House of Commons

Monday 31st March 2014 Commons Chamber

Monday 31 March 2014

The House met at half-past Two o’clock

Prayers

Monday 31st March 2014 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Monday 31st March 2014 Commons Chamber

The Secretary of State was asked—

[David Mowat (Warrington South) (Con)]

2. What assessment he has made of the Office of Fair Trading’s recent recommendations on the creation of independent governance committees in defined contribution pension schemes.

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

The Government announced last week that pension providers will have to implement new independent governance committees to oversee workplace pension schemes. This is part of the Government’s package of measures to ensure that workplace pension schemes are well run and deliver value for money.

[David Mowat]

I thank the Minister for that answer, and I congratulate him again on his brilliant announcement last week of a 0.7% cap, which is 50% of the cap that the Opposition imposed on stakeholder pensions. But the OFT report identified other governance issues with smaller pensions where trustees and fund managers come from the same organisations, and it suggested that these independent governance committees be set up quickly. Will he confirm that that will happen before auto-enrolment goes much further?

[Steve Webb]

I am grateful to my hon. Friend for his support for our robust action on pension scheme charges. On governance, we recognise that there is potential for conflict of interest in some master trusts. Therefore, in last week’s Command Paper, which I am sure he will have studied, we proposed that master trusts should be subject to the same independence requirements as independent governance committees. We are now consulting on that proposal.

[Kevin Brennan (Cardiff West) (Lab)]

What does the Minister make of the Government’s new Financial Conduct Authority’s first foray into the area of defined contribution pension schemes?

[Steve Webb]

The FCA will shortly announce details of plans to look at a raft of old pension and life assurance products, some of which have exit fees and high charges, and I think consumers will warmly welcome such an investigation.

[Mr Julian Brazier (Canterbury) (Con)]

I commend progress on this as well as the amazing wider package of pension reforms for which my hon. Friend is responsible. On the balance that trustees will look at, may I urge him to bear in mind existing people in the system, not just pensioners themselves, because with Sheerness Steel people who were still working were almost wiped out in order to protect those who had retired?

[Steve Webb]

My hon. Friend is quite right. As he knows, we have both the Pension Protection Fund and the financial assistance scheme to help those whose sponsoring employer has become insolvent. It is important that we make sure that sponsoring employers are in a robust position and that regulation is proportionate, which is why we are changing the remit of the Pensions Regulator so that it has regard, in its actions, to the sustainable growth of the sponsoring employer.

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

Last week, the Minister announced that the Government were adopting lock, stock and barrel Labour’s policy on the pension cap. That is welcome news for savers, but the Minister and the hon. Member for Warrington South (David Mowat) both know that governance is key to ensuring that savers get value for money all the way through the pensions system. Does the Minister therefore agree that allowing big insurance companies to appoint independent governance committees themselves is a little like allowing the home team to pick the referee in a football match?

[Steve Webb]

The hon. Gentleman raises an important point about governance and independence. He should know that the proposed terms of reference for IGCs include requirements that providers go through open and transparent recruitment processes, and that members be appointed for fixed terms, with limited numbers of reappointments. The requirements are designed to avoid any possibility that IGC members have incentives not to challenge providers in order to remain in post.

[Mary Macleod (Brentford and Isleworth) (Con)]

3. What assessment he has made of recent trends in employment figures.

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

8. What assessment he has made of recent trends in employment figures.

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

16. What assessment he has made of recent trends in employment figures.

[The Minister of State, Department for Work and Pensions (Esther McVey)]

We have record numbers of people in work, and the numbers are rising. Youth unemployment has fallen for six consecutive months. There are record rates of women in work and increasing numbers of people setting up in business. We are most definitely seeing a new enterprise generation.

[Mary Macleod]

Since 2010, unemployment in Brentford and Isleworth has reduced by 21% and youth unemployment by 29%. Will the Minister join me in welcoming this, and in inviting everyone in west London to my third jobs and apprenticeships fair on Friday at West Thames college?

[Esther McVey]

I would indeed invite as many people as possible to go along to my hon. Friend’s job fair—her third one. She does so much to help her young people to get into work, and she works to support women into work, which must be acknowledged, particularly as we are now seeing record rates of women in work.

[Nick de Bois]

In my constituency, there have been 60 new enterprise allowance take-ups, and there have been 200 across the borough of Enfield. Will the Minister update me on her plans for continuing that scheme? Will she also update the House on the scheme’s progress across the country?

[Esther McVey]

My hon. Friend makes a good point. The new enterprise allowance has been a huge success. The latest figures, which came out last week, show that 40,000 people have set up businesses in that way. It is now running at 2,000 new businesses a month. That is because we support those businesses financially, but it is also because we support them with strong mentoring. Equally, at the very beginning, they must have a good business plan. New enterprise allowances are here, and they are staying.

[Alun Cairns]

Unemployment in the Vale of Glamorgan has dropped by more than 27% since the general election. Does that not demonstrate that UK employment growth is happening in all nations and regions? We should be celebrating the fact that the economy is growing outside London and the south-east as well as growing in that region.

[Esther McVey]

I totally agree with my hon. Friend. He is right. As I have said, new enterprise generation stretches across the UK. Long-term youth unemployment in his constituency is down by 28%. I hope it will go down a little bit more and reach the national average—youth unemployment is down by 32% nationally—but a lot of good things are going on across the country.

[Sheila Gilmore (Edinburgh East) (Lab)]

22. Despite all the talk of new jobs, 2.3 million people are still unemployed, only 58% of whom are on the jobseeker’s allowance claimant count, which suggests that it is not the generosity of benefits that is keeping people out of work. What steps are the Government taking to get that number down?

[Esther McVey]

I do not know whether the hon. Lady was smiling when she was describing all the good news that is happening. There is a record number of people into employment—over 30 million—youth unemployment has gone down for six consecutive months, and there is a record number of women in work. Perhaps she did not hear that, which is why I have repeated the good news that our long-term economic plan is working.

[Mr Stephen Hepburn (Jarrow) (Lab)]

But in reality, is it not true that long-term unemployment is rising, and that youth unemployment has doubled in the past six months, all because the Government are carrying out a policy whereby, at the next general election, good, secure, well-paid and skilled jobs in the public sector will have been slashed by 1 million, all with the goal of getting a low-wage economy in which insecurity is rampant?

[Esther McVey]

The hon. Gentleman spoke with gusto, but that was all he spoke with, because those are not the facts. Long-term unemployment has gone down and more people are in work than ever before. Perhaps he should have read the figures before he stood up to speak.

[Lucy Powell (Manchester Central) (Lab/Co-op)]

The Minister spoke of more women than ever in work, which is actually a reflection of the fact that there are more women of working age. She should look at other figures. For the first time in more than 15 years, the gender pay gap is rising, not falling. That is a reflection of women working below their pay grade, training and education, in part-time, low-paid work. What will she do about that?

[Esther McVey]

I have two figures for the hon. Lady. She is correct that there are record numbers, but I also said that there are record rates for women, which is different. That shows that our long-term economic plan is working. There are more women in work than ever before.

[Nigel Adams (Selby and Ainsty) (Con)]

4. What assessment he has made of recent trends in youth unemployment. [R]

[The Minister of State, Department for Work and Pensions (Esther McVey)]

Thanks to the Government’s long-term economic plan, youth unemployment is falling. I am particularly pleased that long-term youth unemployment has fallen by 38,000 over the last year. In my hon. Friend’s constituency, long-term youth unemployment has gone down by 38% in the past year.

[Nigel Adams]

Will the Minister congratulate, with gusto, local businesses, Jobcentre Plus, Selby college and York college for their efforts in ensuring that tremendous fall in youth unemployment since the last election in Selby and Ainsty?

[Esther McVey]

My hon. Friend said that with such gusto that I do not think I could top it. Employment and enterprise is important to him—at age 26, he set up his own telecommunications company with the aid of a Government enterprise grant, so he knows what he is talking about—and he is helping lots of people in his constituency.

[Alison McGovern (Wirral South) (Lab)]

Of the young people the Minister just mentioned who have a job, how many have gone on to work on zero-hours contracts?

[Esther McVey]

As the hon. Lady will know, the number of zero-hours contracts has remained fairly stable since 2000. They are called zero hours or casual hours, and they are used by Liverpool city council and Wirral council, which are Labour run. The worst council for using them is Doncaster.

We are having a full review of zero-hours contracts, and if they are exploitative we will bring about changes. Our report is due in July—something that Labour did not do for 13 years.

[Greg Mulholland (Leeds North West) (LD)]

Thanks to the new enterprise allowance scheme, more than 1,000 people in Leeds have met a business mentor and 490 have set up a new business, including 40 in my constituency. Does my right hon. Friend agree that that shows small businesses driving our economy and getting people back to work?

[Esther McVey]

I agree with my hon. Friend. New enterprises are starting up because of the new sense of confidence and optimism in the economy. The extra support that we are putting in place—checking business plans and providing support through mentors—is really paying dividends.

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

Some 180 young people in my constituency have been out of work for one year or longer. Can the Minister explain to the young man I met two weekends ago—he has been out of work for 18 months and is desperate to find a job—how the Government were so quick to give the banks a tax concession in the Budget, but are so slow to introduce a proper jobs guarantee plan for young people across the country?

[Esther McVey]

I would like to have a word with the young chap you are talking about, because I would like to give him hope and optimism, which is something that you are distinctly not giving—[Interruption.] I apologise, Mr Speaker. I do not mean your good self: I mean the hon. Gentleman. That young chap needs hope and optimism, and he needs to know what is happening in the rest of the country, because other people are getting jobs. Youth unemployment—including long-term unemployment—has gone down, and if the young chap sticks with it and gives it a go, he will get there in the end. That is the best news that I can give him. It is far better under this Government than it was under the Labour Government, when youth unemployment went up by 45%.

[Damian Hinds (East Hampshire) (Con)]

5. What steps his Department is taking to promote financial inclusion and to help families to budget.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

Through universal credit, the Department for Work and Pensions is investing £38 million in expanding credit union services to help more people to access affordable credit. A budgeting support package will be available to all those who need it through universal credit. At the same time, the Government are clamping down on loan sharks and doorstep lenders who have taken advantage of vulnerable people for too long.

[Damian Hinds]

In this 50th year of credit unions in Britain, may I commend the Secretary of State for what he continues to do to support the sector? Will he update the House on what is being done to tackle the excesses of the payday lenders he mentioned?

[Mr Duncan Smith]

The Financial Conduct Authority will limit continuous payment authorities, which allow payday lenders to take money out of people’s bank accounts, to two payments. The FCA will keep that under review. It is also preventing CPAs if a person would be left without money to buy essentials or for priority debts. We have already seen some payday lenders leave the market because it is being restricted in the right way. It is worth saying that before the last Government came to power, payday lending did not exist, but it spiralled to £1 billion-worth under them.

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

Has not the source of the pressure on family budgets been policies such as the freeze in child benefit and the cuts to tax credits, which have left families hundreds of pounds worse off?

[Mr Duncan Smith]

The biggest pressure on family budgets was the fact that far too many people lost their jobs as a result of the crash in the economy, in which GDP fell by 7.2%. Since then, we have reformed welfare. It is difficult when people are out of work, but we are doing huge amounts to get them back into work. As my hon. Friend the Minister of State has said, more people are in work, more women are in work and more young people are beginning to get into work, so we are getting more people into a position to look after themselves.

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

Financial resilience for families in my constituency can be a real challenge. One of the biggest impacts on the family budget can be the loss of a loved one. Does the Secretary of State think it is now time to consider whether social fund funeral payments should be index linked to inflation to ensure that they keep pace with the cost of funerals?

[Mr Duncan Smith]

I am certainly prepared to discuss the matter with my hon. Friend if he wants to come and see me about it. I keep that area of the social fund under review, as he knows. We localised about £200 million of the social fund to councils so that they could deal with the problems people face directly. We also kept the remaining money, so a total of about £1 billion goes out to all sorts of things, such as funeral payments, support for loans and support for people in hardship. This is a big push by the present Government to help people ahead of payday lenders.

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

Last week the BBC reported that just 6% of households affected by the bedroom tax had managed to move. Also last week, a report from Real Life Reform showed that nearly eight out of 10 tenants hit by the bedroom tax were in debt, with borrowing increasing by an average of £52 each week and families increasingly relying on loan sharks. Rather than preaching about careful budgeting, why do Ministers not just scrap this hated and unworkable tax, which is sending people spiralling into debt?

[Mr Duncan Smith]

It is interesting that the Opposition and the hon. Lady take the view that people moving is a bad thing. Let me just tell her—[Interruption.] It is interesting that they say that, but 30,000-plus people—I will repeat that: 30,000 people—who were in overcrowded accommodation have now had the opportunity for the first time to move into houses where they are not overcrowded. The hon. Lady and the Opposition left us with a quarter of a million people in that position—250,000—so in 10 months over 10% have had the opportunity to move and we are saving over £1 million a day. I call that a success.

