported its enactment and who pioneered the hard work required to get it into legislation.

I cannot understand, and I can think of no sensible or acceptable reason, why the Northern Ireland Executive and Assembly have failed to adopt the Act and put it into effect. However, I have listened with great interest to what has been said today by the eloquent speakers who have supported the amendment and I have read what was said in Committee, when I was not able to be present, and I find myself in complete agreement with practically everything that has been said today about the desirability of Northern Ireland introducing the provisions of the Defamation Act.

I appreciate the kind sympathy that the noble Lord, Lord Lester of Herne Hill, has extended to the Northern Ireland judiciary, of which I was privileged to be part, although not in the litigation to which he referred in such affecting terms. I think it was after I had been translated to become a member of the Appellate Committee of your Lordships’ House and therefore I cannot speak about the rights or wrongs of that case or of any other particular litigation.

Notwithstanding all that I have said, I have concerns and reservations and I owe it to the House and to those noble Lords supporting the amendment to say why. This is a reserved matter, as the noble Lord, Lord Browne of Belmont, has reminded the House, and it is therefore devolved unless taken back by the sovereign Parliament. I accept—there is no doubt about it—that, in principle, this Parliament, as a sovereign Parliament, is entitled to override any part of the legislation and to enact this if it sees fit, if it thinks that it is a proper case to do so.

My concern is whether it is right, sensible or wise to intervene in this way with a reserved matter, however important or desirable it is that the amendment should be put into effect. Where are the limits to lie for the House taking such a step? Is it not dangerous precedence for us to do that, even with something as important and fundamental as this? I accept all that has been said about the importance of free speech and the subject matter of the amendment, but is it wise? Would it create danger; would it start a process? If we do this in relation to this Bill, where will it finish if other people try to press Members of either House to introduce similar legislation amending Northern Ireland law in reserved matters on less fundamental subjects?

I do not find it easy to answer such questions. I am concerned that, if we go down that road, it is difficult to see where it will take us. I would very much like to see the Northern Ireland Executive and Assembly adopting this without delay. It is time it was done briskly and expeditiously, but whether we should do it is another matter. It is with very real regret that I find it difficult to support the amendment, however important and desirable the result would be.

[Viscount Colville of Culross (CB)]

My Lords, I declare an interest as a producer at the BBC. I support this amendment and add my concerns to those of other noble Lords at the refusal of the Northern Ireland Executive to implement the Defamation Act 2013. I was sorry not to have been able to attend Committee but I read, with regret, the Hansard report of the Minister’s speech, in which she said she could do little beyond offering some encouragement for this to go forward.

The failure to implement the Act is having a deleterious effect on free speech in Northern Ireland. Even before the Defamation Act 2013 was implemented in England and Wales, Northern Ireland was particularly blighted as a place where free speech could flourish. The conservative nature of the libel judiciary in Northern Ireland means that a judge has to decide that a jury would be perverse to decide a libel case in favour of one party or the other. This sets the bar very high for the prompt resolution of disputes and allows a plaintiff to say that matters must go before a jury. As a result, trials are lengthy and expensive, whereas, in England and Wales, the judge can, at an early stage, determine the questions of fact about whether a statement is defamatory on a simple balance of probabilities test, which considerably shortens the process.

The disadvantages facing authors in Northern Ireland have been fully exploited by both politicians and putative plaintiffs. The BBC is one of the few organisations big enough to defy the threats of those who want to chill free speech and stop investigative journalism. My indefatigable and courageous colleagues who work on Northern Ireland’s investigative programme “Spotlight” find themselves under attack in a way that is hard to believe in the rest of the UK.

I cite two recent cases. In October 2012 “Spotlight” broadcast a programme called “Belize Oil” which investigated the business affairs of Susan Morrice, a Belfast-born businesswoman, now based in Denver. She raised money for an oil exploratory company called International Natural Energy. Astonishingly, the company struck oil in Belize and made millions of dollars. However, the class B shareholders—many from Northern Ireland—who were not professional investors, did not receive a penny in dividends. They sued Ms Morrice, who was found guilty in a Caribbean court of having siphoned off thousands of pounds of company money for her personal use.

As the programme was being prepared for transmission, the journalists involved were bombarded with daily, sometimes hourly, threats of defamation. After transmission, a libel writ was issued against the programme. Tens of thousands of pounds of licence payers’ money was spent as BBC journalists and lawyers prepared the defence case, only for Ms Morrice to drop the case. This is the woman who has Northern Ireland’s gas and oil exploration rights.

18:00

Likewise, in July last year “Spotlight” transmitted a programme looking at the history of a housing maintenance company, Red Sky, which lost its contract with the Northern Ireland Housing Executive. The company had been accused of poor workmanship and charging for work that it had not done. Prior to a meeting of the housing executive to reconsider the ending of the company’s contract, a DUP member of the executive, Jenny Palmer, told BBC’s “Spotlight” that the DUP Social Development Minister Nelson McCausland’s special adviser had put pressure on her to change her vote at a key housing executive board meeting and to vote in favour of extending the firm’s contract.

“Spotlight” made public part of an e-mail from the leader of the DUP, the First Minister, Peter Robinson, which was sent to the BBC prior to transmission. The e-mail warned the BBC that if it went ahead and broadcast the criticisms levelled against him in the programme, he would instruct a lawyer to begin libel action against the BBC. The programme was transmitted and included criticisms of him, but he did not follow up on that threat. Yet again, thousands of pounds of licence payers’ money was spent to defend the threat of that libel action. All the people I have spoken to felt sure that the public interest defence in Clause 4 of the Defamation Act would have been a great foil against those threats. Newspapers in Northern Ireland publish some brave reporting, but they do not have the power and the money to be able to defend themselves against those threats in the same way as the BBC.

It is not just the big media organisations which suffer the chilling effect on free speech from the libel laws of Northern Ireland. I have spoken to lawyers who read books for small publishers in the country to advise on possible libel risk. They tell me that, in Northern Ireland, the threat of libel is so great that they raise many more points of libel risk than they would when advising on publication in the rest of the United Kingdom.

As noble Lords have pointed out, there is no substantial political opposition in Northern Ireland, so in no other part of the United Kingdom is it so important that the media scrutinise the actions of politicians, yet this is the very place where they find it so hard to do so. I say to the Minister: now is the time to ensure that the major provisions of the Defamation Act are implemented in Northern Ireland, in the interests of transparency and democratic accountability.

[Lord Hope of Craighead (CB)]

My Lords, I hesitated as to whether or not to intervene, as my experience of devolution is in regard to matters relating to Scotland, but I have also had experience in the UK Supreme Court of devolution matters relating to Wales. I think it is right that I add a word of caution in support of what the noble and learned Lord, Lord Carswell, said. The amendment seems to me to raise a constitutional issue not quite in the terms suggested by the noble Lord opposite. The issue is really how one balances the structure of the devolved legislature’s powers between what is reserved and what is devolved.

In Scotland, the language is different. As noble Lords will know, the position is that matters open to any legislation are called reserved matters. In Scottish parlance, what we have been talking about here is a devolved matter, which would be a matter for the Scottish Parliament. It is well established by convention that it is not open for Westminster to enter into legislation relating to devolved matters unless there is a Sewel convention which permits that. It is arranged with the Scottish Parliament and a Motion is passed through the Scottish Parliament that approves of the measure that this House or the other place seeks to pass. That is well established and happens quite frequently. It helps one get over the difficulties of demarcation, if there be any.

I am certain that north of the border—I am talking about Scotland, on this side of the Irish Sea—to use the word alarm would be to put it rather softly. It would be regarded as quite offensive for Westminster now, having devolved matters, to tell the Scottish Parliament how it should deal with an issue such as this. I make absolutely no comment on the nature of defamation law in Northern Ireland; that is not the issue. The question is whether it is really properly open to this House to engage with the matter, given the nature of the devolution arrangement which both Houses have approved and which is in legislation. As was suggested, there are other mechanisms for bringing about reform of the law. It may be extremely frustrating that it would take so long, but the law commissions exist to take these matters on board. Unpalatable though it may be, I would respectfully suggest that the advice of the noble and learned Lord, Lord Carswell, is absolutely sound. It would be most unwise of this House to disregard it.

[Lord Lester of Herne Hill]

Before the noble and learned Lord sits down, I wonder whether I could just ask this question. Given that the European convention limits the powers of the devolved institutions in Scotland and Northern Ireland and given that it expressly empowers the Secretary of State to require action if inaction would lead to a breach, would it not therefore be the case that it is within the competence of the Executive in London, and if necessary the Parliament in London, to secure compliance with the convention rights to free speech and a good reputation?

[Lord Hope of Craighead]

The noble Lord is quite right that the powers of the Executive are controlled by convention rights. The legislative competence of the Parliament is controlled in the same way and it is open to a court to pronounce an affirmative order requiring a member of the Executive to do something. There are mechanisms, and these would be put into place through the existing devolved system. This is something that could be arranged, but that is quite different from what is being suggested here, which is, without that background and without that attempt being made, to simply legislate from this House. I underline the caution which is being properly urged on the House by the noble and learned Lord.

[Lord Bew]

My Lords, I rise to support a central point made by the noble Lords, Lord Lester and Lord Black, concerning the way in which the current arrangements contain the possibility of great unfairness and difficulty for the Northern Ireland judiciary. I am a supporter of the Defamation Act 2013 and, as noble Lords have said, I served on the Select Committee of both Houses. Put aside for a minute the wisdom or otherwise of that Act—and I do believe it is a wise Act—the problem for the Northern Ireland judiciary is that it is now stuck with the interpretation of an antiquated law, while the rest of the United Kingdom, in particular the media, will be operating fundamentally according to a rhythm set by the Defamation Act 2013.

I want to make a further point concerning the issue of forum shopping, or, as it applies in the Defamation Act, libel tourism. The Northern Ireland judiciary in recent cases—I am thinking particularly of the ruling by Mr Justice Deeny in the Sean Quinn case on 10 January 2012—has clearly set itself against what we might call forum shopping. Mr Justice Deeny argued that that key, very important bankruptcy case was not suitable for Belfast on the grounds that Mr Sean Quinn had had his being and his residence in the Republic of Ireland for the previous 32 years. That is a clear indication of the broad thinking of the Northern Ireland judiciary on this question of forum shopping. In the case of the libel law, it is the issue we used to know as libel tourism, which the Act is designed to deal with. So we know to some degree where the thinking of the Northern Ireland judiciary is on this question.

There is a sense within European law in general that forum shopping is not something to be encouraged, and yet Northern Ireland is stuck with legislation—our old libel law—which actually encourages forum shopping. I am just trying to bring home to the House that the point made by the noble Lords, Lord Lester and Lord Black, is actually a profound one. The judiciary of Northern Ireland is being placed in an extremely difficult position by the current arrangements. I understand the point made by the noble Lord, Lord Browne. I have already been approached by the Law Commission and I assure him that I will give as full evidence as I possibly can to it.

[Lord King of Bridgwater (Con)]

My Lords, I hesitate to intervene in something on which such distinguished legal brains have been brought to bear but, briefly, as a layman in these matters, I am very impressed by the arguments made by the noble Lord, Lord Lexden, and the power of the argument about the desirability of uniformity in the application of defamation laws. The noble Lord, Lord Browne, said that the advantage of devolution is that we can all make different laws. However, as a good unionist he will know that it is very desirable that as a union we stick together as closely as we can and do not make a principle of establishing every different law that we can between the different parts of the United Kingdom.

As a loyal member of the United Kingdom, I think it is desirable that the Executive of Northern Ireland should look at these matters as it seems that they are likely on some occasions to significantly disadvantage some of their own supporters, who might find themselves caught up in some very unfortunate implications. Although there is the devolved power, that power should be exercised also with respect to the position of other parts of the United Kingdom, which may find from the illustrations given by the noble Lords, Lord Black and Lord Bew, that these are difficult matters.

I hesitate to deviate from the noble Lord, Lord Lester, as he and I have a bit of history as well in some areas, as anybody will know who remembers the broadcasting ban or the amazing events when the chief constable decided to deprive female constables of the right to carry arms. The noble Lord, Lord Lester, was active during my time in that area.

At the end of the day, I am not quite clear from the exchanges that have taken place whether this is just genuine inertia or whether there is a fundamental objection within the Executive to doing this, thinking it totally undesirable in Northern Ireland, and exactly what the background to this is. However, I am prepared to accept that it is the determination of the Executive to address this, although they are moving very slowly. That is the most preferable way to go in terms of what the noble and learned Lord, Lord Carswell, said, and not to get caught by being unnecessarily accused of trying to undermine the devolution proposal. The message should go out very clearly from this House that we think this is highly desirable and almost essential to do. We look to the Executive to do it as speedily as they can and bring this matter into line, without imposing it in the amendment as proposed.

[Lord Trimble]

My Lords, the great advantage of this debate is that it has enabled a wide range of people across the House to express their views on the desirability of extending the modern defamation law to Northern Ireland. I very much hope that the Northern Ireland Executive will pay attention to the views that have been expressed here. There has been no argument presented in favour of retaining the old, outdated laws. I have not heard any and, from what has been said, I gather that nothing has been said by the Northern Ireland Executive to explain what is going on. The noble Lord, Lord Browne, referred to the decision inviting the Northern Ireland Law Commission to look at the matter. I hope that will happen quickly and that it indicates that action is being taken, rather than something being done just to fend off criticism. I hope that something happens there.

I must also attach significant weight to the hesitation and reservations that have been mentioned. The noble and learned Lord, Lord Hope, referred to what might happen in Scotland if this was to happen. That brought back to mind what happened in Northern Ireland in, I think, 1923, when on a certain measure London was indicating that it was likely to override the decisions being taken by the then Northern Ireland Ministers. I think it was suggested that they might seek to withhold Royal Assent from legislation that was going through Stormont, and the then Northern Ireland Prime Minister made a very robust response to that. It was of such a nature that the proposal disappeared and there was then no attempt to interfere with the exercise of devolved powers.

18:15

What also comes to mind in dealing with the question of the power of this Parliament to legislate on devolved matters, whether for Wales, Northern Ireland or Scotland, is that that power did exist with regard to the old Stormont under the Government of Ireland Act. I remember an article—do not ask me for chapter and verse on this—written maybe in the late 1950s or early 1960s by Francis Newark, professor of law at Queen’s University, in which he referred to this power to legislate, which was an expression of the sovereignty of this Parliament, as being a provision to be brought out only in an emergency.

That was before we had our Troubles and I rather suspect that looking at these provisions now one would see them as being applicable not just in an emergency but in other circumstances as well. The noble and learned Lord, Lord Carswell, was quite right to point out that this is something that needs consideration. It is my impression that this amendment has been put down in order to produce this debate in the hope that what is said will have an effect. However, the message should be taken back to the Northern Ireland Executive that if they are not going to act on this in a responsible way that maintains a broad measure of parity on matters—because the matters stretch across the whole of the country there is a need for parity—they are exposing themselves to the prospect of something happening.

I notice particularly the provision that the noble Lord, Lord Lester, referred to under Section 26 whereby the Secretary of State can require things to be done in order to secure adherence to the conventions. I urge the Minister to take back to the Secretary of State for Northern Ireland that there is quite strong feeling on this matter in this House and that she should seriously contemplate that power and how it might be used, even if only as leverage.

[Lord Empey]

My Lords, nobody could doubt that this debate has been very wide-ranging. The contributions from our noble and learned colleagues and others have made us realise that the matters we are discussing are of very great significance.

There are a number of easy solutions. Obviously, the Executive can act at a far greater pace than they are at the moment. However, there has been a change in the past few months with the change in Finance Ministers at Stormont. Mr Hamilton’s predecessor was very dismissive of any actions being taken in this matter; Mr Hamilton has asked the Law Commission to intervene. The Private Member’s Bill that Mr Nesbitt has before him has had his consultation and he has undertaken to share that consultation with the Law Commission. I believe he met it last week and reassured it that that would still be the case.

However, there has been a change in the pace at which this consultation is going. Originally we thought it would be brief and to the point because this issue has been consulted on time after time. However, I am now hearing stories that there is going to be a scoping study and then there will be a consultation by the Law Commission on top of the consultation that has already taken place in the Private Member’s Bill, on top of the consultation on the 2013 Bill. By my very rudimentary calculations, that would take the issue outside of the current Assembly’s mandate, which ends in 2016. What could be an easy solution could in fact simply kick the can down the road.

There is no question that those of us who have had the privilege of being in Stormont know that the issues raised by the noble and learned Lords, Lord Carswell and Lord Hope of Craighead, are important. By any stretch of the imagination, the easiest solution is for Stormont to deal with this itself. However, the noble Lord, Lord Lexden, and his colleagues point to the wider obligations of the United Kingdom Government and the issue of free speech and human rights. Of course, human rights have an international obligation, which is excluded from the devolution settlement and reserved to Westminster.

Pressure and sentiments have been expressed on all sides of this House. I hope that in their winding-up statements both the Government and the Opposition will encourage an early resolution to this, rather than simply going on and on with consultations for years. The truth is, and the noble Viscount, Lord Colville, made this point, that there are a few schoolyard bullies back in Belfast who regularly threaten people who speak their minds.

We have not mentioned today the other issue of academic publication, which is vital. Having had some responsibility for that, I know that there are many good researchers. We encourage research; indeed, we want to find even more money to put into research, only to find that the researchers could be prevented from actually publishing their findings. No one wants us to be in that place.

There is a simple solution to this, and I hope that the pressure from all sides in this House will direct us towards the solution, which is for the Northern Island Executive to encourage the Assembly to pass a legislative consent Motion. Alternatively, if that opportunity has now passed, the Assembly has the Private Member’s Bill in front of it; it could take over that Bill and introduce it very quickly. That is the course of action that I hope it will follow.

[Lord Alderdice]

My Lords, I had not intended to speak in this debate, but when I heard the speech of the noble Lord, Lord Browne, and the reservations of the noble and learned Lords, Lord Carswell and Lord Hope of Craighead, I felt that it was important to address the question of devolution and what the devolution doctrine means. It does not seem to be admissible of an entirely legal constitutional interpretation. It does not seem to be a matter of saying, “We’re devolved; we don’t have to give any kind of explanation to anyone for what we do. We can simply make arbitrary decisions”. It was not ever intended for that purpose. It was intended in general terms, and in particular in Northern Ireland, to ensure that decisions were made on a cross-community basis that ensured that the governance of Northern Ireland took into account the particular circumstances of Northern Ireland and its particular needs—domestically, within the United Kingdom, in relation to the Republic of Ireland and in relation to its relatively remote status. There are many areas where devolved government appropriately makes different decisions because, in terms of education, healthcare, transport or agriculture, the situation is different economically, practically, culturally, socially or whatever.

In certain circumstances, the notions adumbrated by the noble and learned Lords, Lord Carswell and Lord Hope, are completely correct, and their cautions in those circumstances would be well taken. The purpose of devolution is to enable that kind of differentiation. However, no reason has been given by the Northern Ireland Executive for this delay and for holding back. The noble Lord, Lord Browne, very appropriately supported his party in its decision on this matter, but even he did not give any good reasons why he should not fall in with the operation of the new Defamation Act in the rest of the United Kingdom. Nor, as far as I am aware, has there been any public debate at home in Northern Ireland, any indication that an agreement has been reached or any reasons adduced why we should not move forward—on the contrary, there has simply been an arbitrary decision that we are not going to go ahead on this. Then—and the noble Lord, Lord Browne, presented this in a very positive way—we will have this local consultation. That is fine if it is to ensure that there is real local difference, but it is not fine if the consultation kicks the issue into the long grass, and there is a suspicion that that is what it is all about.

On top of this, there are those circumstances where one can appropriately seal off Northern Ireland, as it were, to deal with particular issues. Animal health might be one. However, this issue cannot be dealt with in an isolated fashion. The whole point is that publication, whether digitally or in hard copy, cannot be isolated within Northern Ireland, and it puts everyone at risk if one tries to do that inappropriately.

I therefore want to emphasise that, although I appreciate the reasonable cautions, it does not seem to me that devolution is meant to enable the local devolved Executive to make arbitrary decisions without explanation or clarity, or decisions that are simply inappropriate to the circumstances. Then the question comes of how we deal with this. Do we deal with it by simply slamming something through this evening in your Lordships’ House and leaving somebody else to pick up the pieces—political or legal? I think not, but my noble friend Lord Trimble has pointed in the right direction. That is to say, whatever the limited remaining powers and opportunities of the Secretary of State for Northern Ireland, one of the opportunities she has is to take the messages from this Palace to the Stormont Administration and say to them, “Do you realise how strongly people in the rest of the United Kingdom feel about this? They are not terribly accepting of the notion that you are going to take a whole lot of time to deal with this. If you want to take a little time to tweak it or for your own particular reasons, that may well be acceptable”. However, I would be assured and reassured by the Minister, not if she were to say that she was going to accept this—because I am sure that she is not going to be in a position to do that—but if she were able to say to us that the Secretary of State, her right honourable friend, will take seriously what has been said in your Lordships’ House tonight, convey that to the Northern Ireland Executive at the most senior levels, and ensure that the matter is taken seriously and expeditiously.

[Lord McAvoy]

My Lords, this has been a wide-ranging debate with speeches of quality. It further justifies the existence of this place, where such a measured debate can be held. The noble Lord, Lord Lexden, cited journalists as one of the main reasons why he was bringing this forward. I could think of many other occupations that have inspired more sympathy and understanding than journalists, but I take the point that he made. On a totally irrelevant point—and it is a good job that there is not a Lord Speaker to rule me out of order—I noticed that the noble Lord, Lord Lexden, invariably sits in a seat below the coat of arms of a former stadholder of Holland, better known as William III. I am sure it is entirely coincidental, but it many ways it is quite appropriate.

This is the second lengthy discussion we have had on this issue and I am sure I will be shot down in flames with my intervention, but there we are. I will repeat the point I made in Committee—that the extension of the Defamation Act is a devolved matter. I know that the noble Lord, Lord Alderdice, made a powerful point about the nature and state of devolution as a principle, and it is a principle. Nevertheless, I place on record immediately that the Labour Opposition favour the introduction of the Act as quickly as possible and will seek assurances from the Minister as to how she intends to pursue that matter.

It is clear that the extension of the Defamation Act 2013 to Northern Ireland stands firmly in the competence of the Stormont Assembly. It is through the Assembly’s passing of a legislative consent Motion, not an Act of Parliament, that the Defamation Act 2013 will come into force in Northern Ireland. The noble Lord, Lord Lester of Herne Hill, said, if I am picking him up right—and, as a former forklift truck driver in a factory, I hesitate to cross legal swords with him—that devolution was a flawed principle. As a lay person, I do not understand the concept of attacking it on that basis. A free Parliament passed that law; a free Parliament passed devolution and a free Parliament has a right to make mistakes and will make mistakes, as the noble Lord, Lord King, knows well. The principle of devolution was passed by a free Parliament, and we in the Opposition recognise that and are very reluctant to get involved in laying down the law to a devolved Assembly. The noble and learned Lord, Lord Hope of Craighead, quite rightly mentioned the reaction in Scotland if London—in parentheses, England—tried to “dictate” to the Scottish Parliament on a devolved issue. We can have legal debates and highly principled debates here but, if we do not understand the nature of the political impact of the things that we try to do, that would be a flawed approach.

18:30

I state again clearly that we would push to see the Defamation Act 2013 extended to Northern Ireland. Those wishing to see the extension of the Act should be heartened and encouraged by the level of debate here because, quite rightly, no one has attacked the principle of the Defamation Act being applied to Northern Ireland. There will always be different laws in different parts of the United Kingdom, which is surely its strength, and devolution is part of that.

Certainly the Executive who or Assembly that completely ignored the reasoned, well made points made here in favour of pursuing this would be very foolish. It is absolutely right that the noble Lord, Lord Browne of Belmont, reminded us of devolution. It was useful to have that reminder, because it shows that local reaction to dictation from London is seen as dictation from England. The noble and learned Lord, Lord Carswell, also indicated the need for caution in going about these things. It is very important that that was local opinion being brought to bear on this debate.

Reference has been made, as it should be, to Mr Mike Nesbitt’s Private Member’s Bill. There are accusations that the consultation is being deliberately delayed. The message should go out from here: “We want to see you get on with it”. The consultation garnered over 200 responses—a large number—of which around 90% were positive. It was also mentioned that the current Northern Ireland Finance Minister, Mr Simon Hamilton, has also asked the Northern Ireland Law Commission to examine the issues surrounding defamation law within Northern Ireland. While some have expressed concerns over the timetabling, surely that shows that clear and active consideration is now being given to the extension of the 2013 Act.

Several noble Lords, including the noble Lord, Lord Bew, gave illustrations of why the introduction of the law in Northern Ireland would be good. The noble Lord, Lord Empey, confirmed that as well. If we have an influence—and I believe we do—it is that your Lordships’ House is a House of Lords that tries to influence opinion within the United Kingdom. The Assembly that and Executive who ignored that would be a very brave one, because discussion here does reflect public opinion in Northern Ireland. That also builds on the reference that the noble Lord, Lord Kilclooney, made to growing dissatisfaction and disillusionment with the Assembly. The message is clear: listen to the people and act in their interests.

[Baroness Randerson]

My Lords, I know that the concerns expressed so eloquently by my noble friends Lord Lester and Lord Lexden are shared widely across the House. That has been obvious from the debate today. There can be no doubt, either in Westminster or in Stormont, about the strength of concern felt by many noble Lords about the failure so far to reform the law on defamation.

Many organisations and individuals have also highlighted concerns about the possible effects of there being differences in the law between Northern Ireland and England and Wales. For example, the noble Lord, Lord Bew, referred to the problems for the judiciary in trying to deal with an out-of-date law and the noble Lord, Lord Black, and other noble Lords referred to the impact on the media. As we have heard, there has been an active campaign in Northern Ireland involving civil society organisations, academics, the media and some political parties. It is not quite true, as the noble Lord, Lord Pannick, implied, that nothing has happened since the Defamation Act was passed here. Things have moved on in Northern Ireland. There have been responses; they just have not been very fast or gone very far. It is not true to say that nothing has happened, because the campaign has certainly had an impact. The noble Lord, Lord Browne, outlined that there is action now in the Assembly, both by Mike Nesbitt and with reference to the Law Commission. Some scepticism has been expressed about whether this will lead to a result or whether it is just a delaying tactic by the Executive. I will not speculate on that, but I put it to noble Lords that the Law Commission is a well-respected, expert institution and if there were any intention to use the commission to avoid the issue, it seems to me that that would be likely to backfire. We have also heard about the consultation and the Private Member’s Bill brought forward by the leader of the Ulster Unionist Party, Mike Nesbitt. Undoubtedly his consultation produced some valuable responses and information. These are real changes and developments that have happened in Northern Ireland since the Defamation Act was passed here.

As I have said on previous occasions, the Government believe that the Defamation Act makes some very important improvements to the law that was previously in place. It introduces a tougher serious harm test to discourage trivial claims and a single publication rule so that a publisher cannot be repeatedly sued about the same material. It addresses libel tourism and prevents claims being brought in the English courts where the parties have little connection to this country. It provides simpler and clearer defences to those accused of defamation—for example, the creation of new statutory defences of honest opinion and truth and a new statutory defence for publications on matters of public interest. The Act also takes specific action to help encourage robust scientific and academic debate. It is important that those improvements and advantages are emphasised time and again as that is the way in which the Executive in Northern Ireland will be encouraged to develop their own legislation on this and to adopt the Defamation Act for themselves.

The noble Lord, Lord Lexden, asked some specific questions. It seems a very long time ago now but it is important that I respond to them. In response to his first question on whether the Government will secure a public explanation from the Executive of their inaction, I repeat that this is a devolved issue and it is important that we respect that devolution. However, that does not mean that the UK Government have not asked the question and would not appreciate an explanation.

[Lord Lexden]

Assuming that the question has been asked, should the House draw the inference and the conclusion that no answer has been given to the Government—no answer to the people of Northern Ireland, no answer to those in this House who have raised the question, and no answer to the Government either?

[Baroness Randerson]

It has been said several times this afternoon—more times than I can count—that the Northern Ireland Executive have not given any explanation. Of course, the most important group to which the explanation is owed is the people of Northern Ireland.

The second question asked by the noble Lord was whether we would establish what the Executive intend to do. I repeat that it is for the Assembly and not the Government to hold the Executive to account, and it is for the Assembly to seek an explanation. That goes along with my comment that the people of Northern Ireland are those to whom the Executive should be explaining themselves in the first instance.