[Karl Turner (Kingston upon Hull East) (Lab)]

6. What steps he plans to take to tackle long-term unemployment.

[Ben Gummer (Ipswich) (Con)]

13. What steps he plans to take to tackle long-term unemployment.

[The Minister of State, Department for Work and Pensions (Esther McVey)]

Those at risk of long-term unemployment are given personalised support through the Work programme. Industry figures show that it has moved half a million people into work. Jobseekers returning from the Work programme will get extra support through our new help to work scheme.

[Karl Turner]

Through the hard work of the Labour-led council and the three Hull MPs, Siemens has now said, “Hull, yes,” to a joint investment, with Associated British Ports, of £310 million, which will create 1,000 jobs, but this is not a silver bullet. We have a long-term unemployment crisis in my city. Will the Minister now support Labour’s job guarantee for the long-term unemployed?

[Esther McVey]

I am glad to see that the hon. Gentleman is taking full credit for the Siemens move, but I would like to think that the long-term economic plan and everything this Government have done for the last year should take some credit too. Equally, long-term unemployment in his constituency is down 20% on the year, while long-term youth unemployment in his constituency is down 34%, so I would say that what we are doing is right. Our long-term economic plan is right and I am glad that Siemens is in his constituency.

[Ben Gummer]

It is a fact that every Labour Government since the war have left office with unemployment higher than when they came in. That is why I am particularly proud that unemployment, both youth and total, is lower than when we came into office in 2010. We have a particular issue with long-term unemployment in Ipswich. What will my right hon. Friend do to ensure that when we leave office—in the long distant future, I hope—long-term unemployment will be lower than when we took office?

[Esther McVey]

My hon. Friend is correct, and he is meticulous in his homework and his figures and in everything he does. I would also like to explain to the House that long-term unemployment in the UK is half that of the eurozone—the figure is 2.7%—so what we are doing is right. Let us not get out of office, because when we are in office we run the country a lot better.

[Stephen Timms (East Ham) (Lab)]

The hon. Member for Ipswich (Ben Gummer) is absolutely right. Last year, the number of people who had been unemployed for more than two years reached a higher level than at any time since 1997. It then started to fall, but last week—contrary to what the Minister said a minute ago—it went up again. Does she accept that long-term unemployment is a terrible waste of human and economic potential, and will she now introduce a compulsory job guarantee for those who have been receiving jobseeker’s allowance for more than two years?

[Esther McVey]

It seems that the Opposition never really learnt anything. They want to introduce the future jobs fund and traineeships, for instance, because they enable them to manipulate the figures. They can take people off long-term unemployment and start the clock ticking again, but the figures that they give are unreal and untrue. We are ensuring that we measure the levels correctly, and that there is an honest assessment of what is happening to unemployment, including long-term unemployment. I can tell the Opposition, without fiddling any figures, that it is coming down.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

The corollary of long-term unemployment is the problem of hard-to-fill job vacancies. Can my right hon. Friend give me the most recent figures for the Thirsk, Malton and Filey travel-to-work area, and can she tell me what the Government are doing to place people in the care jobs which are so important to the community but so difficult to fill?

[Esther McVey]

My hon. Friend will be pleased to know that we are introducing sector-based work academies. When people are nearly job ready, and when businesses in the care sector have jobs to provide, we bring young people together and give them work experience and training, and a guarantee of a job interview at the end of that. Forty per cent. of those young people are being given jobs in the care industry.

[Ian Swales (Redcar) (LD)]

7. What assessment he has made of the effectiveness of the benefit cap.

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

12. What assessment he has made of the effectiveness of the benefit cap.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

The benefit cap is working. The latest statistics show that 39% of those who are no longer subject to the cap have since moved into work. We will evaluate the policy thoroughly, and expect to publish the findings in the autumn.

[Ian Swales]

The average yearly pay in my constituency is about £21,000 before tax and national insurance. Does the Secretary of State think that a benefit cap of £26,000 gives people outside London an incentive to work?

[Mr Duncan Smith]

The introduction of the benefit cap meant that, for the first time ever, people who were out of work could not end up with more than the average earnings of people who work hard and try to make their way in the world. That was the first stage of the process. Obviously, as with all our policies, we continue to look at it, but I currently have no plans to change the existing levels.

[Stephen Metcalfe]

Given that Members in all parts of the House have now supported a cap on benefit spending, will my right hon. Friend tell us whether he has received any representations on how it is possible to promise to repeal some welfare reforms such as the benefit cap while at the same time avoiding a breach of the overall cap?

[Mr Duncan Smith]

Interestingly, the Opposition voted against the imposition of the benefit cap, which they subsequently claimed to support. Last week they did a U-turn and voted for the welfare cap, which is the overall setting of the level of welfare. They plan to get rid of the spare room subsidy, but they have not told us where they will find the money. So here we go again: it will mean more money in taxes, more money in spending, more money in borrowing, and a bust economy once more.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

9. What progress he has made on the mesothelioma compensation fund scheme; and if he will make a statement.

[The Minister of State, Department for Work and Pensions (Mike Penning)]

I am proud to say that the Diffuse Mesothelioma Payment Scheme Regulations 2014 were passed by the House on 17 March, and the scheme administrator is in place. Applications will be accepted from next month, and we will make the first payments in July, as planned.

[Alison Seabeck]

Can the Minister explain why this morning, following an earlier inquiry on my part, there is nothing on the Department’s website, nothing on the gov.uk website and nothing on the website of Gallagher Bassett, the scheme administrator, although the scheme is intended to be up and running early in April? My constituents who suffer from this disease want to know how to apply. I think that the Minister is cutting it a bit fine.

[Mike Penning]

We may be cutting it a bit fine, but we want to get it right. We do not want people to try to apply before it is possible for them to do so. I find it difficult to understand why any Opposition Member should deny that this is a wonderful scheme that gives hope to people with a disgusting, horrible disease. Those people received nothing previously, which is why the scheme is so important.

[Guy Opperman (Hexham) (Con)]

In a previous profession I represented many victims of this terrible disease and I welcome the fact that the coalition has managed to get approval for the mesothelioma fund on the statute and also secured enhanced damages. Does the Minister agree not only that this will make a very big difference in the north-east, where there is a high prevalence of this disease, but also that the focus now must be on enhanced publicity so all the victims know just what they have to do to get the compensation?

[Mike Penning]

I could not agree more and I was very proud to be able to announce that we will be raising the benefit to 80% of average civil claims. That will give £123,000 to the claimants and their loved ones, plus £7,000 in legal fees, which if they do not spend they can keep; it will not be clawed back in any shape or form. People have waited for this scheme for many years and we will do everything we can to make sure that people who deserve it get it.

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

10. What assessment he has made of the effectiveness of (a) the Work programme and (b) Universal Jobmatch.

[The Minister of State, Department for Work and Pensions (Esther McVey)]

The Work programme is a success, and industry figures show it has moved half a million people into work. Universal Jobmatch revolutionises the way jobseekers look for work and it has already helped many jobseekers find the jobs they want through the millions of vacancies posted since 2012.

[Diana Johnson]

We recently heard that 60% of jobs on the failing Universal Jobmatch programme are bogus, such as the one for an MI6 “target elimination specialist”, and many of my constituents have been ripped off by criminal scams. With the Jobmatch programme set to be axed, will MPs now get the monthly constituency figures on the number of jobseekers chasing each job, which was removed in 2013, or will that information still be withheld?

[Esther McVey]

Opposition Members just love to run everything down despite the fact that all these things we have put in place have helped a record number of people into work. We introduced a brand-new scheme that was in addition to what people could already do to look for work. More than half a million companies have opened up a scheme within Universal Jobmatch, which is helping millions of people to find work. Whenever we find any businesses that are not correctly adhering to terms and conditions—it is a tiny number—they are removed, but I have to say that this is a terrific addition to help people look for work. Shame on you!

[Chloe Smith (Norwich North) (Con)]

The Minister knows of my passion for directly tackling youth unemployment in my constituency. Could she also tell me a little bit about what she is doing to help older workers find work, particularly using the tools referred to in the question?

[Esther McVey]

My hon. Friend does so much in her constituency to try to find young people jobs, such as setting up a scheme to find 1,000 of them jobs. She is doing that incredibly well and that task has nearly been completed. She is right that we have to help people of all ages. Yes, we put a £1 billion Youth Contract in place to help young people, but we have got to help people of all ages to get into work, which we are doing, whether through a new enterprise allowance, sector-based work academies, job clubs or Jobs First, and I can only reiterate that record numbers of people are in work.

[Mr Frank Field (Birkenhead) (Lab)]

As somebody who supports Jobmatch, may I ask the Minister whether she shares my concern that some of our constituents have been ripped off by those who are acting fraudulently? What steps has she taken to safeguard this scheme, which most of us support?

[Esther McVey]

The right hon. Gentleman, my constituency neighbour, is right in saying that 14 job- seekers —out of the millions a month who are looking for jobs through the scheme—were asked to pay for a Criminal Records Bureau check. The DWP is now working with them. Ten have put in for a compensation claim, and we are helping them to sort that out. If there is a bogus job or one that does not adhere to the terms and conditions on Universal Jobmatch, it is removed immediately. However, despite that one company, more than half a million companies are putting jobs up on the scheme to help people into work. I think we can all say that this is a resounding success.

[Lorely Burt (Solihull) (LD)]

The Work programme provides tailored support to the people who are most at risk of becoming long-term unemployed, at a fraction of the cost of Labour’s flexible new deal. Companies such as EOS in my region have been successful in helping people in that way. Does my right hon. Friend agree that we should be supporting the programme, rather than criticising it as the Labour party is doing?

[Esther McVey]

My hon. Friend is right. Of course we have to support schemes that work and of course we have to support businesses that want to get involved with our scheme. What is interesting is that we have got industry signed up to everything we do. All the big companies and all the small companies are signed up to what we want to do. The Opposition have come forward with a job guarantee, but not one business has signed up to that.

[Steve Baker (Wycombe) (Con)]

11. What recent assessment he has made of the effect of withdrawing crisis loans on homeless people wishing to raise rent in advance to secure housing.

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

Crisis loans have been withdrawn, but DWP budgeting loans are still available for rent in advance. There is also a range of support available through local authorities, including discretionary housing payments and local welfare provision, and, as I am sure my hon. Friend knows, there is a rent deposit scheme in his constituency administered by Wycombe district council.

[Steve Baker]

I am most grateful to the Minister for his answer. Unfortunately, Wycombe Homeless Connection has stated categorically that the withdrawal of crisis loans has made it much harder for homeless people to get into flats and homes. Will he write to me to tell me exactly what he expects from Wycombe district council, so that we can ensure it is properly guided? May I also point out that I would support the Department restricting certain benefits to the wealthiest pensioners if that would enable homeless people to get off the streets and into homes?

[Steve Webb]

I am sure that my hon. Friend would want us to stick to the terms of the coalition agreement, which commits us to protecting pensioner benefits for the lifetime of this Parliament. However, he is right to say that we have to do right by homeless people, and I welcome the fact that the December quarter’s homeless acceptance figures were down by 5% compared with a year earlier. That covers the period in which the change was made, and there are now about 50,000 homeless acceptances a year, which is about half the level that we saw in the early years of the Labour Government.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Does the Minister find, as I do in my constituency, that when people in his own constituency get into a real crisis, the help that they used to be able to draw down is no longer there and that the community and third sector groups and charities are underfunded?

[Steve Webb]

On the contrary, the money that we were spending on crisis loans and community care grants, amounting to more than £170 million a year, has been devolved in full to local government. The hon. Gentleman should take the matter up with his local authority if is not spending it properly.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

14. How many IT specialists are working on the digital solution to universal credit.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

We continue to build up the Department’s digital capability, having launched the Government’s first digital academy and brought in a man called Kevin Cunnington, who was previously global head of online at Vodafone. Some 370 people are working full time on the universal credit change programme. The aim of any multidisciplinary team is that individuals should come and go, reflecting requirements at each stage. A team of 50, of which 25 are digital specialists, is currently working alongside other experts, and it is steadily building and on track.

[Chi Onwurah]

It is my understanding that the Secretary of State plans to continue the development of the existing, discredited universal credit IT system while building a new system in parallel, on the recommendation of the Government Digital Service. Will he confirm whether that is the case, and set out how much extra that double development is going to cost? Also, how is he going to recruit the skills he needs, given the current shambles?

[Mr Duncan Smith]

First, on the skills side, we have been recruiting and we have also been educating internally at the DWP, which has been a big success. The digital process, which is about improving this, will carry on. It is the development that was recommended for the longer term. In the meantime, the live service is running, and the system is not discredited. It is working, with the pathfinder rolling out through the north-west, and it will continue to roll out. The vast majority of the equipment being developed in that will be used within the digital system, so those who say that the money being spent on that is being wasted are simply wrong. It will be used in the medium and longer term for all of the universal credit roll-out.

[Charlie Elphicke (Dover) (Con)]

In developing universal credit and its IT system, what lessons have the Government drawn from IT projects conducted by the previous Government?

[Mr Duncan Smith]

The reason why we are doing this in a way that tests it at each stage, so we make sure we have got it right before rolling it out and taking more numbers on board, is because we want to make sure that taxpayers’ money is protected through this process and that the system works. I recall, as I am sure my hon. Friend does, that when the Labour Government launched tax credits it was a total disaster; we had loads of people in our surgeries with real problems relating to payments. This Government will never revisit that, which is why I will never accept any advice from the lot who wasted billions on failed IT programmes.

[Chris Bryant (Rhondda) (Lab)]

I know the Secretary of State loves to argue that black is white and white is black, but how on earth can he possibly stand here and suggest that this project is “on track”? The Government promised that 1 million people would be on universal credit by tomorrow—by 1 April this year—but how many are on it? He said at the beginning of the month that there were 6,000, but the figures given by the Minister of State, the right hon. Member for Wirral West (Esther McVey), show that fewer than 4,000 are. So precisely how many people are working on the IT? Is it 50, as the Secretary of State just said, or is the figure eight, as the Minister of State said earlier this month?

[Mr Duncan Smith]

I know the hon. Gentleman likes to get up and speak, but sometimes he needs to be aware of the facts that have been given to him. I have just given those facts, but because he was not listening I will give them again. Of the team of 50 working on the digital system, 25 are digital specialists—there will be more as we develop it and report back. May I simply say that instead of moaning about this system, Opposition Members might like to visit it, as many other MPs have done, because they will see how successful its rolling out has been? Some 90% of the claims for JSA as a result of universal credit are now made online, and 78% are monthly payments—these are people confident to receive those payments. [Interruption.] The reality is that the systems the Labour Government implemented were failures, whereas this will succeed and change many people’s lives.

[Mr Speaker]

Order. Mr McCann, I say to you in all courtesy and in all charity that the role of the Parliamentary Private Secretary—you are sitting in the PPS slot—is to nod and shake the head in the appropriate places, and to fetch and carry notes, not to shriek from a sedentary position or gesticulate in an unseemly manner.

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

Will my right hon. Friend confirm, and remind the House, that universal credit is set to deliver £35 billion of benefit to our economy?

[Mr Duncan Smith]

Yes, I agree with my hon. Friend on that. The National Audit Office report said that a minimum of £38 billion would actually be the positive elements brought to the UK economy and those who are in need. The real problem is that the Opposition say they support it, but they carp about it. The reality is that every change they ever brought in was a failure. They wasted billions of pounds of taxpayers’ money. We will implement this carefully and because of that, people will benefit, rather than suffer, as we all recall they did when Labour introduced tax credits.

[Mark Pawsey (Rugby) (Con)]

15. What recent assessment he has made of the effect of universal credit on employers.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

The Department has consulted widely with employers over the past 12 months to ensure that universal credit works in the best way possible for them. The Minister with responsibility for welfare reform recently met national employers, trade bodies and employer representative groups, and we know that universal credit will have a positive impact on employers through the flexibility it brings to their work force—unlike tax credits.

[Mark Pawsey]

I thank the Secretary of State for that answer. He will be aware the Rugby jobcentre is among the first six offices to introduce universal credit. Will he join me in complimenting the staff there on achieving a successful roll-out in a complicated procedure? Given recent concerns about child care, will he reassure the House about the availability of child care support under universal credit for families in work?

[Mr Duncan Smith]

I am grateful to my hon. Friend for raising that issue, because under universal credit we will increase the child care level to 85% of the cost. We will be investing a further £400 million a year in a steady state, and 500,000 families will gain. These are positive incentives to go back to work. Child care costs are now paid up to a maximum of £646 per month for one child and £1,108 for two or more children. In universal credit we are removing the 16-hour rule, which exists in tax credits and is a major disincentive for many lone parents and others to take jobs—that has been abolished, and some extra £200 million will help 100,000 families back into work.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

17. What recent assessment he has made of whether the UK will meet the 2020 statutory child poverty target.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

The Government are committed to the Child Poverty Act 2010 and to ending child poverty by 2020. It is not possible accurately to project child poverty figures, but already we are seeing progress in tackling the root causes. Just last week, we learned that there are now 290,000 fewer children living in workless households compared with 2010, and that has a net impact and effect on child poverty.

[Catherine McKinnell]

The Secretary of State mentions reducing the number of children in workless households, but today child poverty is overwhelmingly a problem for working families. Since 2010, the number of parents who work part time but who want to work full time is up 45%. What are the Government going to do about the prevalence of low-paid insecure work that is trapping families in poverty?

[Mr Duncan Smith]

The last figures that covered people who were in work and in poverty were misrepresented by those who talked about them. In truth, those figures reflect what happened under the previous Government, when we saw an increase of 500,000 families who were in work and in poverty. That has been flat since the election. We are working on that to ensure that we get as many people out of poverty as possible. The reforms that we are changing and making to get people back to work, which the Minister of State, my right hon. Friend the Member for Wirral West (Esther McVey) has talked about, will have a huge impact on those who are in poverty now.

People are better off in work. Despite what Labour did, people have more chance now to change their circumstances and more likelihood of coming out of poverty. Let me remind the hon. Lady of one little fact. Labour spent £175 billion of taxpayers’ money on one benefit—chasing a child poverty target that it simply did not achieve. That was wasted money.

[Mary Macleod (Brentford and Isleworth) (Con)]

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

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

We were pleased this week to find elements of—that new families formed were no longer breaking up. These figures came out last week to ensure that we are making our programmes work for very good reasons. Families are now staying together. Stable families in households being able to—[Interruption.]

[Mr Speaker]

Order. May I gently interrupt the Secretary of State? I thought that he was going to give a brief rundown of his departmental responsibilities in answer to the first topical question.

[Mr Duncan Smith]

I was talking about the figures that came out last week on new families forming and staying together.

[Mr Speaker]

That is what the right hon. Gentleman was seeking to do?

[Mr Duncan Smith]

indicated assent.

[Mr Speaker]

We are grateful. We will leave it there for now.

[Mary Macleod]

May I thank my right hon. Friend for the work that he and his Department are doing in transforming lives and getting people back into work? In preparation for my jobs and apprenticeships fair on Friday, will he confirm the job vacancy figures for both London and Brentford and Isleworth?

[Mr Duncan Smith]

At the end of last week, there were 927 active vacancies and 1,493 active jobs in the Brentford and Isleworth constituency. The vacancies were largely in retail, travel, transportation and tourism. The jobcentre has also worked with Asda and Premier Inn to deliver work experience and sector-based work academy opportunities.

[Rachel Reeves (Leeds West) (Lab)]

Just 46% of disabled people are in work, while 40% of disabled people not working report that they want to work. Helping disabled people into work provides them with security and dignity as well as helping control the costs of social security. Will the Secretary of State tell the House what proportion of disabled people referred to the Work programme get a job?

[Mr Duncan Smith]

The Work programme has been successful for those who are furthest from the labour market. The group of people the hon. Lady is talking about who suffer from sickness and disability have, for the first time, been worked with and helped back into work. The figures that we are seeing now are slower than we would have wished, but they are, none the less, improving all the time. Let me remind the hon. Lady that no one has ever attempted to get these people back into work. The Work programme is succeeding in helping into work those who were never in work before.

[Rachel Reeves]

The truth is that just 5% of disabled people on the Work programme end up in work. If that is a success, I would like to know what failure is. It is worse than doing nothing. It is a disgrace to let disabled people down in such a way. In the Budget, spending on employment and support allowance was revised up by a staggering £800 million because of delays, incompetence and the complete failure of the Work programme. Will the Secretary of State now agree to take action to help disabled people and give them the support they need and reform the failing Work programme?

[Mr Duncan Smith]

Let me remind the hon. Lady that, as I said earlier, for these people, and the previous Government made no effort whatsoever to get them back to work—[Interruption.] No, 2.5 million people were written off on sickness benefits under the previous Government. No one worked with them and about 1 million were left without anybody seeing them for nearly 10 years. That is the record of the previous Government. I simply remind the hon. Lady that since we came to power, some 22,000 have started a job for the first time and many thousands more have worked with the Work programme to get ready for work without a requirement to go to work. The programme is succeeding and improving all the time and this is the first time that the thousands who are going back to work have ever had help—they got none from the previous Government.

[Henry Smith (Crawley) (Con)]

T2. What is my right hon. Friend’s assessment of how the Government’s triple lock guarantee for increases in the state pension has benefited thousands of pensioners in my constituency and across the country?

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

I am grateful to my hon. Friend for flagging the fact that we have increased the basic state pension by whichever of earnings, prices or 2.5% gives the best outcome for pensioners. Compared with the earnings link, which we think the Opposition would have restored from 2012, that is an extra £440 a year in state pension for pensioners in our constituencies.

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

T3. A constituent of mine who is on jobseeker’s allowance wrote to me to ask for financial support to get feedback on her interview technique to find where she was falling down at interview. Instead, I gave her a mock interview and, I hope, some helpful feedback. She says of the jobcentre, “I have asked umpteen times for interview practice, but all I get is directed to tips on the web.” Why can that not be provided by the jobcentre?

[The Minister of State, Department for Work and Pensions (Esther McVey)]

I would like to know which jobcentre that was. I know, as I go to jobcentres all the time, how caring and supportive the advisers are. They take as much time as necessary, particularly with the claimant commitment we have rolled out across the country, to find out what skills, tips and support claimants need. I know that that is working, which is why we have record figures. I shall take the issue up, however.

[Dr Julian Huppert (Cambridge) (LD)]

T8. A number of my constituents have contacted me to say that they are having to wait six months or even longer for an assessment for employment and support allowance or the personal independence payment. Surely that is unacceptable. What will the Minister do to make sure those people get assessments that are both accurate and prompt?

[The Minister of State, Department for Work and Pensions (Mike Penning)]

There are two separate answers to that question. On WCA, Atos is leaving and we will bring in a new contractor before moving to multiple contractors to ensure that the suppliers can do what is said on the tin, all without paying a single piece of compensation to Atos—[Hon. Members: “Hear, hear.”] Exactly the opposite, actually—Atos will be paying it to us. Secondly, PIP is being rolled out. We need to ensure that we get it right, as the hon. Gentleman said, and we will make sure that we get it through quicker. We need to make sure that the assessments are correct rather than making mistakes.

[Julie Hilling (Bolton West) (Lab)]

T4. My constituent, Lyn Ward, has had a lumpectomy, a mastectomy, chemotherapy and radiotherapy. Eleven months later, she is still waiting for her PIP assessment and in desperation has gone back to work, even though she is not yet fit. When will that be sorted out?

[Mike Penning]

As I said to the hon. Member for Cambridge (Dr Huppert), we need to make sure that we get it right as we roll out PIP. The hon. Lady can give me the details of the case if she would like. Thousands of cases have been handled correctly, and if there are mistakes we must ensure that they are addressed.

[Steve Baker (Wycombe) (Con)]

T9. What recent assessment has the Secretary of State made of the innovation fund in helping disadvantaged young people?

[Mr Duncan Smith]

The innovation fund, which started with £30 million put in by my Department, has helped to build up the concept for social impact bonds, which will help to invest in the sort of projects that my hon. Friend is talking about. The trials have been to help children from the ages of 14 to 16 to get remedial education and to be job-ready. That has been a huge success and we will in due course publish the figures, but it opens the marketplace to new money from private investors and trusts.

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

Last week, the Select Committee on Work and Pensions published a report that recommended that the backlog for the PIP assessment should be cleared before the Government continued with the migration from the disability living allowance to PIP. Will the Government accept that? Will the fact that Atos has now lost the contract for the WCA have an impact on PIP? What action has the Minister taken to speed up new claims for PIP?

[Mike Penning]

Atos leaving the WCA contract will have no impact on the PIP part of the contract. We are making sure that we speed it up as we go. Interestingly, as the Chair of the Select Committee knows, I have turned off the tap on reassessments so that we get the initial backlog done first. The backlog is taking too long, in my own Department as well as in the two providers, but we will get it right.

[David Rutley (Macclesfield) (Con)]

Given the German Government’s determination to clamp down on EU migrant benefit abuse, does my right hon. Friend agree that there is growing support among key EU member states for this Government’s agenda on this vital issue?

[Mr Duncan Smith]

Yes, there is huge support in other countries. Recently, Mrs Merkel, the Chancellor of Germany, said:

“There is a need for clarity: who is entitled to claim social security in Germany, and under what conditions.”

The Deputy Prime Minister of the Netherlands, among others, has said exactly the same. I am in discussions with many of my counterparts across Europe to make sure that we, as individual independent nations within the EU, will be able to impose the conditions we require to stop migrants coming here just to get better benefits than they would in their own country.

[Mrs Mary Glindon (North Tyneside) (Lab)]

With thousands of PIP claimants waiting six months or more for even their medicals before they get anywhere near any money, will the Minister say exactly what penalties he is imposing on Atos and Capita for failing so abysmally?

[Mike Penning]

As I said in my previous answer, it is not just Atos and Capita that are too slow. They are under a contractual obligation to the Department and I am enforcing that contract, so where they are asked for compensation we will get that compensation.