In response to the third question put by the noble Lord, Lord Lexden, we have of course set out to the Executive what we see as the benefits of the Act and we will continue to discuss the issue. When my noble friend Lord McNally was Minister for Justice, he wrote to the Executive commending the Act, and I am absolutely sure that the Executive will in due course become aware of our debate this afternoon.

Therefore, the Government have been active in encouraging the Executive to consider the need for change. Prior to the introduction of the Defamation Bill before Parliament, there was contact at official level to establish whether the Executive wished to seek the approval of the Assembly to a legislative consent Motion. Following completion of the Bill’s passage, as I said, my noble friend Lord McNally wrote commending it to the Executive.

[Lord Lester of Herne Hill]

My noble friend has emphasised the importance of the Law Commission in Northern Ireland. Can she correct my misunderstanding, if that is what it is? My understanding is that the Northern Ireland Law Commission consists of a part-time commissioner and a chief executive, and that is it. Am I wrong about that?

[Baroness Randerson]

I am not aware of the exact size of the Law Commission. However, I am aware that the Law Commission’s reputation is not affected by any issue regarding its size, in that it is clearly a body with a good reputation. If the commission is as small as my noble friend indicates, that might explain why it will take it some time to consider this issue. However, I am not able to give a precise answer to his question.

I wish to remind noble Lords that the civil law of defamation is of course a devolved matter, and under the Sewel convention decisions on whether legislation in transferred areas should apply to Northern Ireland usually fall to the devolved Administration. A number of noble Lords have set out why they believe the Government should consider breaching the Sewel convention. I urge them to consider the wider ramifications of doing so for our relations with all the devolved legislatures in the United Kingdom. I welcome the words of the noble and learned Lords, Lord Carswell and Lord Hope, in this regard. It is important that we respect devolution. It is not just in respect of Scotland that we should be wary of breaching the Sewel convention; I believe that it would be destabilising in Northern Ireland if we were to pick and choose which bits of devolution we decided to observe. My noble friend Lord Lester has eloquently explained the weaknesses of our non-federal system of devolution, but I urge noble Lords who are of the mind that we should breach the Sewel convention to look at this from the viewpoint of the nations of the UK. We should be considering what it looks like from Scotland, Wales and Northern Ireland if we pick and choose which aspects of devolution we observe.

18:45

I turn now to the comments of the noble Lord, Lord Black, who asserted that this was a constitutional issue and hence not devolved. I fear that the problem cannot be defined out of existence in this way: the issue is clearly a devolved one, as part of the civil law. The fact that it raises significant rights issues does not change that. We recognise the concerns involved, but we cannot abandon the principle of devolution just because we deplore the decisions of the devolved Administration concerned. I will return to that in my response. I say also to the noble Lord, Lord Black, that the Data Protection Act is a reserved matter and not devolved, so the Assembly can only legislate with our consent. We carefully consider the content of Assembly Bills in the reserved field.

My noble friend Lord Lester raised issues connected with human rights, namely the power in Section 26 of the Northern Ireland Act 1998. I urge noble Lords not to assume that the previous law breached the European Convention on Human Rights. It might not have been good law, but it did not necessarily fail on the human rights test. I believe that the new Act will be very beneficial; but that does not mean that the previous legal framework necessarily was in breach of international standards on freedom of expression. Even if that were the case, the Secretary of State does not have any general power in the Northern Ireland Act 1998 to make the Assembly or the Executive do something on human rights grounds. Under Section 26(2), she may order a Northern Ireland Minister to do something to implement international obligations. However, if noble Lords refer to Section 98 of the same Act they will see that “international obligations” means,

“any international obligations of the United Kingdom other than obligations to observe and implement Community Law or the Convention rights”.

I turn now to other points made in the debate. As we have heard this evening, there is considerable activity in Stormont and some reason to be optimistic about the chances of legislative change. To the noble Lord, Lord King, I say that the issue we face is to decide at the start what is to be devolved and then make sure we adhere to that decision; otherwise, we are picking and choosing and chopping and changing. It may or may not be appropriate to have devolved the issue of defamation, but it is devolved and we need to observe that now. The reason why I say that it might or might not be appropriate is that, as the noble Lord, Lord Alderdice, has pointed out, we cannot seal Northern Ireland off on this issue. When one analyses the devolution settlements, it is often the case that aspects have been devolved which clearly involve an interaction with neighbouring countries. However, once it has been decided, we have to observe that.

Devolution is sometimes frustrating, as the noble Lord, Lord McAvoy, said. The noble Lord, Lord Alderdice, noted earlier this afternoon that social change comes slowly in Northern Ireland. It is important to bear in mind that although change sometimes comes slowly, it does come in the end. Devolution means that there are different laws in different parts of the country. We must respect that, but that does not mean that we are not entitled to make our views known. I believe that the Government have made their views very clear on this issue. Noble Lords have certainly made their views known today, and I hope that they have been heard by the Northern Ireland Executive.

I can tell the noble Lord, Lord Trimble, that the Secretary of State takes a close interest in our debates on this Bill. I have absolutely no doubt that she will convey the content of our debate and the views expressed today to Members of the Northern Ireland Executive. I know that she is in very frequent contact with both the First Minister and the Deputy First Minister and that she will wish to pass on the views expressed here today.

[Lord Kilclooney]

Very briefly, I agree with everything that the noble Baroness has said about caution in dealing with the devolved Assembly. She has mentioned the Deputy First Minister, but what has been ignored in this debate is that he is in fact a Sinn Fein Deputy First Minister. Sinn Fein is the second largest party in the Assembly and has absolutely no time or respect for the House of Lords. To think that it is paying any attention to what is being said in this House would be misleading.

[Baroness Randerson]

However, as was pointed out earlier this afternoon, Sinn Fein has a considerable interest in promoting free speech in Northern Ireland. I believe that my noble friend Lord Lester referred to the noble Lord, Lord Pannick, in that regard, as the two of them had worked together in relation to the broadcasting of Sinn Fein. It has an interest in the issue, but that probably goes beyond our debate.

I welcome the continued efforts made by the noble Lords, Lord Lester and Lord Lexden, on this issue. I am pleased that we have been able to continue our debate on this matter but regret to say that the Government are unable to support the amendment. I therefore urge the noble Lord to withdraw it.

[Lord Lexden]

My Lords, this has been a tremendous debate and I am deeply grateful to all those who have taken part in it with such vigour and authority. I reassure the noble Lord, Lord McAvoy, that it is purely a matter of coincidence that I so readily sit under the arms of the House of Orange. I must say at once that the views of certain members, particularly of the monarch of the House of Orange in the 17th century, played no part whatever in the views that I have formed.

The noble and learned Lord, Lord Carswell, in his particularly powerful speech spoke for us all when he urged the Executive to adopt the Defamation Act, and to do it quickly. Our debate was also enriched by his cautionary words, and those of the noble and learned Lord, Lord Hope, on the Sewel convention. Clearly that needs to be borne carefully in mind. As my great friend, the noble Lord, Lord Empey, said, the Government must be mindful of their wider obligations. That is the note on which we need to end.

My final question is this: if the Northern Ireland Executive fail to pursue this matter properly, what further action will the Government take? That is the note on which we should end. I have constituted myself into a kind of watching brief on this matter and I shall seek opportunities, by one means or another, to raise this fundamentally important issue from time to time in the House. I hope that we shall be able to note progress: it is extremely important that we keep a watching brief on it. On that note, I beg leave to withdraw the amendment.

Amendment 3 withdrawn.

Amendment 4

Moved by

[Lord Trimble]

4: After Clause 25, insert the following new Clause—
“Election of the First Minister
(1) The Northern Ireland Act 1998 is amended as follows.
(2) Omit sections 16A (appointment of First Minister, deputy First Minister and Northern Ireland Ministers following Assembly election, 16B (vacancies in the office of First Minister or deputy First Minister) and 16C (sections 16A and 16B: supplementary).
(3) Before section 17 (Ministerial offices) insert—
“A17 First Minister and deputy First Minister
(1) Each Assembly shall, within a period of six weeks beginning with its first meeting, elect from among its members the First Minister and deputy First Minister.
(2) Each candidate for either office must stand for election jointly with a candidate for the other office.
(3) Two candidates standing jointly shall not be elected to the two offices without the support of a majority of the members voting in the election, a majority of the designated Nationalists voting and a majority of the designated Unionists voting.
(4) The First Minister and deputy First Minister—
(a) shall not take up office until each of them has affirmed the terms of the pledge of office; and(b) subject to the provisions of this Part, shall hold office until the conclusion of the next election for First Minister and deputy First Minister.(5) The holder of the office of First Minister or deputy First Minister may by notice in writing to the Presiding Officer designate a Northern Ireland Minister to exercise the functions of that office—
(a) during any absence or incapacity of the holder; or(b) during any vacancy in that office arising otherwise than under subsection (7)(a);but a person shall not have power to act by virtue of paragraph (a) for a continuous period exceeding six weeks.(6) The First Minister or the deputy First Minister—
(a) may at any time resign by notice in writing to the Presiding Officer; and(b) shall cease to hold office if he or she ceases to be a member of the Assembly otherwise than by virtue of a dissolution. (7) If either the First Minister or the deputy First Minister ceases to hold office at any time, whether by resignation or otherwise, the other—
(a) shall also cease to hold office at that time; but(b) may continue to exercise the functions of his or her office until the election required by subsection (8). (8) Where the offices of the First Minister and the deputy First Minister become vacant at any time an election shall be held under this section to fill the vacancies within a period of six weeks beginning with that time.
(9) Standing orders may make provision with respect to the holding of elections under this section.
(10) In this Act “the pledge of office” means the pledge of office which, together with the code of conduct to which it refers, is set out in Annex A to Strand One of the Belfast Agreement (the text of which Annex is reproduced in Schedule 4).””

[Lord Trimble]

My Lords, we have reached the final straight and I shall try to get round the track as quickly as possible, and not delay those who are coming to debate other matters later.

I tabled Amendment 4 for the Committee, but unfortunately when it sat I was out of the country and unable to express my views on that occasion. However, I am delighted to see that the noble Lord, Lord Empey, made an excellent exposition of the issues involved, so I will not go back into that history. I want to focus more on what might be coming up in the future. Before moving on to that, it is important to remind noble Lords of the position as it was under the Belfast agreement—the Good Friday agreement—and as it was changed later, not as part of the St Andrews agreement but in some other way.

The key thing for noble Lords to bear in mind about the provisions in the Good Friday agreement is that there was a provision for the joint election of First Minister and Deputy First Minister, which means that a ticket had to be formed. There had to be an agreement on who would stand. A six-week period for this to happen was provided, but because it was a joint ticket and there were six weeks in which to do it, there was the opportunity for the largest party on the nationalist side and the largest party on the unionist side to interact; they had to come to an agreement. There were opportunities for views to be expressed about who might be the nominees.

In 2006 we had provisions that swept that away and provided for a mechanistic provision whereby the various provisions rather obscurely expressed in the legislation would apply, and it would be possible to identify immediately who should be First Minister and Deputy First Minister. This was to be done within a matter of days; I think that a week was provided for it. It was to go through automatically. I will not discuss what the motivations for that might have been.

I will look at the future and pick up the very important point made by the noble Lord, Lord Kilclooney, that because of the way in which the Administration has carried on there is widespread dissatisfaction and disillusionment, and, in my interpretation of what he said, that is likely to have an impact when we next have an Assembly election. Participation rates in Assembly elections have been dropping. They will continue to drop. The drop will be felt most among people who feel dissatisfied about inaction. There are those who are feeling sore because they believed in the Democratic Unionist Party when it attacked the agreement and who then felt disgruntled after it decided that it was going to implement the Belfast agreement with merely cosmetic changes, as well as the significant change in identifying the First Minister and Deputy First Minister.

This opens up a very serious possibility, which I think that we need to be on guard against. It is possible that, as a result of declining participation, especially by working-class unionists, we will find that the unionist vote drops to a point where Sinn Fein becomes the largest party. The DUP will do what it has done before, running a campaign that says, “Vote for us, or else you will get a Sinn Fein First Minister”. It has done that several times—so often that it is not likely to carry much weight anymore. People can see that they were given this argument and then saw the results from the elections, which showed that the argument had no substance to it. So I am afraid that “Wolf” has been cried too often on this.

19:00

I am very concerned that we could find a situation where, because of the fall-off, particularly in working-class unionist votes, a Sinn Fein First Minister is automatically catapulted into office in a matter of days, with no opportunity for people to stop and think or consider where they have got to. Then you will find that working-class unionists who did not vote will express themselves in other ways. People talked earlier about things that might destabilise Northern Ireland—well, look at this. The possibility is there. That is what I want to draw to the attention of the Minister and the House. Because of the structures put in place in 2006, there is a very real danger looming.

One will do what one can to avoid it, by pointing out that in Assembly elections it is important for people to vote down the ticket and express their preferences as they wish, but nevertheless to vote for a wide range of candidates so as to minimise the impact that there might be of this. It would be better still if people could be persuaded to vote—but I am afraid that persuading people to vote is not all that easy in some circumstances. We have all encountered that. That is particularly the case if, as is likely, the Northern Ireland Executive continue to deal with issues with the same degree of expedition with which they have dealt with the Defamation Act. I hope that tomorrow our Select Committee on the Inquiries Act will sign off a report that will draw attention to another extremely dilatory procedure by the Northern Ireland Executive and Assembly whereby they have wasted two years on what they said was a hugely important matter, and wasted them on going through completely unnecessary procedures. But that is just giving a little taster of something to look at when that report is published.

That is the sum of what I wanted to say this evening. I have said it as quickly as I can and I shall listen with interest to whatever the Minister might say.

[Lord Empey]

My Lords, I made the point in Committee that this was an imposed process, without consultation. It offended every point that has been made in this House this afternoon in respect of respecting the settlement and tore up a key part of the settlement that was voted on by a referendum. It was literally a backstairs deal, in the worst tradition of backstairs deals, so let us not give it any credibility that it is some kind of dramatic move forward. It has created a sectarian headcount format for elections even though there is no difference in the powers that can be exercised by the First and Deputy First Minister. They both have the same powers and there is no hierarchy in that regard.