[Tim Loughton (East Worthing and Shoreham) (Con)]

One of the most satisfying ways for people to get into work is often by setting up their own businesses. I am always impressed by the young entrepreneurs mugging me in my constituency to buy something from their new business. Will my right hon. Friend update us on the progress of the new enterprise allowance, in particular on how it is helping our younger entrepreneurs?

[Esther McVey]

My hon. Friend obviously has very enthusiastic young constituents with vibrant businesses. He is right that the new enterprise allowance is helping young people aged 18 to 24, some 7% of whom have set up their own businesses. I have said that we are creating a new enterprise generation, as shown by the 2,000 new businesses a month, 7% of which are set up by those aged 18 to 24.

[Mr Dave Watts (St Helens North) (Lab)]

Following last week’s Budget, will the Minister assure me that if people exhaust their pension pots they will still be entitled to the full range of pensioner income-related benefits?

[Steve Webb]

Unlike the Labour party, we actually trust people with their own money. The people we are talking about have saved frugally for their retirement; they are not the sort of people to blow the lot. We will, of course, look at all the rules on capital in our Department and in the Department of Health in the light of the announcement to ensure that they are up to date, but I think the hon. Gentleman’s view that older people will blow the lot is far from the truth.

[Robert Halfon (Harlow) (Con)]

Is my right hon. Friend aware that unemployment in Harlow is now 600 lower than it was at the general election, and that the number of apprenticeships in the past year has gone up by 86%? Will my right hon. Friend pay tribute to the Jobcentre Plus and the agencies that are working well with the Government’s Work programme to improve the unemployment and skills situation in Harlow?

[Esther McVey]

My hon. Friend is right to mention the people who work tirelessly to help people into work. All the staff at the Jobcentre Pluses, all the benefit staff and all those who work on the Work programme dedicate so much of their time to something that they believe in: getting people into work.

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

Frankly, the answers that Ministers have given so far on the Work programme defy belief. How can Ministers be satisfied with a Work programme where the latest data show that only one in five people, having spent two years on the programme, go on to secure a job that is sustained?

[Esther McVey]

I will give the hon. Gentleman the figures: 1.5 million people are now receiving support that they have never received before, and half a million of those have got a job. More than 252,000 of those who have been long-term unemployed now have a lasting job. The hon. Gentleman might not think that that is very good progress, but I would say that it is revolutionary: it is turning people’s lives around. I meet those people and they say, “You know what, I thought the world had given up on me, but not now. I’ve got a job and I can support my family.”

[Duncan Hames (Chippenham) (LD)]

I congratulate the Pensions Minister on the radical reforms he announced last week, which will be warmly welcomed by the retired secondary cancer patient whose case I raised with him before the Budget. How soon will people like her be able to get their hands on what is, after all, their own money?

[Steve Webb]

I am grateful to my hon. Friend, who did indeed raise the issue with me before the Budget. Short-term changes came into effect last week to raise the limits on things such as draw-down and, in the jargon, trivially commuting small pension pots. Legislation will go through for much greater liberalisation to come into effect in April 2015.

[Natascha Engel (North East Derbyshire) (Lab)]

We read in The Guardian—it must be true—that the Secretary of State is considering charging for appeals against DWP decisions. If someone has their benefits stopped, with what money are they supposed to pay to get justice?

[Mike Penning]

That is a matter for the Secretary of State for Justice, but we have no plans whatsoever to charge for appeals or tribunals.

[Mr David Nuttall (Bury North) (Con)]

Does the Secretary of State agree that, when it comes to a jobs guarantee, in the real world there is no such thing as a guaranteed job and that new, genuine jobs can be created only by growing companies?

[Mr Duncan Smith]

What is interesting about the Opposition’s view of a jobs guarantee is that their future jobs fund failed. We have introduced work experience, which costs a tiny proportion of what the future jobs fund cost—some £300, as opposed to £6,000 or nearly £7,000 a job—and as many people get into work and come off benefit as did under the future jobs fund. Labour’s make-work schemes do not work, but our schemes, which get private sector employers to help, do. We are getting people back to work.

[Bill Esterson (Sefton Central) (Lab)]

More than 15,000 people in my constituency, which is over 40% of those in work, earn less than the living wage. For millions of people the employment figures hide the reality of underemployment, zero-hours contracts and part-time, low-paid and insecure work. I wonder whether the Secretary of State can tell me how many of his constituents earn less than the living wage.

[Mr Duncan Smith]

I never heard Labour Members moan much about the living wage when they were in government, but all of a sudden it becomes an issue. The reality is that we are doing more to get people back to work, which gives them a chance to improve their living standards and incomes. The reality is that I took the decision to ensure that my Department pays the living wage, including to the cleaners. The Opposition never did that. I think that we stand ahead of them in that matter.

[Philip Davies (Shipley) (Con)]

Has the Secretary of State noticed that when the spare room subsidy was first removed the Opposition and their mouthpiece of choice, the BBC, complained that too many people would be removed from their homes, yet last week Labour BBC was complaining that too few people have been removed from their homes? In the interests of fairness, surely taxpayers not on housing benefit who cannot afford a spare bedroom should not be expected to pay for a spare bedroom for people on housing benefit.

[Mr Duncan Smith]

The first and principal point is that this programme is saving over £1 million a day for hard-pressed taxpayers, many of whom, as my hon. Friend said, cannot afford a spare room themselves but were paying taxes to subsidise those who had spare rooms. The second point is that over 30,000 people who were once in overcrowded accommodation, left behind by Labour in terrible conditions, are now moving into better houses. This programme is a success. The Opposition did nothing about those people the whole time they were in government.

[Mrs Anne McGuire (Stirling) (Lab)]

In my constituency the waiting time for PIP assessments is now 26 weeks. [Interruption.] After further investigation, I discovered that that is because of a lack of suitable accommodation in which to carry out assessments. Why was a contract signed with Atos when there were no suitable premises in my constituency in which to carry out PIP assessments?

[Mike Penning]

I find it very hard to listen to that from a former Minister in the Government who signed the original contracts with Atos, and who seemed very happy with it at the time. We have removed Atos from that work. I will look into the particular situation the right hon. Lady refers to, but I find it very difficult when Opposition Members hark on about what to do about Atos when it was they who employed it in the first place.

[Mr Speaker]

I cannot identify the individual involved—I would not be in a position to do so—so I will simply tell the House collectively that blowing one’s nose underneath a microphone is a distinctly risky enterprise.

Petition

Monday 31st March 2014 Commons Chamber

Jacob Rees-Mogg (North East Somerset) (Con)

- Hansard - - Excerpts

I am very pleased to bring to the House a petition brought to me by the mayor of Midsomer Norton, among others, that has been signed by so many people, so numerous as the stars in the heaven and as the sand which is upon the seashore.

The petition states:

The Petition of residents of North East Somerset,

Declares that the Petitioners believe that while the principles of the National Planning Policy Framework (NPPF) are worthy, its implementation has led to negative consequences that were not anticipated; further that the Petitioners believe that when the Planning Committee of a local authority, which has a draft Core Strategy, refuses a planning application on strategic grounds, the application is often allowed on appeal by the Planning Inspector on the basis of non-strategic, site-by-site considerations; and further that the Petitioners believe that as a result, unsustainable development in the Somer Valley is being approved on sites often remote from employment and transport infrastructure, in accordance with the priorities and interests of developers rather than the carefully researched and democratically agreed plans of the Local Authority.

The Petitioners therefore request that the House of Commons urges the Government to take the necessary steps to allow Planning Inspectors at appeal hearings to take into account and give great material weight to the cumulative effect of proposed developments; further that the House requests that the Government allows Planning Inspectors to interpret the sustainability principle in the NPPF on an area rather than merely on a site specific basis and further that the House requests the Government to take the necessary steps to allow Planning Inspectors at appeal hearings to give weight to the strategic proposals of a draft Core Strategy while it is going through the lengthy approval process.

And the Petitioners remain, etc.

[P001340]

Yarl’s Wood Immigration Centre (Detainee Death)

Monday 31st March 2014 Commons Chamber

15:35

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

(Urgent Question): To ask the Home Secretary to make a statement about Yarl’s Wood.

[The Minister for Security and Immigration (James Brokenshire)]

I am sure that the whole House will join me in offering our very sincere condolences to the family of the woman who died at Yarl’s Wood yesterday. This was tragic news, and I was certainly very sorry to receive the information. The House will understand that what I can say at this stage is limited.

The established procedure in this situation is to bring in the police to look at the circumstances. Bedfordshire police are currently leading that work. No cause of death has yet been established. Once police inquiries are concluded, the established process is that the prisons and probation ombudsman will begin an investigation. That will happen in this case. However, our focus in the immediate aftermath must be to support the family and to keep public comment to a minimum until the circumstances of yesterday’s sad news become clearer.

Following any death in detention, we ensure that detainees are offered counselling and access to a support plan. We review the detention of any individual in the centre who is considered to be vulnerable and ensure that they are given appropriate support. That also applies to staff working in the detention centre.

What I can say, in general, is that the operation of immigration removal centres is a serious responsibility that falls to the Home Office. Nobody involved in this work is in any doubt about the seriousness of the role. In taking on my role as Minister for Security and Immigration, I made it an early responsibility to visit an immigration removal centre to help me understand fully the range of issues connected to detention in such an environment; I visited Brook House and Tinsley House in February.

Like other immigration removal centres, Yarl’s Wood is subject to oversight from Her Majesty’s inspectorate of prisons, whose most recent report was published last October. There were some key recommendations for the Home Office to review. However, the assessment of the regime in general was that it was improving. I commend to the House Nick Hardwick’s overall introduction to the report, which succinctly highlights the difficult circumstances of women in detention and the improvements that have been made to the regime. The report, and the Home Office’s response to its recommendations, have both been placed in the Library.

The responsibility for the detention of immigration offenders is taken seriously by everyone involved; I underline that it is a personal responsibility. I hope that the House will understand that it is far too early to draw conclusions at this stage and that to indulge in speculation would be distressing to the family and irresponsible, given the seriousness of the issues involved.

Detention and removal are essential elements of an effective immigration system. It is important that our centres are well run, safe and secure and that our detainees are treated with dignity and respect, and provided with the proper facilities. Detainees’ welfare is extremely important, which is why are committed to treating all those in our care with such dignity and respect. The House will be as distressed as everyone to hear of this news and will want the family and loved ones of the lady involved to know that they are in our thoughts and prayers at this difficult time.

[Yvette Cooper]

The whole House will agree with the Minister that the news of a 40-year-old detainee dying in Yarl’s Wood is extremely sad. All our thoughts must be with the family and friends, and it is important that they should get appropriate support.

I welcome the Minister’s response that a full investigation is in place. He will be aware that there are unconfirmed reports that the detainee was initially denied medical assistance. Can he assure the House that all those reports are being fully looked into as part of the police and wider investigations? He will also be aware that there are reports that Yarl’s Wood had turned down offers of help from the local NHS for other women detainees who were distressed after witnessing the death. Is that the case, and what further support was provided to others at Yarl’s Wood yesterday?

The whole House will agree that immigration rules need to be enforced, and that does require deportations. Some people need to be detained in advance of deportations, and that is never easy. The House will also agree that this must always be done humanely, with high standards and safeguards in place. Last October’s prisons inspectorate report on Yarl’s Wood referred to some dismissive responses from health staff within Yarl’s Wood, and research by Women for Refugee Women says that many women detainees felt that they were not believed by health staff and raises concerns about physical and mental health support. What action has been taken about that?

What action have Ministers taken since last year’s deeply disturbing reports of abuse of vulnerable women by Serco employees at Yarl’s Wood, including having sex with women detainees and sexual bullying? We have not yet seen a full investigation into what happened and what action has been taken to prevent it from ever happening again.

The inspectorate has also said that women who had been abused or trafficked are still wrongly detained in Yarl’s Wood. These are clearly very vulnerable women who need support, so what is being done to stop them being detained?

The Minister will be aware of the case of Yashika Bageerathi, who is being placed in Yarl’s Wood just before her A-levels despite the Home Office guidance about not separating families and not moving teenagers just before exams. In the light of the concerns raised, will he personally review Yashika Bageerathi’s case?

Given the continuing concerns about Yarl’s Wood, will the Home Secretary commission a joint inquiry on its operations and the Serco contract by the prisons inspectorate and the independent chief inspector of borders and immigration, and will she then report swiftly back to the House?

I welcome the Minister’s response to the question. He and I both agree that while immigration rules must always be enforced, detainees must be treated humanely, and it is the Government’s responsibility to ensure that both take place.

[James Brokenshire]

I thank the right hon. Lady for the tone of her comments and the points she has made about this tragic incident. I certainly agree that it is important that we have a system that is firm but fair and treats those who are in our immigration removal centres in a humane and appropriate way. That is certainly the standard that I expect, and I know that that view is shared by the Home Secretary and all of us who have responsibility in this regard.

The right hon. Lady asked about the level of support provided to those at the centre. I have spoken to the centre director, John Tolland, about that. He has underlined the fact that there has been increased staffing, increased counselling is being provided, and additional pastor support has been arranged for those at the centre.

I am not in a position to comment on the specific points that the right hon. Lady raised, but I can assure her that they will have been heard by those with responsibility in the police and the inspectorate. Certainly, I would expect all issues to be thoroughly analysed and investigated appropriately, given the nature of this incident.

The right hon. Lady highlighted the issue of medical support and the overall regime at Yarl’s Wood. She will be aware that the chief inspector of prisons, Nick Hardwick, conducted an unannounced inspection of Yarl’s Wood, and it is worth highlighting his concluding remarks. He said:

“Yarl’s Wood has had a troubled past, punctuated by serious disturbances and controversy surrounding the detention of children. This inspection found that the improvements we have noted since the detention of children ended have continued. Nevertheless, despite the good progress made, improvement continues to be necessary.”

I entirely endorse that. There is a need for continued focus to ensure that we see further changes and improvements at Yarl’s Wood. That is something that I will continue to focus on.

On health service support, specific recommendations that were contained in the inspector’s report have been pursued and there has been further analysis of the health support required there. That has been sent to the NHS commissioners.

I reassure the House of the seriousness that we attach to the incident. We expect all issues to be properly investigated and pursued.

[Mr David Burrowes (Enfield, Southgate) (Con)]

Given what we have heard about Yarl’s Wood today, how does it make sense for my constituent, Yashika Bageerathi, to have been detained there for nearly two weeks now, away from her traumatised mother and family? Her plight has been championed by the students at Oasis Academy Hadley school and by over 170,000 people in an online petition. They want her back to continue her studies and to complete her A-levels in May. Given that Home Office policy says specifically that someone who is three months away from sitting a major exam will not be removed, will the Minister order the release of Yashika today and allow common sense and compassion to prevail?

[James Brokenshire]

I know that my hon. Friend has raised concerns about this case and I commend him for his customary focus on supporting his constituents, which he has underlined again in respect of this individual case.

We consider every claim for asylum on its individual merits and this particular applicant was not considered to be in need of protection. The case has been considered carefully not simply by the Home Office but by the courts and tribunals, and has gone through the proper legal process. The decision has been upheld and supported by the courts. Given those circumstances and the extent and level of judicial and other scrutiny, the Home Secretary has indicated that she does not feel that it is appropriate to intervene. That remains our position.

[Keith Vaz (Leicester East) (Lab)]

I associate myself with the comments made by the hon. Member for Enfield, Southgate (Mr Burrowes). The Minister is right to have started an investigation and to await its outcome, but the deaths of Jimmy Mubenga and Alois Dvorzac remind us of how careful we need to be in these matters. Last year the chief executive of Serco wrote to me to say that seven of his employees had been dismissed for inappropriate conduct at Yarl’s Wood over the past few years. Does the Minister agree that even before the inquiry concludes, he needs to contact the private sector companies to remind them that they have a huge responsibility when dealing with people’s lives, that they ought to treat those lives with great care and that they must have staff who are properly trained?

[James Brokenshire]

The right hon. Gentleman has highlighted some significant issues. There have been some shocking and disturbing cases in the past few years and he has referred to them. He will know that there are ongoing police investigations and criminal proceedings in those cases, which makes it difficult for me to comment on any specifics. I underline to him that the Home Office has conducted a review of the methods of restraint and the use of force in the difficult circumstances of removal. The development of new bespoke training packages for escorts during the removal process has been undertaken by the National Offender Management Service. An independent advisory panel for non-compliance management, chaired by Stephen Shaw, a former prisons and probation ombudsman, was appointed to assess the restraint techniques and the safety of the proposed systems. That panel’s work is literally due to conclude in the next day or so and I look forward to its recommendations, because it is important that staff are fully cognisant and trained. Certainly, I underline the key message of holding responsibility for managing those in detention.

[Sarah Teather (Brent Central) (LD)]

During my various visits to detention centres, I have been alarmed by the number of times I have heard from detainees that they have difficulty accessing health care, usually in direct contradiction to the reports being put out by management. The situation is particularly alarming given the number of detainees with serious health problems. The Opposition spokesperson, the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), has referred to a report by Women for Refugee Women that highlights the number with particular health difficulties, and we know that those in detention often find that things get worse. What is the Minister doing to get underneath the skin of the data that management put out about access to health, and what is he doing to ensure that those with serious mental health and physical problems are not in detention at all?

[James Brokenshire]

I know that the hon. Lady has taken a close interest in these matters for some time, and I welcome her involvement and question. On the chief inspector’s recommendations for Yarl’s Wood, a health-needs assessment was conducted on behalf of the NHS last August. It has been shared with the NHS more broadly and I will certainly pursue the issues involved. I reassure the hon. Lady that those in detention are held there for the least amount of time practical and possible. Indeed, the advice and guidance on rule 35 reports —with which she will be familiar—have been refreshed and underlined. I certainly take the issue of medical support for those who are in need of assistance extremely seriously, and we will continue to focus on ensuring that appropriate medical support is provided in our immigration removal centres.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

May I also associate myself with the comments of the hon. Member for Enfield, Southgate (Mr Burrowes)?

The Minister talks about the importance of treating detainees with dignity and respect. He will know that, before yesterday’s tragic incident, there has been a growing chorus of concerns about the experience of women in particular at Yarl’s Wood: there are stories of sexual harassment and a number of the women detained have experienced rape or sexual violence in their home countries and have mental health problems. Given those concerns and what happened yesterday, will the Minister commit to meeting Women for Refugee Women so that he can hear at first hand its concerns about its work with the women at Yarl’s Wood?

[James Brokenshire]

Certainly, I would be pleased to have such a meeting to hear the concerns and see whether any specific issues can be applied more broadly to the immigration removal centre system in general. I underline the fact that the chief inspector’s summary report notes that there are daily “individual needs” meetings at Yarl’s Wood to help discuss detainees who are vulnerable or otherwise of cause for concern before removal and they facilitate information sharing about risk. So much of this is about managing risk and highlighting need. Clearly, I want to see further improvements. It is right that there have been changes and advancements at Yarl’s Wood, but more needs to be done and that is why we will continue to keep that in focus.

[Mark Reckless (Rochester and Strood) (Con)]

The House will understand the Minister’s reluctance to comment on particular cases, but does he agree that the general record of the police and the Crown Prosecution Service in these matters shows that there is no culture of impunity in this country for those involved in immigration detention, whether they are in the private or public sector?

[James Brokenshire]

That is why I have underlined the need to focus attention on how removals are conducted. They must be done in the right and proper way, with a sense of respect for those involved. It would be inappropriate for me to comment further in respect of individual cases, but I expect the highest standards to be undertaken. That is why we are also strengthening the training and guidance for those involved, to make sure that the highest standards are met.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

How many of the women detained at Yarl’s Wood have been held for a period of three years or longer?

[James Brokenshire]

I am afraid that I do not have the details to hand, but I am very happy to write to the hon. Gentleman with further information on the duration of detentions at Yarl’s Wood.

[Richard Fuller (Bedford) (Con)]

May I thank the Minister for his thoughtful responses to questions? Many outside observers of Yarl’s Wood would say that its management has improved in the recent past, but however good it is, we are still dealing with some very vulnerable women. Many of them have sought asylum here because they were victims of rape or abuse, and just because they could not prove that to an immigration official does not mean that it did not happen. The current process for detaining women for immigration purposes seems to me to be ineffective, costly and unjust. Will my hon. Friend take the opportunity, after this tragic incident, to bring a fresh pair of eyes to the whole process of the detention of women for immigration purposes?

[James Brokenshire]

I respect the close interest that my hon. Friend takes not simply in Yarl’s Wood, but more generally. I underline the fact that there have been improvements at Yarl’s Wood, and he referred to them. We are seeking to speed up decisions while maintaining high standards in asylum cases and more generally in the immigration system. That is why we took the decision to split the old UK Border Agency, with visas and immigration as a specific command in the Home Office—responding to and accountable to Ministers—to ensure that we improve our decisions and their timeliness.

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

When previous reports of abuse against women in Yarl’s Wood surfaced, a number of women believed that witnesses and victims were deported early to avoid their cases being followed up properly. Will the Minister absolutely assure the House that all relevant evidence, including witness evidence, will be gathered in the inquiries that he has instituted? When deportations are envisaged of people who might have evidence to offer, will the process be looked at very carefully so that the information is obtained properly?

[James Brokenshire]

It is right and proper that the ongoing police inquiry is pursued, and that the police should follow the evidence where it takes them. That is the right process. Clearly, we will support them in their ongoing investigations to ensure that they reach appropriate conclusions and, once they have finished their criminal investigations, that subsequent investigations are also concluded. I am certainly very clear that that needs to be pursued robustly and clearly to get to the facts of what has happened.

[Bob Stewart (Beckenham) (Con)]

All Members of the House are greatly saddened to hear about the death of a woman in Yarl’s Wood. Many of the people in Yarl’s Wood are likely to be victims of the criminal gangs who got them into this country illegally. What measures is my hon. Friend taking to try to identify and deal with those criminal gangs?

[James Brokenshire]

My hon. Friend highlights an important point about immigration, crime and the trafficking of people into this country, which I have described as the trade in human misery. That is why we will introduce a modern slavery Bill. It is also why the immigration enforcement command in the Home Office is working with the National Crime Agency and others to secure the best intelligence for pursuing the organised criminals exploiting and trafficking people into this country so that they can be brought to justice and feel the full force of the law.

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

Before the news broke on Sunday morning, someone called me to describe the scene that had been reported to them when talking directly to detainees. This person told me that the mood was panicked and that other women detainees had passed out from shock at what had happened. Will the Minister give me an assurance that additional resources were deployed to help with the situation as early as Sunday morning?

[James Brokenshire]

I can only say that the centre director, to whom I have spoken, has said that additional resources were deployed and that additional support has been given to those in detention. I am sure that all the facts of the case will be pursued and investigated, and that will certainly cover the manner in which the incident was handled after the news broke. The centre director has told me that, recognising the distress caused by this tragic news, reassurance was given to those in detention and that further ongoing support is being provided.

[Dr Julian Huppert (Cambridge) (LD)]

I add my support to the condolences and the plea for common sense in the case of Yashika. There is no doubt that Yarl’s Wood has improved, not least with the ending of child detention, which was simply inhumane—I am glad we have stopped it. However, this country continues to be unique in routinely detaining migrants without any time limit, at huge expense—according to one estimate, it is £75 million. Will the Minister look at alternative, community-based solutions such as in Sweden, which gets a higher returns rate, costs less and is more humane?

[James Brokenshire]

We always look at ways in which detention is minimised. However, in a system in which we seek to remove, detention can and should be a means of managing that process. Certainly, we continue to monitor the situation carefully. I hear the point the hon. Gentleman makes, but there are no easy solutions. Sadly, we need to detain in some circumstances to ensure that our removals process operates effectively.

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

What assessments are made of those women before they go into detention? Is there a medical check on their physical or mental status? How are they assessed?

[James Brokenshire]

Medical support is provided at each immigration removal centre and, when someone arrives, risk assessments are conducted. That was the process I saw on the visit I undertook to an IRC a few weeks back. It is about managing risk and ensuring that issues that need to be identified are picked up at the outset. I hope I can assure the hon. Gentleman that steps are taken when new arrivals appear at IRCs to ensure that issues or any support required are appropriately identified.

[Henry Smith (Crawley) (Con)]

Will the Minister confirm that the Government are making improvements to the way in which the immigration detention centre estate operates, particularly at Brook House, Tinsley House and the family Cedars centre in the Gatwick area?

[James Brokenshire]

I have been to Brook House and Tinsley House to see for myself the operating environment and conditions there. I have seen the focus given to ensuring that immigration removals centres are humane places to be, and that appropriate standards are undertaken. An inspection regime underpins that, but I can assure my hon. Friend of the focus, seriousness and weight of responsibility that the Government feel on such matters to ensure that the regime is continually monitored. Improvements can be made—significant improvements have been made over the past few years, but we need to do more.

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

In an earlier answer, the Minister referred to a review being conducted by the National Offender Management Service, which is welcome, but on the allegations of inappropriate sexual contact at Yarl’s Wood, what examination is the Minister undertaking of Serco policy, management and staff supervision?

[James Brokenshire]

As I have highlighted, and as the chief inspectorate of prisons report highlights, further improvements are required. Steps have been taken, but serious reports have been made in the past. Yarl’s Wood has a troubled past, but steps have been taken to move it forward. I can assure the hon. Gentleman that I, as a relatively new Minister for Security and Immigration, am focused on seeing that standards are further improved, and on ensuring that our immigration removal centres, which are necessary, do their work in a humane and fair way as part of supporting our immigration policy.

[Greg Mulholland (Leeds North West) (LD)]

The appalling treatment of my constituent, Enid Ruhango, and her room-mate, Sophie Odogo, led to the damning 2006 report by Her Majesty’s inspectorate of prisons. I am delighted to say that the courageous Enid is now living, as she should, as a member of the community in Leeds. Will the Minister tell me and the House exactly what was learned from that report in terms of access to medical treatment and humane treatment during transportation?