I would say to the Minister that, when she stands up to defend the devolution settlement, she will understand that it rings a bit hollow to some of us when it was the Government who broke that settlement and did so without consulting those who made the settlement—and, it must be said, the noble Lords, Lord Trimble and Lord Alderdice, and others who were there at the time to make the deal. There is a Scottish saying—the noble Lord, Lord McAvoy, will know this—“Eaten bread is soon forgotten”. Had it not been for people like the noble Lords, Lord Trimble and Lord Alderdice, and others, there would be no Assembly for these people to sit in. A lot of people take it very badly that a deal that was done—a referendum that was passed—was swept aside in some kind of backstairs deal without even the courtesy of a phone call to say, “This is the line we are proposing to take”. Some of us learnt about it when we saw the draft of the 2006 St Andrews agreement Act. That is why, when I hear people defending the principle of devolution, it rings a bit hollow for some of us who have been around these things for some time.

I have, however, made my point. I support the noble Lord, Lord Trimble, in his amendment. It is that sort of thing that has been undermining. The potential for a six-week negotiation was the reason that Sinn Fein went to Tony Blair to get the thing changed; it was afraid that, if it put forward a particular candidate, that person would be negotiated out. It wanted certainty that whoever it was would go in. That coincided with the political changes that meant that, on the unionist side at that stage, it was much more convenient not to have to put your name on a ticket with a Member of Sinn Fein to get elected as First and Deputy First Minister respectively. It just happened to suit people at that time.

There is no noble principle involved in the 2006 amendment. It was, by any stretch of the imagination, a dirty deal.

[Lord Kilclooney]

My Lords, I do not want to be preaching more caution or to be more alarmist, but I find myself in total agreement with the analysis by the noble Lords, Lord Trimble and Lord Empey, of the situation within the Northern Ireland Assembly and the appointment of the First Minister and Deputy First Minister, and the way in which this could be received by the community at large in Northern Ireland.

With the possible decline of unionist—I use the word with a small “u”—interest in the future of the Northern Ireland Assembly and with the possible lower turnout by unionist voters, under the new system that was introduced in St Andrews we could have a Sinn Fein First Minister in Northern Ireland for the first time. Can your Lordships imagine the reaction of what has been termed earlier in this debate the loyalist working class who had not bothered to vote and then find a former battalion commander of the IRA as their First Minister? I fear it would bring about the total collapse of the Northern Ireland Assembly.

[Lord Browne of Belmont]

My Lords, this is an issue that the noble Lords, Lord Trimble and Lord Empey, have returned to on several occasions in the past, and I am sure that they will keep doing so in the future. However, as I pointed out in Committee, no other ministerial appointments, with the exception at present of the Justice Ministry, require cross-community support. It seems inappropriate that this requirement should be applied to the appointment of the First Minister and Deputy First Minister.

In Northern Ireland we are currently experiencing the longest period of stable government in a generation. What is detailed in the amendment simply moves us backwards and returns us to the position that existed in Northern Ireland pre-St Andrews. When we look back at Northern Ireland under the devolved institutions prior to the St Andrews talks and compare it with the stable Province we now have as a result of an extended period of devolved government since 2007, we see a remarkably different country.

As noble Lords will be aware, and as I mentioned in Committee, there is a legal requirement placed upon the Northern Ireland Assembly to provide a report on how the Assembly structures can be improved. My party, the Democratic Unionist Party, would be reluctant to pre-empt the work ongoing in the Assembly to review its functions and those of all the political institutions by supporting amendments such as this. It is my firm belief that it is inappropriate to simply unpick some parts of the relevant legislation. This amendment would simply divert attention from the important issues and challenges that Northern Ireland and its politicians face every single day. If changes are to be made we must look at the totality of the system of devolved government.

[Lord Alderdice]

I am encouraged by some of the things the noble Lord has said. I would be encouraged even more if he was able to give an undertaking that his party will also adhere to its commitment to this way of forming the First Minister and Deputy First Minister portfolios whatever the outcome of the Assembly elections in 2016. It would be a real reassurance not only to this House but to others if he was able to give an undertaking that his and his party’s commitment to this way of working is not only for when they have the First Minister but for whichever party has the First Minister.

[Lord Browne of Belmont]

I am not in a position to speak for the Executive or for my party in the Assembly. However, I am sure that they would wish to progress in a way that they believe will serve the people of Northern Ireland best.

I oppose the amendment and I hope that we will be able to proceed with the elections in Northern Ireland. Unlike the Ulster Unionists, I am not pessimistic about the outcome; I am very optimistic.

[Lord Bew]

My Lords, I support the amendment. It is not the least of the distinctions of the noble Lord, Lord Trimble, that he is a former First Minister of Northern Ireland. He is not the only former First Minister of Northern Ireland in this House, but he is the only one who can say that he was supported by a majority of both communities in the process of election. We have lost something in the structures of the Assembly and the way it operates simply by the absence of that process and that type of affirmation for the First Ministership.

However, I do not want to dwell on the past. A number of points have been raised today about the future and possible destabilising trends—some of which might or might not eventuate—and it is important that we do not sleepwalk into this possible crisis with the Executive and the institutions. The noble Lord, Lord Alderdice, asked a profound question, and one way of considering the implications of the question is that some of the parties, at least, to the current arrangements may no longer have precisely the same investment in those arrangements that they once had. If possible, there should be a dialogue or discussion in the Assembly with a view always to maintaining the stability of Northern Ireland, because there is a possibility, for the reasons mentioned by the noble Lords, Lord Kilclooney and Lord Trimble, that we are sleepwalking into a crisis with these institutions. The noble Lord, Lord Browne, is right: these institutions have delivered a form of stability for some years now, but that does not mean that they will continue to do so. I would like reassurance that the Government are keeping the matter under review and are not sleepwalking.

[Lord Maginnis of Drumglass (Non-Afl)]

My Lords, first, I apologise for intervening at this late stage and for not having been here, as one might have expected, at the beginning of the debate. I was detailed to find out some information about a serious event that took place in 2006. I have only just received the information that the person who was suspected of the Regent’s Park bombing many years ago was arrested by the Metropolitan Police some time past and was able to pull out of his pocket a letter dated 2006 which said that he would no longer be deemed a terrorist. Over the past few months, a court case, held virtually in secret, has revealed that 187 terrorists were given that letter in 2006, saying that, although they were terrorists, they would no longer be deemed to be so. How can we vote with any assuredness on this Bill when we discover belatedly that, subsequent to the St Andrews agreement, this sort of behind-backs, underhand deal was carried out by the Government at that time?

19:15

[Baroness Smith of Basildon]

My Lords, this debate has been interesting, as was the one in Committee, although that was without the wisdom of the noble Lord, Lord Trimble; I say his name carefully. We have benefited enormously from the experience of noble Lords here this evening: this is the value of debates in your Lordships’ House on this issue.

Clearly, we all want to ensure that governance in Northern Ireland is based on a strong cross-community partnership. I readily accept that there is no system for electing the First and Deputy First Ministers that we all would consider perfect. Indeed, the current system may not be perfect. Let us not forget where Northern Ireland had been during the four and a half years leading up to 2006. It was a major step forward to have the institutions up and running again after being suspended for that time. That was the purpose of the St Andrews agreement, the ongoing discussions which came from it and the legislation subsequently passed by your Lordships’ House and the other place. For three and a half of those four and a half years I was a Minister in Northern Ireland, and it was a difficult, tense time, as noble Lords here tonight will know better than I. When I flew out to Belfast on my first day, I was told I should expect to be a Minister for about six months. When I left three and a half years later, the Assembly was still not restored. It was a very serious and difficult time.

Since the St Andrews agreement changed the arrangements, we have had the longest period of stable government in Northern Ireland in a generation. That is not to be underestimated or dismissed lightly. Many positives proceeded from that agreement. I understand why this amendment has been brought forward and the reasons for it, but it takes apart one part of the agreement that was agreed in your Lordships’ House and the other place through legislation. We have heard very eloquently from the noble Lord, Lord Trimble, why the popular 1998 agreement for electing First Ministers and Deputy First Ministers required the direct involvement of the Assembly. He and others welcomed that very clear demonstration of cross-community support. If we were to return to the pre-St Andrews system at this stage, it would have to be done by cross- community consensus and agreement, and I really do not think that we have achieved that at present. I understand the reason for tabling the amendment, but at the moment we do not have the agreement and cross-community support necessary to achieve it. We have to understand the reasons why that came about.

In this debate and others that we have had today, wider issues have been raised by several noble Lords, including the noble Lords, Lord Bew and Lord Trimble, about the disengagement of local people in Northern Ireland. We have talked about it in terms of the Assembly, but there is also the wider political context. That is not peculiar to Northern Ireland, but I understand the concerns about it relating to Northern Ireland. I think that the noble Lord, Lord Bew, referred to it as a destabilising trend. All sides of your Lordships’ House want confidence in the system and the Assembly. We want the stability of the Assembly to be entrenched and enhanced. That will not be done just by the institutions or the apparatus of democracy; it is far deeper than that. Perhaps there may be an opportunity for further discussion in your Lordships’ House—I do not think that tonight is the time—to address those issues to bring the entrenched stability that I think we all want.

We do not support the amendment at this time, while understanding the reasons why it has been proposed.

[Baroness Randerson]

My Lords, I want to preface my response by referring specifically to comments made by the noble Lord, Lord Maginnis. Noble Lords have been in the Chamber this afternoon and may not be aware that I have issued a Written Statement that deals with that issue. I do not feel that it is appropriate to try to tackle it in this Chamber at this time, because it is not part of this debate.

I turn to the amendment. The noble Lord, Lord Trimble, will be aware that the Government opposed amendments on this issue both in Committee in the other place and in Committee in this House. Despite the eloquence of the noble Lord, Lord Empey, we retained our opposition here. Again, we will maintain that position to this amendment on this occasion.

I recognise the noble Lord’s views on the matter, and he clearly has a close personal interest in the issue. However, as the noble Baroness, Lady Smith, highlighted in Committee and again just now, the St Andrews agreement, which led to this mechanism, ultimately led to the re-establishment of devolved government in Northern Ireland. It would be, to say the least, an unhelpful step if we were to start to unpick certain aspects of it.

I acknowledge the noble Lord’s views on whether the revised method for electing the First and Deputy First Ministers at Stormont was discussed at St Andrews. It is certainly the case that the noble Lord, Lord Empey, made that point in Committee. However, the revised method was enacted through the legislation which followed the St Andrews agreement in 2006. That legislation was endorsed and passed through this House. Whatever the merits of the amendment in the abstract, it would command limited support in Northern Ireland. Very probably, it would get virtually no cross-community support. It would provoke serious opposition and potential instability.

The current Northern Ireland settlement is imperfect, but it is what we have. I welcome the support of the noble Baroness, Lady Smith, and her party on this issue. Her words echo my thoughts.

The noble Lord, Lord Bew, made some very important points. In response, I would say that the Government are acutely aware of the tensions and difficulties in Northern Ireland and within the Executive. That is one reason why we do not want to destabilise the settlement either by changing or attempting to change the mechanism for selecting the First Minister and Deputy First Minister or by involving ourselves in the devolution settlement on issues that are devolved. It is important that we do not disturb the situation. That does not mean that we are sleepwalking, or allowing Northern Ireland to sleepwalk, into any unravelling of the current situation. I agree strongly with the views of the noble Baroness. With every month that passes, the institutions of Northern Ireland become more firmly established in the country and as part of the politics, and it becomes less likely that they will hit the sort of problems that occurred soon after devolution was established.

As I highlighted in Committee, reopening old debates of this nature is liable to create a distraction that would shift the focus of Northern Ireland politics away from the pressing challenges that Northern Ireland faces—issues such as community division and economic renewal. I hope the noble Lord would agree that those issues should take precedence at this time and, in doing so, will be willing to withdraw his amendment.

[Lord Trimble]

I thank noble Lords who have taken part in this little debate, which has gone on longer than I had hoped. As the noble Lord, Lord Browne of Belmont, said, these are issues that I have dealt with before. I remember certainly the first time I dealt with them in 2006. I divided the House, and I was very happy to have the support of the noble Lord, Lord Browne of Belmont, in doing so. He has changed his position somewhat since then. I merely mention this from the point of view of spreading news on the matter.

I note the statement of the noble Baroness, Lady Smith of Basildon, who said that if one was to make a change, the change would require cross-community support. She is right. That is how the agreement was made. The agreement was made based on a broad support —a “sufficient consensus” as we called it—and the majority of unionists and the majority of nationalists supported it in the talks. If you are going to make a change to it—although no express provision has been made as to how changes should take place—then the noble Baroness is quite right to say that the changes would be legitimate if they were made by the same procedure by which the agreement was made in the first place.

That is not what happened in 2006. I was finding it somewhat difficult to follow what the Minister was saying at some points, but I think it is absolutely clear that the change to the identification of First and Deputy First Ministers was not actually in what is called the St Andrews agreement. It came into the legislation to implement it, but it only popped up at the last minute without any coherent explanation of where it came from, and with no indication that there was the sort of cross-community support that ought to have been sought for it. People say going back would be a bad thing to do. The Minister says that going back would have limited support in Northern Ireland. The original agreement had a referendum, and it was supported by an overwhelming majority; that referendum is ignored. It has been said many times in this debate that we should not upset the devolution settlement. The devolution settlement was upset, peremptorily. That is undeniable. Consequently this is something to which we will return, until we get things sorted out on this. We have at present a bad system which may have bad consequences; I hear what the Minister says about not sleepwalking and I hope that that is the case. We shall see. Let us make sure that we do what we can to ensure that there is no sleepwalking. I think I can guarantee the Minister and the Northern Ireland Office that we will return to this aspect of this issue, to try and ensure that people are on top of this. We have a rotten system which may turn round to bite us. This is not the time to press the matter further. I beg leave to withdraw the amendment.

Amendment 4 withdrawn.

Social Welfare Law

Tuesday 25th February 2014 Lords Chamber

Question for Short Debate

19:30

Asked by

[Lord Low of Dalston]

To ask Her Majesty’s Government what is their response to Tackling the Advice Deficit, the report of the Low Commission on the future of advice and legal support on social welfare law in England and Wales.

[Lord Low of Dalston (CB)]

My Lords, I am very pleased to have this opportunity of introducing the report of the commission, which I was honoured to be asked to chair, on the future of advice and legal support on social welfare law in England and Wales. I am grateful to all those who have put their names down to speak—it is quality more than quantity tonight. I am particularly honoured that the right reverend Prelate the Bishop of Peterborough should have chosen to make his maiden speech in this debate and I am sure that we are all looking forward to what he has to say with eager anticipation. I am also looking forward to hearing what the Minister has to say with eager anticipation. I must place on record my appreciation of the contribution of my fellow commissioners and our hard-working secretary and researcher, Richard Gutch and Sara Ogilvie, for this was truly a team effort and we had a brilliant team.

As part of the Government’s austerity measures, there have been significant reductions, estimated by the Government to save £89 million a year, in the scope of legal aid for issues of social welfare law. These are for things such as benefit debt, employment, immigration, education and many aspects of housing. This is compounded by reductions in local government funding for advice and legal support, which are likely to amount to at least a further £40 million by 2015. Some local authorities are cutting virtually all not-for-profit provision in response to the cuts in funding from central government approaching 40% by 2016.

Services are closing or retrenching on a significant scale, yet the demand for advice and legal support has never been greater and can only grow further as the Government’s welfare reforms are rolled out. I could tell your Lordships harrowing tales of the serious consequences for the advice sector, and therefore for individuals needing support, of the almost complete removal from scope of welfare benefits advice. However, partly because of time and the need for brutal summary, I prefer to concentrate in a more dispassionate way on what we are suggesting to address the problem. I do not think that anyone doubts that the austerity measures, however necessary, have left us with a real problem.

We were under pressure to recommend simple reinstatement of the cuts from two quarters: from lawyers, of course, who thought that our recommendations focused too much on the front end of the legal journey and insufficiently recognised the importance of legal interventions for resolving social welfare problems; and from those who resist any change in patterns of funding for public services, such as the introduction of the market. However, in a situation where we have to accept that there will be less money for legal help and representation, we were anxious to develop a fresh approach which, through measures to reduce the need for advice and legal support in the first place, developing more cost-effective approaches to service provision and drawing on a wider range of funding sources than hitherto, ensured that people could still meet a lot of their needs through a greater emphasis on information and advice, while ensuring that there is at least some money available for legal help and representation.

Rather than recommending simple reinstatement, we preferred to think in terms of a continuum of provision including public legal education, informal and formal information and general advice—often provided by local authorities—specialist advice, legal help and legal representation. We took the view that it was important to tackle the whole of this continuum in an integrated fashion and that legal aid should be seen as just one part of it, not in isolation as a stand-alone funding mechanism. We do not underestimate the importance of legal interventions for solving people’s problems. Sometimes it takes a lawyer to bring a recalcitrant defendant to the table. However, with cuts of the order of £100 million a year in legal aid, it seemed clear to us that the advice end of the spectrum was going to need to take more of the strain. The more we can do at the beginning of the process, we reckoned, the less we may need to do at the end. However, we are absolutely clear that there needs to be provision for legal help and representation at the legal end of the spectrum.

Of course, the advice sector is not beyond improvement. There is a general perception that it is too fragmented and could benefit from rationalisation from closer working together and a greater spirit of collaboration. We would also like to see the national umbrella bodies, such as Citizens Advice and AdviceUK, working more closely together and sharing their resources and experience more widely. AdviceUK told us about a system in Portsmouth based on what it calls “systems thinking”. It moved from a system that involved waiting for two hours, seeing a volunteer for 20 minutes then making an appointment to see a specialist—altogether potentially involving 13 steps before seeing an adviser who would help you—to a system that dispensed with triage or rationing, put specialist staff in the front line, with expertise in one area but able to pull in others as necessary rather than simply referring on, enabling you to see someone within 20 minutes. It has shown that approaches such as this can achieve savings of at least 30% and sometimes, as in its work in Nottingham, as much as 95%. Although it may seem like a Rolls-Royce service it can end up costing less in the long run.

Our report contains 100 recommendations but the six most important are: first, that public legal education should be given higher priority, both in school alongside financial literacy and in education for life, so that people know their rights and where to go for help. Secondly, though there are certainly factors making for increased demand in the welfare reforms and other austerity measures, we are convinced there are also ways of reducing the need for advice and legal support in the first place. For example, the DWP could be incentivised to get more decisions right first time by being required to pay costs on upheld appeals. Thirdly, we suggest ways in which courts and tribunals could be made to work more efficiently. Fourthly, the next UK and Welsh Governments should develop national strategies for advice and legal support, preferably with all-party support and there should be a Minister with responsibility for advice and legal support within the MoJ with a cross-departmental brief for leading the development of the strategy. Fifthly, local authorities or groups of local authorities should coproduce or commission local advice and legal support plans with the local not-for-profit sector and commercial advice agencies. Sixthly, we estimate that a further £100 million a year is required to ensure a basic level of provision of information, advice and legal support on social welfare law.

We are calling on the next UK Government to provide half of this by establishing a 10-year—to enable long-term planning—national advice and legal support fund for England and Wales of £50 million a year to be administered by the Big Lottery Fund. We aim to spread the load so that no part of government is asked to bear too great a burden. We therefore propose that the fund should be financed by the MoJ, the Cabinet Office and the DWP, as the main creator of the need for advice and legal support. Ninety per cent of the fund should be used to fund local provision in line with local plans, with 10% for national initiatives. The Big Lottery Fund should allocate the 90% share of the national fund to local authority areas, based on indicators of need using joint strategic needs assessments and health and well-being strategies. We have also identified other national and local statutory, voluntary and commercial sources of funding that we believe could contribute an additional £50 million a year to match the national fund.

Greater use needs to be made of new technology for the section of the population that is increasingly digitally literate. This will free up resources to enable more face-to-face, in-depth and intensive support to be targeted at those most in need. In addition to the current range of specialist lines, there should be a one-stop national helpline providing a comprehensive advice service to the general public and able to act as a safety net for those who have nowhere else to go.

Although I said that we were not arguing for a simple restoration of the cuts, that does not mean that we would not like to see any of them reversed. We would like to see funding reinstated for housing cases, for instance, so that people can get help before they reach crisis point and face imminent eviction. The scheme for the funding of exceptional cases under Section 10 of the LASPO Act needs to be reviewed, because as things stand it is just not working. This was intended to act as a safety net for funding cases that would now be out of scope of legal aid but where either human rights or EU law required the provision of legal aid. During the passage of the LASPO Act, it was estimated that there would be between 5,000 and 7,000 of these cases a year, but a Parliamentary Answer on 11 February this year stated that the total number of applications so far was only 1,030, of which only 31 had been granted.

In summary, our strategy is to suggest ways of reducing preventable demand, simplifying the system and enabling it to work better, putting more weight on the advice end of the spectrum and suggesting ways in which it could work more efficiently. We believe that by investing in a wider range of information and advice, with some legal help and representation, many of the undesirable consequences of the LASPO Act can be avoided and we will actually end up saving money. I hope very much that the Minister will find not only that there are things in our report with which he can agree but that it makes a useful contribution to the stabilisation and rehabilitation of our system of advice and legal support on social welfare law.

19:41

[Lord Bach (Lab)]

My Lords, I congratulate the noble Lord, Lord Low, on securing this important debate. As he said, he has attracted an impressive list of speakers, not least the right reverend Prelate the Bishop of Peterborough, whose maiden speech we are looking forward to hearing. I hope very much that the Minister can respond to the debate in a positive way.

In my view, the Low commission report is the first positive, the first piece of good news and the first chink of light, if I may call it that, that we have seen for some time in this field. Considerable congratulations are owed to the noble Lord himself and to his fellow commissioners on producing this excellent report and on perhaps cheering us all up a little bit. I hope that the House will forgive me if I pick out one of the noble Lord’s fellow commissioners. Steve Hynes, director of the Legal Action Group, played an important part in setting up the commission, and the leading role he has played in the field of social welfare law over many years has, in my opinion, been outstanding.

It is important to have some good news because for years now the position has looked bleak and depressing, getting worse month after month. The truth is that social welfare law has been decimated over the past four years. That is because the Government seem to have decided as a matter of policy that access to legal advice for some people—often the poor, often the disabled, often the acutely vulnerable—in order to deal with those areas of law that affect everyday life, such as housing, debt, welfare benefits, employment and immigration, is not even a necessity, let alone a priority. This government policy is seen most obviously in LASPO itself and its implementation since 1 April last year.

However, the decision to downgrade this part of our legal system was taken well before 1 April 2013. How else can the following information set out in paragraphs 1.10 and 1.11 of the report be explained? I quote:

“Eligibility levels and the number of cases in social welfare law then increased between 2007 and 2010. This was due to three factors—the recession, which meant more people were potentially eligible for legal aid; a decision by the government to bring more people into scope; and an increase in the budget to allow more civil law cases to be paid for by the legal aid scheme.

When Labour left office in 2010, social welfare law legal help cases had peaked at 485,664 for the year 2009/10. However, by last year, 2012/13, the numbers of social welfare law cases had fallen to 293,319, due to decisions made by the coalition government to reduce expenditure on civil legal aid”.

That is a drop of nearly 200,000 cases annually—around 40% of cases—and all before LASPO ever came into force.

Another example is public legal education, mentioned in the report and by the noble Lord, Lord Low, in his speech today. Following the general election, not only was the outstanding committee that had advised the Ministry of Justice on this vital subject summarily disposed of, but the budget for work on public legal education over the next number of years was suddenly no longer. Now, 11 months after LASPO came into force, the position is much worse and gets worse with every announcement of a closure of a not-for-profit provider, or of redundancies and closures having to be made by big players in this field, such as the CAB and Shelter.

A lot of income from very modest legal aid payments is resulting in a sharp decline in the number of providers of these crucial services. Many fewer people are receiving legal help than deserve to. We know, as the noble Lord has said, that a pathetic, miniscule number of exceptional cases have been allowed through, even though the Government—perhaps laughingly—claim the scheme is working effectively.

This week’s news sums it up. On Friday, RAD Deaf Law Centre, with offices in London and Newport, is closing its doors. Its chief executive has said:

“Funding cuts have had a profound effect on RAD”.

Have we really, as a country or as a society, come to this: that the law centre that helps deaf people in our country has to close because the Government have abolished the meagre legal aid that went to provide important funding so it could do its vital work?

Last Friday, a newspaper reported that the Government are thinking of charging people making appeals against DWP decisions to social security tribunals. Is this a serious proposition, I ask the Minister? How much in charges do the Government think they will get from these appellants? Will it be more than 1% or 10% of the administrative cost involved in setting up these charges, or is it—this is what it seems like to me—just a rather crude attempt to stop people appealing at all, bearing in mind that in recent months 58% of those who wanted to overturn DWP-sanctioned decisions in tribunals have been successful?

The position is grim indeed, and that is why the report is so timely and so welcome. The report does not call for a return to the system that has been wiped away; it looks forward and recommends a number of modest, practical measures that will make it possible once again for everyone to obtain the legal advice that they need, when they need it. The report argues convincingly that, by modest expenditure, by spending a bit of money, the state will save money as all the evidence shows that early intervention in the sorting out of legal problems saves costs, both in human and financial terms in the long term.

The report starts with the premise that access to justice for all has to be the starting point for any proper legal system. It challenges the political parties in this country to disagree. Surely, none of the political parties does. With a general election looming, that is why this report is so timely. It asks us in the political parties to take this issue seriously and develop policies accordingly. That is why we should all be grateful to the noble Lord, Lord Low, and his fellow commissioners. We must not let this opportunity go to waste. We would not be forgiven easily if we did.

19:50

[Lord Thomas of Gresford (LD)]

My Lords, I, too, congratulate the noble Lord, Lord Low, both on securing this debate but, more importantly, on the outstanding report that he and his commissioners have produced.

Many of us in this House, not least the noble Lord, Lord Bach, who has been at the forefront of the argument, warned the Government about the deficit that would arise through the cuts arising out of LASPO. In the debate instituted by the noble Lord, Lord Boateng, in December 2011, I asked,

“where is the funding for the specialist advisers of the CAB”,

and advice centres,

“going to come from when those legal aid contracts disappear?”.—[Official Report, 8/12/11; col. 909.]

The noble Lord, Lord Low, and his commissioners have been ingenious in their recommendations in seeking out funding streams from a number of sources. I fully support the concept outlined in the report that there should be a national strategy for advice and legal support in England, and hope that the current Welsh Labour Government will develop a similar strategy in Wales, although their general lack of vision does not make me too optimistic.

Noble Lords will also recall that we on these Benches warned the Government that their cutbacks in the LASPO Bill would result in advice deserts. My noble friend Lord Marks of Henley-on-Thames, who spoke in the debate of the noble Baroness, Lady Deech, warned that,

“the present proposals risk creating advice and representation deserts where no appropriate legal advice or representation is available. This the Government have recognised, but the proposals also risk creating specialism deserts. The danger of advice deserts could be addressed by increasing the number of providers in more sparsely populated areas. The specialism issue is more difficult”.—[Official Report, 11/7/13; col. 453.]

In that context I will draw your Lordships’ attention to Wales. I am impressed that a member of the commission was Mr Bob Chapman, a member of the committee of the Administrative Justice and Tribunals Council in Wales and chair of the trustee board of the Swansea Neath Port Talbot Citizens Advice Bureau. It is clear from reading the report that Welsh issues have not been overlooked.

The report points out that the Independent Advice Providers Forum has collected evidence that £4.1 million-worth of cuts in Wales kicked in from April 2013, £2.4 million of which were from the loss of legal aid contracts, and the rest from reductions in Welsh government, local authority, European and other funding from corporate and charitable sources. In its place the Advice Services Transition Fund intends to put just over £1 million back into advice services in Wales. I fear that even that dire conclusion may be too optimistic.

On this very day, Powys County Council is meeting to consider its budget. It will be considering the recommendation of its cabinet to cut funding to citizens advice bureaux throughout the county. At first the cabinet said that it would be cut entirely, but last week it compromised. The proposal that is being debated today is to cut funding for the CAB by half in the current year and reduce it to zero in the following year. The chairman of the trustees of the Powys CAB, Chris Mann, says of this:

“Without core funding from the County Council, Powys CAB will lose all other sources of grants. These pay specialist and professional advisers on debt, welfare benefits, employment and housing and allow our volunteers to assist clients on a range of pressing social issues”.

The other sources of grants to which Mr Mann refers are contracts worth some £336,000 for the provision of essential services to the residents of Powys. Without core funding from the council, the highly skilled paid staff will lose their jobs, and the volunteers, who are so vital to the CAB, will be unable to continue.