[James Brokenshire]

Significant changes and improvements have been made, including to the commissioning functions that the NHS has in respect of providing appropriate medical support in immigration removal centres. We constantly learn from cases as we seek to prevent further tragic incidents. I assure my hon. Friend that we will continue to do that, and I will focus on these issues of medical support in respect of Yarl’s Wood. A report has been commissioned, and I will pursue the matter.

[Charlie Elphicke (Dover) (Con)]

In reviewing this tragic case, will the Minister consider carefully the strong and passionate case that has been made over a long period by my hon. Friend the Member for Bedford (Richard Fuller)? Does the Minister also agree that too many people are in these institutions for too long, including the Dover removal centre, and we should hurry up the processing as much as we can?

[James Brokenshire]

I agree that we should always seek to minimise the time that someone spends in detention, but appeals can often delay matters. The Immigration Bill will reduce appeals from 17 to four. We want to ensure that we have a firm but fair system, and that is what we will deliver.

[Duncan Hames (Chippenham) (LD)]

I wholeheartedly support the appeal made by my hon. Friend the Member for Enfield, Southgate (Mr Burrowes). How can a Government who are rightly proud to have ended child detention for immigration purposes keep an 18-year-old, who is a star pupil at her school, out of the classroom and in detention at Yarl’s Wood? What lessons should her fellow pupils learn from this episode?

[James Brokenshire]

I understand the concern my hon. Friend has expressed. I should just mention that the individual is 19, not 18. This case has been considered carefully by the Home Office and the courts, and it has been ruled that humanitarian assistance is not appropriate. The Home Secretary has indicated that it is not appropriate for us to intervene in such circumstances.

Bill Presented

Recall of Members of Parliament

Presentation and First Reading (Standing Order No. 57)

Zac Goldsmith, supported by Mr Douglas Carswell, Mr Graham Stuart, Mr Dominic Raab, Nick de Bois, Mark Reckless, Mr Frank Field, Kate Hoey, Mr Michael Meacher and Caroline Lucas, presented a Bill to permit voters to recall their Member of Parliament in specified circumstances: and for connected purposes.

Bill read the First time; to be read a Second time on Friday 6 June, and to be printed (Bill 193).

Wales Bill

Monday 31st March 2014 Commons Chamber

[Relevant documents: Fourth Report from the Welsh Affairs Committee, on the Pre-legislative scrutiny of the draft Wales Bill, HC 962, and the Government response which has been deposited in the Library.]

Second Reading

16:07

[The Secretary of State for Wales (Mr David Jones)]

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

The legislation before the House today delivers an ambitious package of devolved powers for Wales, including powers providing incentives and opportunities for the Welsh Government to grow the Welsh economy and increase prosperity; powers making the devolved institutions in Wales more accountable for raising some of the money they spend; and powers that make devolved governance in Wales fairer.

The Government have a strong record on Welsh devolution. We have delivered a referendum on full law-making powers, established the Silk Commission on Devolution in Wales, which has since published two comprehensive reports, and have now introduced the first Wales Bill in more than eight years. The Bill implements most of the recommendations that the Silk commission made in its first report. I wish to record my thanks to Paul Silk and his commissioners for the dedication and hard work with which they reviewed the case for devolving fiscal powers to the National Assembly.

The powers devolved to Wales by this Bill will, for the first time, make the devolved institutions in Wales—both the Welsh Government and the Assembly—directly accountable to the electorate for raising some of the money they spend. The Bill will give the Welsh Government more levers to enable it to deliver sustainable economic growth in Wales. It will also deliver borrowing powers that will allow the Welsh Government to invest more in critical infrastructure, not only in transport links such as the M4 and the A55, but in schools and hospitals.

The Silk commission included commissioners from all four political parties in the Assembly, and reached unanimous agreement on its recommendations. I hope that the same spirit of co-operation and broad consensus will extend to all parts of this House today in respect of the Bill.

Let me turn to the detail of the legislation. The Bill provides that the Assembly will assume responsibility for devolved taxes. These are, initially, a tax on land transactions and a tax on disposals to landfill, replacing stamp duty land tax and landfill tax in Wales. The commission recommended the devolution of both taxes. This will put new economic levers in the hands of the Assembly and the Welsh Government.

[Geraint Davies (Swansea West) (Lab/Co-op)]

What does the Secretary of State say to the Mayor of London, Boris Johnson, who has now asked for stamp duty to be devolved to London, which would give him £1.3 billion? Is this not a charter for the proliferation of all sorts of competitive taxes across different parts of the United Kingdom?

[Mr Jones]

It seems to me that that is a concern of the Mayor of London and does not really fall within the scope of today’s discussion.

Our proposal will put new economic levers in the hands of the Assembly and Welsh Government, while also providing independent streams of revenue to facilitate borrowing. It will help Welsh Ministers to grow the Welsh economy and ensure that its performance has a direct impact on their budget.

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

In devolving those minor taxes, the UK Government are conceding the principle of fiscal empowerment for the Welsh Government. Why does the Secretary of State therefore feel the need to require a referendum on devolving income tax?

[Mr Jones]

Simply because it is an important constitutional step. It was given to the Scottish people in 1997, and we feel it is necessary to pay equal respect to the people of Wales on the occasion of the proposed devolution.

[Hywel Williams (Arfon) (PC)]

Is it the principle of devolution or the practice—the specific nature of income tax devolution—that requires a referendum?

[Mr Jones]

Clearly it is the devolution of income tax, and I would remind the hon. Gentleman that this was specifically recommended by the Silk commission.

[Jonathan Evans (Cardiff North) (Con)]

Has my right hon. Friend noticed in recent days—not just from the interventions so far, but from some Labour Back Benchers—the idea that there should not be a referendum and that the matter should be left to a general election, depriving the people of Wales of a vote?

[Mr Jones]

Yes, I have heard that, certainly from those on the Plaid Cymru Benches. I would simply repeat that it is appropriate that the people of Wales have their voices heard on such an important matter.

The Bill also provides a mechanism for additional taxes to be devolved in future, with the approval of both Houses of Parliament and the Assembly. I am pleased that the Bill delivers new borrowing powers to the Welsh Government—again, as recommended by the commission. As for capital borrowing, we are providing the Welsh Government with the ability to borrow up to £500 million to invest in capital infrastructure in Wales. That is a generous limit, allowing the Welsh Government to get going on the much needed upgrade of the M4 around Newport. It also reflects the independent funding streams for which the Welsh Government will assume responsibility through the two devolved taxes and is a limit that can be increased in future if the Welsh Government become responsible for additional taxation, including income tax.

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

Does my right hon. Friend not agree that the project for a new motorway around Newport is essential? There has been far too much delay—it was cancelled by the Labour Administration back in 1997, despite the previous commitment. Today’s announcement is basically the green light for the project to go ahead.

[Mr Jones]

Indeed. I think that everyone in the south Wales business community recognises that the M4 is indeed a foot on the windpipe of the economy and we are anxious to see it upgraded. The competence that we shall be giving the Assembly Government—in fact, we have already extended it to them—will enable them to proceed as quickly as possible with that essential upgrade.

[Chris Bryant (Rhondda) (Lab)]

While we are on infrastructure improvements, the Government here have much boasted that they will be electrifying the valleys lines. Every time they seemed to suggest that they would pay for it, but now it seems they are refusing, so who will actually be paying for the electrification of the valleys lines?

[Mr Jones]

We are skiing somewhat off piste, because that is not within the competence of this Bill, but there is clear correspondence between the Assembly Government and the Department for Transport on how the upgrade would be funded, and it is absolutely clear that the Welsh Government were paying for the upgrade of the valleys lines.

[Owen Smith (Pontypridd) (Lab)]

Does the Secretary of State wish to deny that he said on several occasions that it was his Government who were paying for the electrification of the railways in Wales, including the valleys lines?

[Mr Jones]

What I will say is that we made it absolutely clear that this Government were paying, directly and indirectly, for the upgrade of the main line as far as Swansea and for the valleys lines. I think that if the hon. Gentleman has a word with his friend the First Minister, he will find that there was an exchange of correspondence between the two Administrations which made the funding arrangements very clear, as did an e-mail from the Office of Rail Regulation.

[Geraint Davies]

Will the Secretary of State give way?

[Mr Jones]

No; I will make some progress.

The Bill also provides for a referendum to be held in Wales on the devolution of an element of income tax, should the Assembly decide to call one. The Silk commission recommended that income tax devolution should be subject to a referendum, as it was in Scotland in 1997, and the Government agree with that recommendation. As I have said in the House on several occasions, I should like the Assembly to call a referendum as soon as it is able to do so, and I personally would support a yes vote in such a referendum. It would make the Welsh Government, and the Assembly, significantly more accountable to the people who elect them.

[Stephen Mosley (City of Chester) (Con)]

Has my right hon. Friend been able to give any consideration to the impact that changing tax rates in Wales will have on cross-border regions, particularly the economic sub-region that covers Chester and north-east Wales? Has any assessment been made of what would happen if the rates on the two sides of the border were different?

[Mr Jones]

Indeed. As my hon. Friend will know, there was a separate consultation on that very issue. It is another element that will be taken into consideration during the debate on the referendum.

[Wayne David (Caerphilly) (Lab)]

The Secretary of State has put it on record that in his view the Barnett formula is coming to the end of its life. What progress have the Government made in reforming it?

[Mr Jones]

We have made it very clear that we need to rebalance the finances of this country before we will consider that. Let me remind the hon. Gentleman, however, that in October 2012 there was a specific agreement between the Welsh Government and the Treasury that on the occasion of each spending review there would be an assessment of the issue of convergence, and that is indeed what happened on the last occasion.

[Owen Smith]

The Secretary of State said a moment ago that he would be voting yes and campaigning for a yes vote in a referendum on tax-varying powers. May I take him back to the time when he was a Member of the Welsh Assembly? In his maiden speech, he said:

“We have no tax-raising powers—long may that state of affairs continue.”

When did he change his mind?

[Mr Jones]

That was some 12 years ago, and, of course, we all change our minds. I am sure that the hon. Gentleman changed his mind in the light of his experiences in the Blaenau Gwent election, the first election that he fought.

[David T. C. Davies (Monmouth) (Con)]

As one who has not changed his mind, may I ask whether the Secretary of State was as surprised as I was to read in the Western Mail that Opposition Members are offering to give the Assembly the power to raise income tax by up to 15%—and this only a few years after they all seemed to agree that the Assembly had the tools with which to do the job?

[Mr Jones]

Indeed: a Damascene conversion. The hon. Member for Pontypridd (Owen Smith) is a particular enthusiast—he now believes that 15p should be devolved to the Assembly, whereas as recently as 5 February he clearly stated that he did not believe in any tax devolution at all. He will clearly have some interesting explaining to do later in the debate.

[Owen Smith]

I think that the Secretary of State has just misquoted me. He will know that what I have said previously in the House on several occasions is that I do not believe in tax competition.

[Mr Jones]

The hon. Gentleman changes his mind with astonishing regularity. For example, on 5 February, in a Welsh Grand Committee debate, he said:

“I do not believe for a moment that having additional responsibility for tax-varying powers would confer any extra degree of accountability on the Welsh people.”—[Official Report, Welsh Grand Committee, 5 February 2014; c. 18.]

However, during last weekend’s speech to the Welsh Labour party conference, he spoke glowingly of the prospect of devolving 15p in the pound and said that that would

“increase both the accountability of the Assembly and its borrowing capacity too.”

He is clearly a bit at odds with himself, and we look forward to hearing what he has to say later on.

[Mr Peter Hain (Neath) (Lab)]

Will the Secretary of State explain how, with income tax devolution, Wales will continue to benefit—like, for example, north-east England, a comparable area, does—from the redistribution of income and wealth that comes through the Barnett formula, albeit imperfectly, from the 40% of GDP that exists in London and the south-east of England if income tax is devolved?

[Mr Jones]

That is an important point and it is a matter that would have to be debated in a referendum. My own view, as the right hon. Gentleman knows, is that Wales would benefit from a modest reduction in the rate of income tax, but I have to remind him that all we are talking about is a referendum that would empower the Welsh Government to decide on the rate of tax they want to charge the Welsh people. If they decided they did not wish to do that, there would be no compulsion on them to do so. However, it would provide Wales with an additional borrowing stream referable to the level of income tax devolved. It would also provide a powerful incentive to the Assembly Government to grow the Welsh economy, because clearly the more the economy grows, the more would be the revenue.

[Mr Hain]

I understand the Secretary of State’s point. However, I find it very interesting that he has not got an answer to my question—namely, how would Wales continue to benefit from the vast wealth that exists in a relatively limited area and is redistributed right across the UK? The fact that he does not have a clear answer makes me extremely sceptical about this entire proposal.

[Mr Jones]

Clearly, Wales would not be deprived of Barnett consequentials; the right hon. Gentleman knows that. We would have an additional tool for the Welsh Government to use, should they decide to do so, in growing the Welsh economy. I would have hoped he would be bold, because he has spoken in the past of the need to grow the private sector in Wales. I would have thought a small differential in the rate of tax would be a significant incentive to that private sector growth.