The recent history is that in 2013 Powys CAB dealt with 21,000 advice issues, assisted more than 6,000 clients and secured £2.2 million in welfare benefit income for its clients. As Mr Mann points out, this money does not disappear into the air but is spent locally and supports the local community. It is true that the council has a small welfare rights unit but it cannot possibly cope with the work level if the CAB has to close. This is a large area of Wales, where poverty and rural deprivation are endemic. It is precisely the sort of area of desert that we foresaw when we were discussing the LASPO Bill. That is only one example, but it is significant in this context that, according to the CAB, £71 million—43.8% of its funding as a whole in 2012-13—came from local government. In the current year, it expects the percentage to increase to 46.2% from local government, as funding from legal aid drops from £21 million to just £6.5 million. This is a tragedy that is going to happen in vast areas of the country.

Perhaps the most impressive aspect of the commission’s report is that it does not seek to wind the clock back to the pre-LASPO position but recognises realities. Suggested funders include the Money Advice Service, the Department for Work and Pensions, the NHS, local government, trusts and foundations, as well as the legal profession through pro bono and dormant funds. I agree with the noble Lord, Lord Bach, that all political parties, in fashioning their manifestos for a future Parliament, should take all the commission’s recommendations on board.

Finally, I very much look forward to the contribution of the right reverend Prelate the Bishop of Peterborough. He spent eight years as Archdeacon of Chester, so I can greet him almost as a neighbour, even though he was on the wrong side of the border. I also welcome him as a graduate of Peterhouse in Cambridge to join our hardcore Petrean group in the House of Lords, with the noble and learned Lord, Lord Lloyd of Berwick, and others. I am sure that he will add lustre to our deliberations.

19:57

[Lord Woolf (CB)]

My Lords, I thank the noble Lord, Lord Low, for arranging this debate and I join in the chorus of congratulations to the noble Lord and his fellow commissioners on their excellent report. I am not surprised that the report should be excellent; I use that word in referring to it because, having regard to the commission’s membership, about which comment has already been made, I expected no less.

The person whom I wish to single out is Amanda Finlay. Not only was she vice-chairman of the commission, she was a most valued member of the team which worked on my report on access to justice in 1998. I hope your Lordships will forgive me if I make a comment or two about the relevance of my report in the context of the report by the noble Lord, Lord Low, because there are similarities. His report covers some of the same ground, although my report was primarily concerned with the procedures in courts that were making it difficult for the majority of litigants to obtain the access to justice to which they were entitled if they were going to be engaged in litigation. The Low commission’s concerns, as we have heard, were much wider. It was concerned with courts and tribunals, but I think that was a minority part of its report.

The Low commission’s main concern, as we have heard from the noble Lord, Lord Low, is the stressed position of those who need assistance in obtaining the help that they are entitled to under the welfare provisions of the law. As we have heard, it is a section of the community in the greatest need of help, and the state is under a fundamental and basic obligation to ensure that, so far as possible, its needs are met. As we have heard, the people in this group have been doubly disadvantaged: first, because of the pressures that have made them resort to the state to provide them with the means of meeting their basic needs; and, secondly, because their ability to receive the assistance that is necessary to ensure that they obtain the benefits to which they are entitled in law has been substantially reduced because of the cuts in legal aid and the reduction in funding that has occurred due to the need for austerity.

However, I agree with the noble Lord, Lord Bach, that when one looks at the contents of the report as a whole, although it reveals an extremely worrying situation, there are signs of good news. Those signs confirm what I believe to be the case—that if we take a broad, holistic view of the situation, there are ways in which the effect of the deficit in assistance, which is inevitable in view of the cuts that have been made, can be mitigated by appropriate action. The noble Lord, Lord Low, has referred to the type of action that is required. Of course, we have heard the clamour in the media over food banks. That has vividly demonstrated that the conferring of rights on members of the public is of little value if those rights are not complied with in a way that enables them to receive the benefits to which the law entitles them.

I hope that I can claim that, to an extent, the problems in the courts to which I have referred were mitigated by the steps taken in consequence of my report. They included a change in culture on the part of the judiciary and the legal profession over the past few years, which has meant that the needs of the less fortunate members of the community are taken care of in a way that was not always so obvious in the past.

I suggest that the Low commission’s report gives the Government an opportunity to secure a substantial improvement in the situation regarding welfare benefits. Even in these days of austerity, they should be able to take advantage of that opportunity in a way that will benefit the section of the public to which I have been referring. If that is to be done, it is essential that we take advantage of all the new methods of communication that now exist. Those methods enable an amazing amount of information to be provided, which could be very helpful to those who seek the benefits to which they are entitled.

In different areas of the country there have been experiments that have demonstrated beyond doubt what can be achieved. They are set out in the Low commission’s report and are prominent in the 100 recommendations the commission makes. The core of the majority of those recommendations is that they are designed to meet the need for advice. I have no doubt that the national advice helpline that the commission recommends would be of value, as is the kiosk that exists in Cambridge, which was used by 65,000 people in 12 months. Those sorts of initiatives have got to be extended. I hope that, in setting out these various trials, the report will help the Government with what surely must be the objective of any Government—namely, to do what they can to ease the problems of those members of the community most in need of assistance.

The commission also stresses the importance of education. Increasing the use of education will not change the situation overnight, but in the long term that must be very important as well. I suggest that the position is extremely urgent; no delay should be allowed to occur. The report deserves, and should receive, an immediate and strong endorsement by those in charge today. The present Government cannot hide behind the fact that there is going to be an election in a few months’ time. Action can start to be taken now and plans can be made. That applies to the Opposition as well as to the Government. I look forward to the responses from both the opposition spokesman and the Minister to what we are hearing this evening. Like other noble Lords, I, too, very much look forward to the maiden speech of the right reverend Prelate the Bishop of Peterborough.

20:07

[The Lord Bishop of Peterborough]

My Lords, as I make this maiden speech I am delighted to have the opportunity to thank the many Members and staff of your Lordships’ House who have made me so very welcome here. I am also most grateful to the noble Lord, Lord Low, for initiating this debate, and for producing with his colleagues this excellent, wide-ranging and challenging report.

I suppose it to be inevitable that cuts in government spending, however necessary they may be, will always hit the poorest most. It is therefore all the more important to give attention to ways of helping the most vulnerable to claim and receive the support to which they are entitled and the professional advice they may need. This report does that: I welcome it most warmly and hope that Her Majesty’s Government can do so too.

Three particular themes of the report resonate with me. The vision of equal access to justice, with the recommendation of a national strategy for advice and legal support agreed by all parties, is most welcome and would make a real difference. The vision of holistic systems thinking, with its direct addressing of poor and disconnected services, such as those described in the Nottingham study, makes complete sense. The emphasis on local provision, including from the voluntary sector, but requiring better training and co-ordination, is absolutely right. Those three themes, if implemented, would lead to better governance, fairer access and a less divided society.

I regularly meet some of the most needy members of the community. The diocese which I serve includes the lovely and relatively prosperous counties of Northamptonshire and Rutland. It also includes most of the rapidly growing city of Peterborough and other urban centres which are home to many vulnerable people and groups whose lives can so easily break down without the help and advice of the sort described in the Low commission’s report. The migrant communities of Northampton and Peterborough include many—especially older women—whose English is poor and not up to technical explanations or form-filling. The rural poor, not all of whom have access to dependable broadband or the skills to use technology—even if they had easy access to libraries, which they do not—frequently miss out.

I am privileged to be a trustee of the Farming Community Network, formerly the Farm Crisis Network, and am well aware of how difficult it is for some struggling farmers to access advice through the statutory channels. Our towns in the diocese I serve, including Corby, Kettering, Northampton, Wellingborough and the City of Peterborough, have their fair share of poor, white, excluded communities, many of whose inhabitants would benefit from supportive advice and advocacy. I spend time visiting our prisons, and am excited by the activities of charities which help prisoners to find housing or work when they are released. However, I am only too conscious that for many their functional illiteracy and innumeracy, and their all too common psychiatric disorders and behavioural problems, place them at a huge disadvantage in trying to become contributing members of society. I also visit and take an interest in psychiatric hospitals where I meet both in-patients and out-patients who need help and advice to cope with the pressures of life. At Peterborough Cathedral we have regular meetings for Armed Forces veterans suffering from post-traumatic stress disorder; again good people do their best to support them, but the necessary legal and other professional advice seems to be in short supply. All these people and groups need to know that they are valued, that society cares for them and wants to help them and that our affluent country has time and resources for them.

I notice that one of the bodies listed as having made a submission to the Low commission is the Peterborough citizens advice bureau. My chaplain is a trustee of that charity, and I follow its important work with some interest. Thanks to the collaborative partnership-working instigated by Peterborough City Council its funding has not been as badly affected in recent years as some other CABs. However, I notice the very significant increase in the number of cases it has had to deal with. Unique client numbers have risen from 7,190 in the year ending March 2012 to 8,744 for the first nine months of the current year, with an estimate of 12,000 for the full year. If this is typical of other CABs across the country we can see something of the growing need, brought about, according to Peterborough CAB, by a combination of the recession and welfare reform.

I am still very new to the customs and conventions of your Lordships’ House. Please bear with me as I learn from my mistakes. I take it that it is acceptable here for us, not least Bishops, to do God. One of the tests of a civilized society is of course the way in which it supports its weakest and most vulnerable members. I would go further than simply stating an ethical principle, however important. The bottom line for me is the calling of all who think of ourselves as children of God to develop in ourselves, and demonstrate in our words and actions. His especial love for the poor and needy.

20:14

[Baroness Grey-Thompson (CB)]

My Lords, I welcome the debate tonight. It is a privilege to speak after the right reverend Prelate the Bishop of Peterborough. I congratulate him on his fine maiden speech; he has chosen an interesting debate to start his career here. As these things work out, it is perhaps perfect timing. Over the weekend I started a hashtag, which was very complimentary on social media, entitled “Bishops”. I am not sure if I am the first to do this, but I will be adding to it happily later tonight after his fine maiden speech. I warmly welcome the right reverend Prelate to your Lordships’ House and look forward to his many future contributions.

After spending a significant amount of time working on the Welfare Reform Bill and because of the consequences of that, the Legal Aid, Sentencing and Punishment of Offenders Bill, I am grateful for what my noble friend Lord Low has done in this area and congratulate him on his commission’s work. On 21 January 2014 the New Law Journal stated that the Low Commission shines,

“much-needed light on the impact of the LASPO cuts on those largely poor and vulnerable people who up until nine months ago had legal aid as some kind of safety net”.

I do not think that anyone would have said that the system was perfect, but for disabled people it offered considerable help and support. That safety net is disappearing.

My noble friend’s work has not just shone a light on the system within which we are now operating, but has shown how real people are affected by legislation. I accept that when we are debating Bills it is hard to know how every person will be affected, but we are now starting to see it. My noble friend has provided some realistic and sensible proposals. He has not looked back to what some might call the halcyon days of legal aid, but importantly has looked forward. I hope that the Minister will look favourably at the suggestions that have been made. The Law Centres Network is just one organisation that has called for the recommendations to be implemented.

In the past two years we have seen what I believe are some of the biggest changes to the welfare system since its inception. Disabled people have been repeatedly affected by the changes, and not just in one area but in several. They are complex changes at that. I remember the noble Lord, Lord Freud, explaining to me during the Welfare Reform Bill that the new system around universal credit would be simpler, but it is by no means simple. While I have been disappointed that in this area there has been a continued failure to conduct a cumulative impact assessment, I understand why there has not been one. It would have made uncomfortable reading about how some of the most vulnerable people in our society are being treated. I accept that we are in tough economic times and agree that there was a need for looking at doing things in a different way.

One of the consequences of LASPO on disabled people, which has been raised with me by Unity Law, is that it has shifted the costs of civil litigation in respect of personal injury cases to the defendant company and done away with recoverable insurance premiums for claimants as a result. Because Equality Act cases do not include a claim for personal injury, but rather compensation for injury to feelings, and a request for reasonable adjustments, these cases are not cost-shifted and the insurance premium is needed to protect disabled people against the costs of losing.

I have met Chris Fry from Unity Law several times. He believes that if cost shifting applied to Equality Act discrimination claims, the legal aid budget would stretch further, because there would be no liability to third-party costs in failed cases. I realise that I am talking to many lawyers, and not for the first time do I regret studying only politics at university and not law. At this stage I will not go into further detail, but there are some really positive things that we can do in this area to mitigate some of the challenges that we are facing.

We are where we are, but the legislation has fundamentally changed how disabled people are able to access justice. Access to advice is important. As Citizens Advice describes it:

“Impartial advice is a fundamental ingredient to a healthy democracy”.

I know that Citizens Advice has offered me invaluable advice, but it has also worked with a significant number of people who have approached me for help and support. In the past year or so the largest number of e-mails that I have received have been from members of the public on this issue. The vast majority have been from disabled people asking for help in steering their way through the complicated system; I do not know whether this is perhaps because I am disabled or because I talk in this area. They are just not sure where else they can turn. Changes have occurred at local levels to advice services and those changes are not the same in every area. The number of people asking for help within this incredibly pressurised system is worryingly rising. One of the most recent cases to come to me has been from a deaf man who has repeatedly received letters directing him to a phone number. Obviously that is just not possible.

During our time debating LASPO, I spoke several times on the telephone gateway and repeatedly said that, while signposting people to a phone number may work for some, it would not work for all. I have also been contacted by someone with autism, who even more worryingly has said that he has absolutely no one around him to help him make this essential phone call, and he did not know where to turn. I was his last resort. He has tried to write letters, but received no response. He told me that he went to his local advice centre and was informed that the waiting list for an appointment was several weeks. Cases are being pushed to services that were previously stretched but are now more so.

In the area of appeals and tribunals, there is much work to be done to ensure that we have better decision-making in the first place. That sounds terribly easy, but I know that it is not. Reading through some of the social media streams this week, I hope that there will not be a regime for charging individuals for benefits appeals. I wonder whether the Minister would like to comment on this. If this were to be the case, it could be seen as yet another way of penalising disabled people.

The support that disabled people get is crucial. Within my noble friend’s report, I very much liked the proposals to embed information in GP surgeries or the places where people are every single day. I thought that was simple but brilliant. Educating young people as to their rights is something that should be on the curriculum right away, along with good sports provision—but that is another matter. The idea of a phone number and simple website is also an excellent idea to act as a triage. We perhaps still need to do more to ensure that disabled people have adequate access to the internet, but that is an aside. Whatever we do, I believe that we have a duty to provide adequate guidance, assistance and support to everyone, and I commend the work of my noble friend.