[Mr Hain]

The Secretary of State is being generous in giving way, but this is an important point. The Barnett consequentials will continue to come through from that portion of income tax which remains reserved to the Treasury, but the bit that is devolved under the scenario the right hon. Gentleman proposes would not, unless there was some kind of compensating mechanism which is not described. That is what makes me extremely sceptical about this.

[Mr Jones]

Some of what is passed to the Assembly would be subject to indexation every year. This would take into account both growth and contraction in the wider UK economy, so there is a mechanism built into the Bill that addresses the right hon. Gentleman’s point.

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

As the hon. Member for City of Chester (Stephen Mosley) has made clear, this is not just about the Welsh economy; it is about the cross-border economy. Changing tax rates, whether personal or business, will obviously have an impact both sides of the border.

[Mr Jones]

The hon. Gentleman is entirely right, which is why the Government went out to further consultation before announcing their response to the commission’s recommendations. Again, these are points he would no doubt raise in the context of a referendum debate, and given the view he has just expressed, he would clearly be voting against the proposal.

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

I congratulate the Secretary of State on introducing this Bill. I approve of virtually all its contents. I was reading a document produced by the Government in March this year on financial empowerment and accountability, and I was greatly heartened to read that if the Welsh rate of income tax is implemented following a referendum, the Government have accepted the Silk commission’s recommendation that the block grant adjustment should be determined using the index reduction mechanism originally proposed by the Holtham commission. If I remember correctly, those proposals were supported by the Labour party. It goes on to say:

“The detailed operation of the system will be discussed with the Welsh Government.”.

Surely that is the assurance that we need to hear and that will make sure Wales gets its fair share.

[Mr Jones]

My right hon. Friend is entirely right. The indexation proposals would amount to a damp, which would effectively smooth out any peaks and troughs in relation to overall UK income and act as a strong reassurance to the Assembly Government. While I am on my feet, I would like to thank my right hon. Friend for her part in commissioning the work of the Silk commission in the first place.

[Wayne David]

Has the Secretary of State resolved his differences with the leader of the Conservative group in the Welsh Assembly on income tax devolution?

[Mr Jones]

The leader of the Conservative group in the Welsh Assembly, and indeed the group as a whole, fully support the legislation before us.

[Owen Smith]

Will the Secretary of State explain how the indexation method works? Has the Treasury done any analysis on whether the Welsh people would be better or worse off if the rates were not amended at all in Wales? At the moment, that is unclear.

[Mr Jones]

It should be entirely clear to the hon. Gentleman, because the Under-Secretary of State for Wales, my hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) took the trouble to write to the Chairman of the Grand Committee, the hon. Member for Gower (Martin Caton), on 10 February, setting out these matters in great detail. I know that a copy of that letter was sent to the hon. Gentleman, and he will know, having read it, that the provisions are as follows:

“In the first year of operation (and any transitional years) the block grant adjustment will equal the amount of tax revenue generated by the Welsh rate of income tax set at 10p. It is important to note the following:

This is the amount of income tax forfeited by the UK Government as a result of reducing the main rates of income tax by 10p in Wales. If the Welsh Government sets a rate of 10p then there will be no impact on their budget compared to current arrangements. By setting a rate of, for example, 11p or 9p the Welsh Government can increase or decrease its budget (respectively) compared to current arrangements, as the block grant adjustment will still be based on the 10p forfeited by the UK Government. That means that the higher or lower revenue resulting from a rate of 11p or 9p (rather than 10p) would not be netted off the block grant.”

[Chris Bryant]

Riveting.

[Mr Jones]

Well, the hon. Member for Pontypridd had not read this letter, so I am reading it out to him. It goes on:

“In subsequent years the initial deduction is indexed against movements in the UK NSND”—

that is, not savings, not dividends—

“income tax base. That means that if the UK NSND income tax base contracts by 2%, the block grant adjustment will decrease by 2%; if the tax base grows by 2%, the adjustment will increase by 2%.”

That should have been absolutely clear to the hon. Gentleman, but he clearly did not read the letter, so I am glad to have had this opportunity to acquaint him with its contents. It clearly contains the reassurance that he seeks.

[Owen Smith]

Will the Minister give way?

[Mr Jones]

No, I will not give way.

Subject to the outcome of a referendum, the legislation provides for the introduction of a Welsh rate of income tax. The main UK rates of income tax would be reduced by 10p for Welsh taxpayers, and the Assembly would be able to set a new Welsh rate—a whole number or half a whole number—which would be added to the reduced UK rates. The rest of the income tax structure would remain a matter for this Parliament.

The Silk commission estimated that reducing the Welsh rate of income tax by 1p would cost the Welsh Government around £185 million, without taking account of any gains resulting from people moving to Wales to take advantage of lower tax rates. That is not an insignificant amount of money, but lower rates of income tax would boost the spending power of working people in Wales and bolster growth in the Welsh economy. Stronger economic growth in Wales could deliver a real boost in tax revenues, providing the Welsh Government with more resources to invest in devolved services and infrastructure across Wales.

Some Opposition Members, most notably the hon. Member for Pontypridd, have suggested that the devolution of an element of income tax is some sort of unspecified coalition trap, set to ensnare the Welsh Government.

[Geraint Davies]

May I ask for clarification on something, because my right hon. Friend the Member for Neath (Mr Hain) talked about the levels up to the current rate? At a marginal tax rate of one extra penny, the gross value added in Wales is 70% that of the UK. My understanding is therefore that the extra penny charged locally in Wales would generate less income than an extra penny charged across the UK and then transferred over to Wales—so we would lose out, would we not?

[Mr Jones]

For the reasons I have explained, there would be no loss. May I remind the hon. Gentleman, as I reminded the right hon. Member for Neath, that there would be no compulsion on the Assembly Government to change the rate of tax? This is simply an issue of whether or not the competence should be devolved. Once it is devolved, it is then a matter for the Assembly to decide what the Welsh rate of tax should be.

[Jonathan Edwards]

The Secretary of State mentioned that one of the main reasons for devolving income tax was to incentivise the Welsh Government, yet he handcuffs them with his proposed lockstep, which was not included in the Silk recommendations. In the unlikely event of a no vote in Scotland, does he expect the lockstep to remain in Scotland following its referendum?

[Mr Jones]

I am not here to speculate on what will happen in Scotland in September, but I will talk about the lockstep in a moment—no doubt the hon. Gentleman will be paying close attention and intervening as he considers appropriate.

The reality is that this legislation—income tax devolution following a referendum—is a real opportunity to be seized with both hands by the Welsh Government. It is an opportunity to make Wales more competitive and to make the Welsh Government more accountable, as the hon. Member for Pontypridd now agrees. Our challenge to those who view the devolution of income tax negatively is not to shy away from this opportunity, but to seize the moment with enthusiasm and support the proposals in this Bill for a referendum on income tax devolution.

The Silk commission recommended that the Welsh Government should be able to set separate Welsh rates of income tax for each of the three income tax bands, but the Government believe that a single Welsh rate for all three bands—the so-called “lockstep”—is the right system for Wales. The same system is being introduced in Scotland under the Scotland Act 2012. The Government have a responsibility to take a UK-wide view: to consider the interests not only of Wales, but of the United Kingdom as a whole, including Wales. If the devolution of income tax is supported in a referendum, the lockstep mechanism would be the best way to maintain a progressive tax system that redistributes wealth across the whole of the UK but does not unnecessarily benefit one part of the UK at the expense of another.

The Bill also devolves responsibility to the Assembly for its own budgetary arrangements, so that it can establish new procedures for scrutinising and setting the annual budget. That was also recommended by the Silk commission, and by the Welsh Affairs Committee following its pre-legislative scrutiny of the draft Wales Bill. The Bill before us today and the Command Paper the Government have published alongside it have benefited greatly from the Select Committee’s thorough and rigorous scrutiny, and I am grateful to all hon. Members on that Committee for their hard work.

Although the majority of the Bill is devoted to fiscal devolution, the legislation also implements a number of other important reforms: it permanently moves the Assembly to five-year terms; it removes the prohibition on dual candidacy; and it makes provision to preclude Assembly Members from simultaneously being Members of this House. Those are all changes which we consulted on in our Green Paper in 2012. The move to permanent five-year terms will make it less likely that Assembly elections will clash with UK general elections, now that the length of Parliaments is fixed at five years. It is important that Assembly elections should be contested, wherever possible, on issues specific to Wales, and the Bill ensures that they will not be overshadowed by the wider issues that often dominate elections to this House.

[Chris Bryant]

The Secretary of State has used the word “accountable” 14 times so far in his speech and has talked about how this Bill will make politicians in Wales more accountable, but it is going to mean that there will be fewer elections. Does that not make them less accountable?

[Mr Jones]

I would not have thought so. By the way, I am grateful to the hon. Gentleman for counting how many times I have used the word “accountable”. That now makes 15. I would have thought that he would be concerned to ensure that Assembly elections were not overshadowed by general elections, and that in my book makes for accountability.

[Mr Mark Harper (Forest of Dean) (Con)]

I am surprised by the hon. Gentleman’s intervention. When the Fixed Term Parliaments Act 2011 was going through this House, it was Labour’s First Minister in Wales who agreed that the date of the Assembly election in Wales should be moved to 2016 so that it would not coincide with the general election. The hon. Gentleman does not seem to be joined up with his own party.

[Mr Jones]

My hon. Friend was involved in that Bill, and he is of course entirely right.

[Chris Bryant]

The thing is, it is the former Minister who is not very joined up with his own memory. At the time, Labour voted for a four-year fixed-term Parliament in here, which would have meant a four-year fixed term for Wales as well. In that way, we would not have had to coincide and we would have had greater accountability. Let us have a general election now, shall we?

[Mr Jones]

As we have five-year terms for general elections, we take the view that we should also have five-year terms for Assembly elections.

The removal of the ban on dual candidacy restores the position to how it was in the Government of Wales Act 1998. I believe that the change is supported by all parties other than the Labour party, which introduced the ban in the first place. The ban on so called “double-jobbing” between the Assembly and this House addresses legitimate concerns about whether it is possible for someone adequately to represent constituents’ interests in two elected legislatures at the same time.

The legislation also implements several changes that have been specifically requested by the Welsh Government, including formally enshrining that name—the Welsh Government—in statute, as it has been common parlance for the Welsh Assembly Government to be so referred to for several years now.

In responding to the Silk commission’s recommendations, the Government made it clear that we were unconvinced by the case for devolving air passenger duty to Wales, so the Bill makes no provision for that. Neither does it make provision for the full devolution of business rates. That is because, in terms of legislative competence, business rates fall within the devolved subject of local government finance and so we need make no further provision in this Bill. In order fully to devolve business rates, the Government are amending current funding arrangements so that the Welsh Government benefit directly from revenues raised by that tax in Wales.

Finally, as I said in my written statement to this House on 3 March, we do not see this Bill as an appropriate vehicle for implementing the recommendations made by the Silk commission in its second report. The commission’s second report raises crucial questions about the future governance of Wales within the United Kingdom, and it would not be right to rush into implementing its recommendations without careful assessment. It is essential that we take the time needed to get things right. Consequently, the Bill is focused on devolving the package of tax and borrowing powers to Wales recommended by the commission in its first report. Including a whole raft of other powers would merely serve to delay the Bill and jeopardise its enactment before the 2015 general election.

The Government believe that devolution should be used to give a competitive edge to Wales, and that powers devolved should be used to grow the Welsh economy and make Wales a more prosperous place. The Bill will deliver that. It will make devolved governance in Wales fairer, more accountable and better able to support economic growth. I hope, and I believe, that we can achieve a broad consensus in this House around this Bill, and make rapid progress. I commend the Bill to the House.

16:38

[Owen Smith (Pontypridd) (Lab)]

This is an important debate and an important Bill. There are four broad issues under discussion. The Secretary of State has described some of them—some in more detail than others. I shall explain to the House why he glossed over some of them. The four areas I want to discuss are the electoral arrangements, the devolution of the minor taxes, the borrowing powers—the amount of borrowing in particular—and the devolution of income tax varying powers for Wales.

Let me start with electoral arrangements, which the Secretary of State glossed over in just a few phrases. The reason for that will become clear. The changes in the Bill include a reversal of the Government of Wales Act 2006 ban on candidates standing both under first past the post and on the proportional representation list in Wales. The reason that the previous Labour Government decided to introduce that ban ought to be well understood by the Secretary of State, as it stemmed from a Tammany hall-style example of an election that took place in his constituency of Clwyd West in 2003. On that occasion, the winning Labour candidate was elected on first past the post, while the losing Liberal Democrat, Conservative and Plaid Cymru candidates were also all elected, by the back door and on the back list—Tammany hall in Clwyd West. The system was designed by an earlier Labour Government, but we decided that it was clearly at odds with democracy in Wales. We decided that the people of Wales would not understand how losers could become winners.

[Jonathan Evans]

How can the hon. Gentleman say that that was by the back door? In essence, he is saying that those people who serve on regional lists are lesser Members of the Assembly than constituency members under a system that his Government introduced.