20:21

[Lord Hope of Craighead (CB)]

My Lords, it is a very real pleasure to follow the noble Baroness and her very thoughtful speech and to follow the right reverend Prelate. I join with the noble Baroness in congratulating him on his maiden speech. My impression in listening to both of them is that they contribute real value to this debate because they have experienced at first hand the problems that we are talking about. Some of us who are lawyers, such as myself, do not have that privilege, although of course we encounter many of those who are in trouble. But it is the real value of their contribution that needs to be studied very carefully, based on their own first-hand experience of the problems that we are talking about.

As for the report of my noble friend Lord Low, I express deep admiration for what he and his commission have achieved. I confess that I read the report with a mixture of despair and relief, rather like the noble and learned Lord, Lord Woolf, who talked about a mixture of feeling worried and encouraged. The element of despair comes from the appreciation that the report brings of the state in which we now find ourselves. Step by step, we have got into a position of real difficulty, in which so many gaps exist right across the system where legal advice and support are not available. It would be wrong to say that we have sleepwalked into this problem, because so many people have been advising Governments, particularly this one, time and again, that cutting back so much on legal aid, for reasons that we all understand, would add to and create this problem.

The relief and encouragement comes partly from the way in which the commissioners have gone about their work and the integrated approach that they urge the Government to adopt, and also from the various signs throughout the report of what is going on elsewhere in other sectors. The point that I wish to draw to the Minister’s attention is the need in this integrated approach to support what others are doing to fill the gaps.

Let me give one particular example based on my own experience in dealing with students in two of the Scottish universities. I know that the report deals with the position in England and Wales, but Scotland is not all that different; the problems are very similar. One thing that has been growing, both in Scottish universities and certainly in the universities in England and Wales as well, is an appreciation by students of the gaps that emerge and the part that they can play in filling them by providing legal advice where it is needed. There are two particular projects that I know about, one of which was started in 2003 by the University of Strathclyde Law Clinic, which is the largest of these institutions in Scotland, with 195 student advisers, and more recently the Aberdeen Law Project, which started in 2009 and has much the same ambitions, conducting much the same kind of work.

These projects are guided by lawyers within the academic community. They are also funded, to a very substantial degree, by law firms. It is a pro bono exercise. DLA Piper provides funds for the Strathclyde clinic; Pinsent Masons provides funds for the Aberdeen Law Project. This is greatly welcome, for, while the universities themselves would like to provide financial support, it is very difficult for them to do that, given the pressures on their own funding.

There are ways in which the Government can encourage these projects, one of which was demonstrated by the noble and learned Baroness, Lady Scotland of Asthal, when she was in government. She encouraged and participated in an annual awards scheme to student organisations of this kind. It so happened that Strathclyde won the competition in one of the years I was chancellor. She was there, she encouraged what they were doing, and she gave the feeling that the Government were behind what was being done by these student bodies. That is valuable encouragement. It helps those who are thinking of providing funding to feel they are doing something which is in the broad public interest as well as in the interest of the students themselves.

The other aspect of the problem is the work done by the courts. The noble and learned Lord, Lord Woolf, made major strides in simplifying the way in which the courts go about their work. One point, which I particularly emphasise, is the way in which he educated us all in the need for case management, a phrase that I did not encounter in the early days but is now on everybody’s lips, and it works all the way down through the system. It is a means of simplifying issues, working with the litigants in person to be sure that as little time as possible is wasted and people identify the issues as soon as they can.

There is the emphasis in paragraph 5.27 on the need for independent advice. I thought that was a valuable point, partly because I have been serving on a Select Committee on personal service companies, a rather complicated tax matter. Part of the evidence that we have been hearing comes from people who have been trying to use an advice system that the HMRC provides for people who think they are in difficulties. The HMRC says that the advice system is completely independent and that nothing will be communicated to the tax inspectors. People do not believe it, and it is underused. There is, therefore, something to be said for the point drawn attention to in that paragraph—for the Government appreciating that there are independent advisers who need to be supported, as well as government-based advice systems.

The other point worth stressing, as others have done, is the way in which modern technology can be brought to bear to encourage people to seek advice. Younger people than I have apps attached to their iPhones which have access to all sorts of things. I have just acquired an iPhone, and I have been discovering its wonders. Surely there are things the Government could do to increase the accessibility of advice—of knowledge of how systems should be made to work in people’s interests and of the complex system of social benefits. There are avenues to which this report draws attention which are well worth pursuing and should not cost a great deal if proper advice is obtained.

I endorse the point made by the noble Lord, Lord Bach—that there is an opportunity, because of the timing of this report. As he said, we should not let the opportunity go. I would warmly endorse that and all the recommendations made in this excellent report.

20:29

[Baroness Howe of Idlicote (CB)]

My Lords, I join other noble Lords in congratulating the right reverend Prelate the Bishop of Peterborough on his excellent and moving maiden speech.

Like all noble Lords who have spoken so far, I welcome this comprehensive and insightful report which the commission led by my noble friend Lord Low has published. It could not have had a better or more insightful chairman.

Reductions in legal aid and other funding for advice and legal support are having a serious impact on the ability of poor and vulnerable people to access justice. It is this theme on which I wish to concentrate in my contribution to this debate today. The Low commission report highlights the plight of a number of members of the public hit by the loss of legal aid to assist them. They face the kind of everyday legal problems which loss of a job, disability or other crises can throw at them. Examples given in the report include a young couple who were unable to get their landlord to undertake essential repairs; a person in debt who started suffering from severe anxiety and depression and is in danger of losing their house and job; and a disabled person who lost their benefits after being wrongly assessed as fit for work.

In the Government’s latest equality impact assessment, published after the changes to legal aid were introduced last year, a disturbing picture is painted of how these changes will impact on people who are protected by equalities legislation. Around 19% of the general population can be classified as disabled, but 54% of the people who sought advice under the legal aid scheme for benefit problems were classed as disabled. All but a small number of benefit appeal cases were cut from the scope of legal aid. This will mean many of thousands of disabled people going without the legal help they need. In housing cases no longer covered by legal aid, 61% of the clients are women. Organisations opposed to the changes in legal aid, such as the housing charity Shelter, point out that higher numbers of women seek housing advice as they are often left on their own to provide for children or have been forced to move from the family home because of violence or other abuse. Disabled people are also much more likely to face problems with disrepair due to poor housing conditions. Disrepair cases are often small in value and therefore not suitable for no-win no-fee arrangements. However, if they go unresolved, this can have severe consequences for family health.

Black, Asian and minority ethnic communities are more likely to face all of the social welfare problems with which the Low commission report deals. Some 86% of immigration problems previously covered by legal aid involve people from BAME communities. Often they face problems such as proving their status to claim state benefits such as their pension after a lifetime of working legally in the UK—an issue which will be publicised by a report soon to be published by the Legal Action Group. As the former vice-chairman of the Equal Opportunities Commission, the discriminatory impact of the changes to legal aid on people protected by equalities legislation is of particular concern to me.

Aside from these concerns over equality, there are practical considerations. When people get into difficulty in their daily lives, they need to be able to get the right information and advice as early as possible. If this information and advice is no longer available, they could become unemployed, homeless and/or in debt. Then not only will they suffer distress but the state will incur increased costs. Where legal support—whether in the form of legal help or legal representation—is also not available, the number of people who will then try to represent themselves will increase and the courts and tribunals will have to adapt to deal with this increase in unadvised and unrepresented litigants.

Likewise, when systems that are supposed to support people fail to function effectively, those individuals require extensive help, often including specialist and legal skills, to have their needs met. In its paper, Towards a Business Case for Legal Aid, Citizens Advice argues that the state has to pick up the cost of homelessness, poor health and the other consequences of people not receiving early advice on civil justice problems. It estimates that £1 of expenditure on legal aid saves the state around £6 in other spending.

I am sure that all my fellow Peers are heartened by the recent evidence of some upturn in the economy. However, if the experience of previous recessions is correct, it will be some time before the advice needs of the sort of people I have referred to will reduce. Many advice agencies are reporting an increase in demand for services while they are being forced to cut back due to cuts in legal aid and other public spending. For example, in April 2013 Shelter reported a 40% increase in the number of callers to its advice line seeking help with housing-related problems. I also note that, in a recent report, the Cabinet Office accepts that,

“there seems to be a pattern of rising demand”,

for advice,

“during difficult economic circumstances”.

This is hardly surprising.

It is for this reason—the increasing demand for advice and, above all else, the need to assist the sort of people facing the difficult circumstances I am describing—that I urge the Government to look seriously at implementing the recommendations of this excellent report. Everyone, regardless of their sex, ethnic background or disability should have the right to equality before the law. There are some excellent suggestions in this report which will certainly help, but I am deeply concerned that the reduction in the availability of legal aid, as well as other advice services, is putting the fundamental principle of a democratic society at risk.

20:37

[Lord Gold (Con)]

My Lords, I am most grateful to be allowed to say a few words, even though I am not on the speakers list. May I first—

[Lord Phillips of Sudbury (LD)]

My Lords—

[Lord Ahmad of Wimbledon (Con)]

The noble Lord, Lord Gold, has given notice.

[Lord Phillips of Sudbury]

So have I.

[Lord Ahmad of Wimbledon]

I have not received that.

[Lord Phillips of Sudbury]

I gave my details in at 12 o’clock today.

[Lord Ahmad of Wimbledon]

If the noble Lord could take his seat. If both noble Lords intervene for just two minutes we should be able to fit both in. I was certainly not informed that the noble Lord, Lord Phillips, intended to speak.

[Lord Phillips of Sudbury]

I gave it in at 10 o’clock.

[Lord Gold]

I will be as quick as I can be. I commend the noble Lord, Lord Low, and his team for producing such a thoughtful report. I also congratulate the right reverend Prelate the Bishop of Peterborough on an excellent maiden speech.

Although I accept, of course, that LASPO has reduced the scope for legal aid, it is not a new problem that there is a gap between what legal aid will support and the needs of those who have claims or grievances. One has to draw the line somewhere and there will always be deserving cases that cannot attract funding. The reality, as we all know, is that there is a finite fund of money available. The report identifies a number of ways in which this problem might be addressed, including recommendations for further government funding. The Minister will, no doubt, tell us what government support there might be for the Low funding proposals, including the Government’s view on taxing pay-day lenders. However, at a time when the Government are still looking to cut expenditure, I am not optimistic that further funding will be available. I would therefore like to propose that much more might be done by the private sector on a voluntary basis.

Now that I am no longer part of a large legal firm, I feel better able to offer others assistance. Paragraph 8.19 of the report rather delicately suggests that law firms might consider offering some funding support. I would suggest another course, similar to that suggested by the noble and learned Lord, Lord Hope. Solicitors’ firms which undertake litigation work have been concerned for some time that, in training their young solicitor advocates, they have not been able to find sufficient cases where they can develop their skills. I know that all large firms encourage their solicitors to undertake pro bono work and a great number of legal advice centres are part-manned by young solicitors wanting to put something back into society. That could easily be extended to provide much assistance in both advisory work and, where necessary, through court advocacy, by tapping into what I think would be a willing resource. Many sets of chambers would welcome such an initiative and I am sure that the Bar and Law Society will support that.

I know that the Low report suggests that it is unrealistic to consider that pro bono help could replace publicly funded legal help, particularly as the laws and regulations can be complex. However, it is the lawyer’s stock in trade to run with something new and complex, and I have no doubt that there are sufficiently talented young lawyers around willing to help that those requiring assistance may well find themselves better represented than they might otherwise have been.

20:40

[Lord Phillips of Sudbury]

My Lords, I join others in congratulating the right reverend Prelate on his maiden speech, which, if I may say so, was wonderfully down-to-earth. I encourage him to go on doing God if he can relate the good Lord so closely to what I suspect most of us feel.

I congratulate the Legal Action Group on instigating the Low commission. I should declare an interest as one of the founders and first chair. Above all, of course, I identify myself with the congratulations to the noble Lord, Lord Low. It is a formidable piece of work in a relatively short space of time. I wish the commission as much success in pushing forward the 100 recommendations as in putting them together.

I shall concentrate on the first of the six overarching recommendations in the report. I refer to public legal education which, the report states, should be given higher priority both in school and in education for life. I fear that I shall be a bit tetchy as we have so many fine words emanating from this place and so many fine pieces of legislation hitting the statute book. Indeed, we are inundating the people of this country with laws with almost the same effect as the floods in the Somerset Levels. The truth is that so much of what we do with the best intentions ends up unimplemented, misunderstood or not understood at all. The provision of education in schools is declining and not improving. Citizenship education is not part of the inspected curriculum. It is part of the curriculum overall but it is not inspected by Ofsted. Citizenship does not have to be taught at all by academies and free schools—roughly half of schools. The number of teachers training to teach citizenship is declining rapidly, as is the number of pupils taking citizenship. That is down to 2% for GCSE citizenship and only 8% for the half GCSE. The situation could not be worse.

Section 1 of the Legal Services Act 2007 states that there should be a regulatory objective of,

“increasing public understanding of the citizen’s legal rights and duties”.

That is honoured in the breach. The citizens of this country are falling further and further behind what we legislate in their name and, often, for them as individuals. We kid ourselves unless we own up to that and put as much energy and enthusiasm into implementation of the excellent ideas behind the report as we have put into this debate.

There is so much to do to give, in particular, the poorest and least capable any sense of what is available for them by way of the law. I entirely agree with the comments made about the crucial, essential need for advice on where it is most needed. We are hypocrites if we do not ensure that. Again, I commend the noble Lord, Lord Low, and his excellent commission and hope that this is a beginning, not an end, a determination, not an elegant manifesto.

20:45

[Lord Beecham (Lab)]

My Lords, I join previous speakers in congratulating the right reverend Prelate on a notable maiden speech and in expressing profound gratitude to the noble Lord, Lord Low, and his colleagues, for their comprehensive and lucid analysis of the problems of accessing advice and legal support in this critical area of social welfare law, and for the constructive proposals contained in the report.

The landscape the report describes is changing as a result of changes in the financial and, I would argue, political climate. Where once a thriving network of advice services, citizens advice bureaux, law centres, voluntary organisations and professionals was able to support people in times of great difficulty, we are now seeing virtual advice deserts—to use the phrase deployed by the noble Lord, Lord Thomas—within which an occasional oasis can be found, struggling with soaring demand and diminishing resources. As the report demonstrates, and as we have heard today, a number of law centres have closed, with more to come, while the survivors operate with reduced staffing. CABs, serving more than 2 million clients nationally, face shrinking budgets, while the impact of reductions in legal aid and advice increases pressure on them.

Many Members of your Lordships’ House have a long and active relationship with the voluntary sector, especially the advice sector. As a solicitor, I undertook legal aid work. I did pro bono advice sessions with the Newcastle CAB. I helped found the Wallsend CAB in 1973. I initiated the Newcastle Welfare Rights Service as chairman of social services in 1974, and as council leader supported the creation of the Newcastle Law Centre in 1978. The situation of that law centre, the only one between Kirklees and the Scottish border, is dire. From a staff of 14, with five qualified lawyers, it is now down to one solicitor and one adviser, with three staff. It does not undertake legal aid work.

The Newcastle CAB faces similar difficulties. It no longer has any legal aid funding. Its brilliant chief executive, Shona Alexander, has set out in the starkest terms the current position that she, her staff and volunteers, and, most importantly, her clients, now face. Staffing has fallen from 26 to 19, none legally qualified, and 11 of them on contracts expiring in March next year. Funding for a debt adviser by a local charity is ceasing and a full-time adviser and part-time administrator will be made redundant. The bureau’s opening hours have been reduced and demand is such that the bureau closes its doors after half an hour because it cannot accommodate in its waiting room the many people who wish to attend drop-in sessions. The average time taken to advise each client has increased by 50% or more because of the triple whammy of legal aid disappearing, welfare changes and cuts in public services. There is now no funding for interpreters or medical reports, and recently there has been difficulty with deaf clients, with interpreters charging the bureau £70 for an interview. Shona Alexander says:

“Just about every private law firm in Newcastle is referring clients to us because of legal aid cuts”,

and increasing numbers of clients need crisis intervention, especially because of benefit sanctions. She states that, ironically,

“every Government department website or letter refers clients to their local CAB”,

but of course, without providing any direct funding.

As if all this were not enough, there is the difficulty, mentioned in the report, of clients obtaining telephone advice from government departments at premium rates. The Newcastle bureau can deal with only 38% of incoming calls, while clients, some of them specifically referred to the bureau for the purpose by government departments, seek to use the CAB’s own phone lines.

Finally, Shona Alexander refers to two areas of high demand: welfare rights and employment. On the former, hundreds of clients seek advice, for while the city’s service is fully stretched, the CAB caters for non-city residents from the surrounding area as well. The part-time specialist worker is fully booked dealing with complex cases and coaching staff and volunteers with more routine work. In employment, the CAB relies totally on pro bono work from local solicitors, the very source referred to by the noble Lord, Lord Gold. However, there are,

“serious cases of discrimination, health and safety issues and other illegal work practices which are now going unchallenged”.

None of this catalogue of difficulty is unique to Newcastle, as the report makes clear, which is why there is such widespread interest in, and support for, many of the commission’s proposals, as evidenced by this debate. I hope that the Government will respond positively to the constructive proposals in the report. Like others, I was particularly attracted to the idea of public legal education that the commission seeks to promote. Will the Government revive the programme initiated by the previous Government, which, as my noble friend Lord Bach reminded us, they abandoned some four years ago? Will they review urgently the areas of welfare law now excluded from legal aid, particularly those highlighted by the commission in its report—again, this was stressed by the noble Lord, Lord Low, tonight—in relation to housing disrepair, harassment and eviction and disbursements for benefits advice? Will they fund the advice required for applications for exceptional funding and revisit the imposition of fees for employment tribunal applications? For that matter, will they disavow any intention of charging claimants fees to access decision-making and appeals processes, as was mentioned by my noble friend Lord Bach and the noble Baroness, Lady Grey-Thompson?

I hope that the Government will endorse the suggestion of local and national advice plans, adopt the proposals to ensure quality of provision and support moves to share services across the sector and promote pro bono services, recognising that the latter must be seen as supplementing and not replacing properly staffed provision. Will they also look again carefully at the online and telephone gateway services, as others have mentioned, not least in respect of cost?

The report makes relatively modest demands for additional resources but I am slightly apprehensive about the call for local government to fund an extra £50 million. As the noble Lord, Lord Thomas, pointed out, councils already contribute 46% of the funding to CABs—some £73 million nationally. Many, including most of the areas where demand for advice and assistance in welfare matters is most acute, are facing unprecedented cuts in funding for mainline services, including statutory services. Requiring additional expenditure would constitute a “new burden”, which, under the Government’s own new burdens doctrine, should be funded by government and not by further cuts to existing provision.

However, I have a suggestion to make. Many people, alas, have suffered terribly from the recent floods. I hope that that damage will be made good by insurance; according to the industry, the cost will apparently be some billions of pounds. Most of us pay insurance premiums. Funding the commission’s proposals in this report would represent a mere fraction of the cost of repairing that flood damage. Could we not, as a society, treat the emergency situations that so often overwhelm our vulnerable fellow citizens—including many disabled people, as the noble Baroness, Lady Grey-Thompson, pointed out—in the realm of social welfare law as something that we could collectively insure via a modest hypothecated surcharge on our insurance premiums? I invite the Government to consider and cost that suggestion, which may be a better way of helping to make good some of the resource that has been lost in the past year or two.

I spoke earlier about my early involvement with this topic of advice and legal aid. By chance, I recently came across a scrapbook that my father kept of my early years in local politics. It included a letter of mine about legal aid published in the Times in 1971. The Times was the beneficiary of my epistolary contributions as, at that point, I had not taken up reading the Guardian. The letter concluded:

“Is it too late to hope that some of Lord Hailsham’s undoubted energy will be applied to broadening, rather than restricting, the scope of legal aid?”.

This was at a time when Lord Hailsham was mooting changes to the availability of legal aid. I ask tonight: it is too late to hope that the Minister’s undoubted energy, ability and empathy will be applied in restoring the accessibility of advice and legal support for social welfare law, which is a potential life-saver for so many of our fellow citizens?

20:53

[The Minister of State, Ministry of Justice (Lord Faulks) (Con)]

My Lords, I begin by congratulating the noble Lord, Lord Low, on securing this debate and restating my belief, and the Government’s belief, in publicly funded legal services as an integral part of the justice system. All speakers have made valuable contributions to this debate but I am sure that noble Lords will forgive me if I single out the right reverend Prelate the Bishop of Peterborough for his excellent maiden speech. It is clear from his description of the wide variety of people and situations which he encounters in his diocese that he will be able to bring many valuable insights into our debates. I am very glad to welcome him.

Notwithstanding the Government’s continued commitment to the justice system, any discussion on legal aid funding must focus on the spending that taxpayers fund and must recognise the financial realities we continue to face. As noble Lords are aware, legal aid was introduced more than 60 years ago. It has expanded very considerably in scope to become, arguably, something it was never intended to be. The Government were, until recently, spending scarce resources—in effect rather encouraging people to take their problems straight to court rather than trying to achieve successful and often enduring resolution of disputes in different ways.

The Government were forced therefore to take a fresh look and did not embark on the reform programme lightly. However, the fiscal challenge and the spending review settlement required all departments to look critically at where they were spending money, the effectiveness of those interventions and whether they could continue to be justified. A conscious decision was taken, following the public consultation that led to the LASPO Act, that spending the limited taxpayer funding available to the Ministry of Justice on social welfare law matters, when the majority of problems in this area did not require legal expertise to resolve, could not be justified. This and other difficult choices were scrutinised, amended and debated by Parliament after a thorough and wide-ranging public consultation.

People do not always need lawyers in cases involving divorce, employment, education disputes and debt problems, and courts should be a last resort rather than a first one. These are the types of problems that can and should be resolved before tribunals or similar bodies, which are designed to be accessed by unrepresented individuals. However, with the introduction of the LASPO Act—and this is often forgotten—we safeguarded legal aid to ensure that it was targeted to those who needed it most, for the most serious cases, in which legal advice or representation is justified.

We estimate that following the introduction of LASPO around £50 million will still be available in legal aid for social welfare law, which will fund community care and other high-priority debt and housing cases. For those who need or choose to go to court, but who fall outside the scope of the legal aid scheme, there are other resources available in other forms. There are a diverse range of services available that recognise and match the differing needs of individuals, helping them to navigate the system and resolve their problems. I accept that the challenge is to ensure that relevant services continue to be available in a sustainable way. We have seen industries innovate and modernise to address changing needs and environments. It is essential that the advice sector does so too. The noble and learned Lord, Lord Hope, spoke of the increased use of technology. There is also the support for legal initiatives. My noble friend Lord Gold referred to pro bono contributions from young solicitors.

However, the Government have recognised the various pressures that the not-for-profit advice sector would face, as different funding sources were affected as a range of organisations reviewed their funding positions in the light of the changing fiscal environment. That is why the Cabinet Office led a review looking at the long-term sustainability of the not-for-profit advice sector. The Advice Services Review report, published in October 2012, acknowledged that the Government have a role in supporting the sector to adapt to the new funding realities but also made it clear that advice providers would need to take the initiative and change the way they work, adopting often a more collaborative approach with partner organisations across the sector to ensure the long-term sustainability of supply.

In fact, the Government did not wait for the outcome of that report. Since 2010 the Government have provided significant additional support over and above their usual funding to a range of front-line advice organisations such as Shelter, CABs and law centres that provide direct advice to clients on matters such as social welfare law, to help them adapt and make the transition to the new funding climate. This includes providing half of the £68-million advice services transition fund, launched in November 2012 and administered by the Big Lottery Fund, which was referred to by the noble Lord, Lord Low. This fund has provided a total of 228 grants of between £50,000 and £350,000, which are specifically available during 2013-15 to help the sector to address immediate need and help to strengthen organisations for the demands that lie ahead.

The Ministry of Justice itself has worked collaboratively with relevant partners in the sector to ensure that clients continue to be supported even after the introduction of LASPO. In the lead-up to the introduction of LASPO, the MoJ developed a targeted communication strategy to raise awareness of legal aid changes and, in particular, to signpost clients not eligible for legal aid to relevant alternative sources.

My officials also worked closely with other government departments, legal aid providers, advice organisations and relevant third-sector partner organisations to raise awareness and enable them to provide effective information about legal aid changes themselves and details about alternative sources. As part of this, we developed and introduced a new and simple online service. Those words are easy to utter but, having actually tried out this service, I can confirm that it is genuinely simple and can be accessed by those who are not sophisticated in these matters. It is considerably simpler than, perhaps, buying an air ticket from a budget supplier. People can check whether they might be eligible for legal aid. Where they might not be, this service will signpost them to alternative sources. To date, over 194,000 clients have used the site to look for assistance, and we continue to work with legal aid providers and advice organisations on improving awareness.

I turn to the excellent report itself, provided by the noble Lord, Lord Low, and his committee. I have read it with great interest. There are a number of important factors about it. I particularly applaud that it does not simply seek the reinstatement of the status quo ante but rather explores a range of different possibilities. It will be a considerable source of assistance to all the parties as they prepare for the election. The colleague of the noble Lord, Lord Beecham, Andy Slaughter, has said that he will be mining the report for ideas. I know that there have been meetings at No. 10 and that there the noble Lord has met my ministerial colleague with responsibility for these matters, Shailesh Vara. It is an important document that will provide food for thought and inspiration for the way forward.

I welcome the fact that the report does not duck the fact that there are fiscal challenges facing this Government, which necessarily means that fewer resources are available and that hard decisions will have to be made about how they are spent. I also welcome the recognition that the advice and legal aid services sectors are in a period of transition and innovation, which, as the report states, offers scope for agencies to work more collaboratively and in more cost-effective ways in order to help their clients’ needs.

I assure noble Lords that the Ministry of Justice recognises the importance of encouraging decision-makers to get it right first time—a point made in the report and by the noble Baroness, Lady Grey-Thompson, in the course of her speech—and of ensuring that we continue to innovate and improve the current system, as suggested in the report. I can confirm that the Ministry of Justice works closely with other government departments to improve decision-making. We are also considering the recommendations referring to the way in which Her Majesty’s Courts and Tribunals Service hears appeals. The Ministry of Justice has published a strategic work programme for those tribunals that describes how we are working to improve the system in line with efficiency, fairness and accessibility.

We have also established the Administrative Justice Forum, an independent body made up of a range of people who have direct contact and can represent views. We have made considerable progress in the improvement of feedback mechanisms on decision-making to the Department for Work and Pensions, with the introduction of telephone case management and the employment tribunal.

The noble and learned Lord, Lord Woolf, drew an appropriate analogy to his work on access to justice and how that changed the culture and the way that we looked upon the resolution of disputes. That was referred to by the noble and learned Lord, Lord Hope, as well. I am glad to see that the judiciary is referred to specifically in the report of the noble Lord, Lord Low, as providing significant innovation in dealing with litigants in person, which are a reality that we have to face. I refer in particular to paragraph 4.12 of the report. This is the world in which we live: judges would no doubt prefer not to have litigants in person, but they are responding well, using modern technology in assistance to make the system more user-friendly for those who do not have the benefit of legal advice.

There was a great deal of complaint made by the noble Lord, Lord Bach, who I recognise has been a persistent champion of those needing social welfare law. He has also opposed almost every other cut, but I accept that he has made a particular feature of this area. He was critical of the use of the exceptional funding scheme and said that the Government were not, in fact, providing exceptional funding in the way that it was envisaged. I endeavoured to answer questions on that when they were raised in a Parliamentary Question recently. The position is that we think it is working; no doubt the forms might be improved, but we have to provide funding where there is a potential breach under the European convention or EU law. That is the position; that is what is provided by the Act.

There are many other features to which I would like to respond, but time does not permit me to do so. We acknowledge the many useful observations made during this debate and there is a great deal of value in what was suggested in the report itself, particularly in regard to the administrative justice and tribunal system. The Government will, of course, carefully consider these suggestions in the future and continue to incorporate them into our strategic work where it is appropriate to do so.

[Lord Phillips of Sudbury]

Can the Minister give any reassurance at all to the many who have spoken about public legal education, particularly in schools?

[Lord Faulks]

I cannot give any formal reassurance as to whether public legal education will be part of any schools curriculum. It is clearly an important feature in the report and is something that will be considered along with other matters.

House adjourned at 9.07 pm.