[Owen Smith]

No, I was not saying that for a moment. I was saying that I thought that the people of Wales looked askance at losers standing on two separate tickets— first past the post and on the list—to get themselves elected. We have seen why the Opposition oppose that; we believe in democracy and we believe in democracy being seen to be done. We also know why the Government want to reintroduce it in Wales and to allow people to stand both under first past the post and on the list. That reason is captured clearly in the explanatory notes to the Bill, which say explicitly that the measure will benefit smaller parties with a smaller pool of candidates—that is, the Tory party in Wales.

[Wayne David]

Does my hon. Friend agree that the proposed change is in danger of giving the impression that there is somehow a political elite whose members are nevertheless elected even when they lose elections?

[Owen Smith]

That is precisely the impression that it gives. The rationale, as I say, is very clear. The policy only benefits the minority parties in Wales—the Tory party, of course, is a minority party in Wales. It specifically benefits Leanne Wood, the leader of Plaid Cymru in Wales, who intends to stand under first past the post and on the list. I put it to the Secretary of State that the people of Wales will not look well on his gerrymandering elections in Wales in this fashion.

[Hywel Williams]

As we have a unified British Labour party, did the hon. Gentleman make those arguments to the Labour party in Scotland, where a Minister was elected on a dual mandate? Did he campaign to get that Minister sacked?

[Owen Smith]

I am not talking about Scotland today; I am talking about Wales. I am talking about the Clwyd West scandal, which the Secretary of State oversaw. I am talking about the fact that this measure is clearly in the interests of the Tory party and nationalist allies, which is why our nationalist colleagues are so keen to intervene.

[Mr David Jones]

rose—

[Owen Smith]

Clearly, the Secretary of State is going to explain it differently.

[Mr Jones]

In the first place, let me say that I object quite strongly to the hon. Gentleman’s suggestion that I would ever be involved in gerrymandering, particularly given that it was his party that introduced this atrocity in the first place in the 2006 Act. May I refer him to what Professor Roger Scully said in his written evidence to the Welsh Affairs Committee:

“If parties that are defeated at constituency level can still win representation through the list, then it is difficult to see why that should not also apply to individuals”?

Individuals represent parties; where they happen to be standing makes no difference at all.

[Owen Smith]

I am just getting over the fact that the Secretary of State referred to what we thought was a fairly simple safeguarding of democracy as an “atrocity”. I am pleased that I let him intervene, because he chose to read out a piece of evidence given to the consultation on the measure. I note, however, that the Secretary of State failed to inform the House that the overwhelming majority of respondents to the consultation were opposed to the measure. Clearly, this is a nakedly partisan reversal by the current Government. Let me be clear with the House: if we get the opportunity to win back power in this place, we will reverse the measure.

[Glyn Davies (Montgomeryshire) (Con)]

The hon. Gentleman is making the point forcefully against the proposed change. Can he put to us any independent evidence—there is Labour party evidence, yes, but any authoritative independent evidence—that supports what he is saying?

[Owen Smith]

I put to the hon. Gentleman the impact assessment and the explanatory notes from his own Government. They make it clear that this is a partisan measure that will only benefit the minority parties in Wales, among which we count the Conservative party. That is what this is about.

[Chris Bryant]

Is it not particularly irritating that Leanne Wood can stand in Rhondda? She has done it before: she stood in 2001 for the parliamentary seat and lost very heavily. The people of Rhondda will, I am sure, return Leighton Andrews in the next Assembly elections, because he is the best Assembly Member in Wales. They cannot prevent Leanne Wood from being elected, however, because they have no means of affecting the order on the Plaid Cymru list. She gets two goes.

[Owen Smith]

Absolutely. The only thing I would contest in my hon. Friend’s intervention is the suggestion that Leighton Andrews is the best Assembly Member in Wales. That particular accolade goes, of course, to Mick Antoniw, the AM for Pontypridd.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. It is best if in this Chamber we discuss principles, rather than the party political chances of individual candidates.

[Owen Smith]

I am very grateful to you, Madam Deputy Speaker. I simply point out that the explanatory notes referred to the rationale behind the measure as being to help the party political chances of the minority parties in Wales. That is clearly what this is about.

[Mr Harper]

This is not on personalities, Madam Deputy Speaker. I just wanted to pick up on the point helpfully made by the hon. Member for Rhondda (Chris Bryant). Will the shadow Secretary of State tell us whether the Labour party is proposing, for both Westminster and Wales, to revert to elections in four-year terms, or whether it will stick to the five years in the Fixed-term Parliaments Act 2011?

[Owen Smith]

My hon. Friend the Member for Rhondda made Labour’s position clear. We are opposed to the gerrymandering shift from four years to five years to maximise the amount of time the coalition can hang on to power. However, we accept that the First Minister of Wales and the Welsh Government would like to see the term extended to guarantee, as the Secretary of State put it, that there will not be a clash between elections in Wales and Westminster. In explaining Labour’s position, my hon. Friend the Member for Rhondda is entirely right. We still feel that four years is preferable, and that five is far too long and diminishes accountability. That said, we will accept this shift and we will support this aspect of the Bill.

On double-jobbing, the third aspect of the electoral arrangements, Labour has always been clear. It has always had an internal party position whereby it does not support people having dual mandates, standing for election and holding office in the Assembly and in Westminster. We are therefore pleased that the Government are moving into line with Labour on this and we will support this aspect of the Bill.

[Ian Lucas (Wrexham) (Lab)]

I am interested in my hon. Friend’s observation on double-jobbing. Does he agree that it is inappropriate for Assembly Members to stand as prospective parliamentary candidates while, at the same time, serving as AMs? In particular, is it not inappropriate for them to open up constituency offices in the seats that they are fighting? Will he support an amendment to prevent AMs from standing as prospective parliamentary candidates?

[Owen Smith]

I will have to look carefully at my hon. Friend’s proposal and take it into consideration. I would not want to discourage Members from moving back and forth between the Assembly and Westminster, which I think is a positive state of affairs that should be encouraged, but I note the point he makes so eloquently.

[Mark Tami]

Further to that point, the offices the candidates opened are also funded by the taxpayer. Does my hon. Friend think that is right?

[Owen Smith]

That is a very good point that we ought to consider. I would, of course, not support parliamentary or Assembly expenses being deployed for party political reasons.

I will move on to the minor taxes, particularly stamp duty land tax and landfill tax. We heard very little detail from the Secretary of Sport—[Interruption.] Well, there was very little sport there for anyone to have, to be perfectly honest. Hopefully we will have a bit more sport with the Secretary of State now. We will support the devolution of stamp duty land tax and landfill tax to Wales. However, there are many questions about how that will be implemented, so we will seek clarification during the passage of the Bill. Perhaps he will take note of some of these points now so that his Minister can respond to some of them later.

The first point concerns the suggestion that properties on the border between Wales and England would somehow be split, with stamp duty land tax being charged on the English portion and whatever its successor tax is being charged on the Welsh portion. It is an interesting concept. Will the Secretary of State tell us at some point during the passage of the Bill how many such properties there are on the border, given how populous it is? Will he tell us how the Government propose splitting those properties, as in many instances they are houses straddling the border? Will there be a number of bedrooms in England and a number in Wales? We know that the Government are keen on taxing bedrooms.

The second point relates to the cost of devolving that to Wales. We understand from the Bill that the Welsh Government will be asked to pay for the administration of any new tax, which is fair and just, and that that will be offset by any reduction in the cost to Her Majesty’s Government of administering the taxes as they had previously done in Wales. Given that the Secretary of State and the Treasury—this was confirmed by the Exchequer Secretary—have conducted little or no analysis of the impact of those various schemes in Wales, will he tell us how much he thinks it will cost the Welsh Government to administer and how much the offset will be?

On the even more important question of the reduction in the block grant that will come about as a result of the changes—it will be reduced by around £200 million and reviewed periodically—will the Secretary of State comment at some point during the Bill’s passage on the volatility associated with stamp duty land tax, because that figure of £200 million varies radically over time? Will he also tell us how he will calculate any differential in the rise and fall of house prices in England and Wales? By way of illustration, stamp duty land tax revenues in Wales have varied wildly over the past 20 years. They were £20 million in 1997, up to £95 million in 2003 and £130 million in 2005, and then down to £55 million in 2008-09 and £65 million last year. It is an extremely volatile tax, so I would be intrigued to know how the Treasury will account for it in any indexed reduction in the block grant, because that will have a significant impact on both the borrowing powers and, potentially, the revenues of the Welsh Assembly Government.

[Geraint Davies]

As I am sure my hon. Friend knows, over the past year house price inflation has been 13.2% in London and 6.8% across the UK. As I mentioned earlier, Boris Johnson is asking for stamp duty in London, where historically prices have always gone up faster. Is my hon. Friend at all concerned about the differential impact of stamp duty revenues, which he has alluded to already, plus pressure from elsewhere in the UK to have that tax resulting in a less fair and more complicated and confusing situation?

[Owen Smith]

That is a legitimate question. I have said previously that although we will support the devolution of stamp duty land tax and landfill tax and the putting of the income tax question to Wales, we remain concerned about tax competition. Over time, that might result in other parts of Britain wishing for similar degrees of autonomy, thereby reducing the ability of the central Exchequer to pool resources, share risk and redistribute from wealthier to less wealthy parts of Britain. That abiding concern of mine needs to be considered.

[David T. C. Davies]

Will the hon. Gentleman clarify his point? If he believes that the Assembly should have the power to vary income tax by up to 15p in the pound, there will inevitably be some form of tax competition—unless he wants to give the Assembly the power to prevent anywhere else from varying its levels of income tax.

[Owen Smith]

That is not inevitable at all. I shall discuss the issue later in my speech, when I will answer the hon. Gentleman in full.

[Jonathan Edwards]

In Scotland, the hon. Gentleman’s party proposes to devolve responsibility for 40% of the Scottish block grant in terms of tax revenues. How does that sit with the doomsday scenario of tax competition that he has just outlined?

[Owen Smith]

As I will explain later, and as I am sure the hon. Gentleman knows from my speech yesterday, we propose to replicate in Wales what is suggested by my party for Scotland. Wales will have exactly the same powers under a Labour Government. We can trust a Labour Government not to want to cut the top rate of tax and increase the unfairness of our tax system—unlike Plaid Cymru, whose economic adviser, much like the Secretary of State for Wales and the Tory leader in Wales, would like to reduce the top rate of tax.

[Stephen Mosley]

Tax competition will, of course, have an impact on both sides of the border. That impact will depend on whether the Welsh Assembly Government increase or decrease taxes. Does the Welsh Labour party want higher or lower tax rates in Wales?

[Owen Smith]

We want fair and equitable tax rates across Britain. That is why we propose to amend the Bill so that, if a Tory Government in Westminster continue to increase the injustice and unfairness of our tax system by making further cuts to taxes on the wealthiest, Welsh values and Welsh beliefs about social justice can implement a decent and equitable rate of taxation.

[Alun Cairns]

rose—

[Owen Smith]

No, I am going to move on. If the hon. Gentleman holds his water, I shall come back to income tax later.

Landfill tax is relatively uncontroversial save for the link to borrowing, to which I shall come later. There is also the link to the landfill communities fund. We heard nothing from the Secretary of State about that, but it is paid to communities with landfill sites within their boundaries. Has the Secretary of State done any analysis about the value of that fund to Wales? How much is collected and how much has been spent in Wales? How many landfill sites are there in Wales in comparison with England?

The Secretary of State is proposing that the landfill tax community fund also be devolved to Wales and that Wales should become responsible for meeting the costs of implementing a revised Welsh landfill scheme. Given that elsewhere in the Bill, the Secretary of State proposes that HMRC duties should not be replicated in Wales, why does he think the implementation of the landfill communities fund should be devolved? Is that yet another example of his wishing to pass responsibilities to Wales without there being the requisite resources?

We absolutely support the extension of borrowing powers to Wales. They are vital to make up for the £1.7 billion cut in funding for Wales—an almost 40% cut in capital funds—that the Government have implemented since 2010.

It is crucial that the Welsh Government be given the ability to borrow in order to try to back-fill the enormous holes in their budget left by the Secretary of State and his colleagues.

There are two measures relating to borrowing in the Bill, both with limits of £500 million—one to cover volatility in tax receipts and the other to cover capital. I wish to talk about the latter. The Silk commission, whose recommendations the Secretary of State keeps telling us he has largely stuck to, said that £1.3 billion should be devolved to Wales for capital borrowing, but the Bill limits it to £500 million. The Secretary of State says, as he repeated earlier, that the rationale for that is to draw a connection between the amount of money devolved to Wales—the volume of taxes—and the volume of money that might be borrowed. The Secretary of State says, as does the Command Paper on the Bill, that that is just like the position of Scotland. In fact, the Command Paper goes further than he did in saying that the Bill is generous given that in Scotland over £5 billion of taxes are devolved and £2.2 billion of borrowing is allowed—£220 million each year—and that if a similar ratio were applied to Wales, then Wales would get not £500 million but £100 million.

The problem with that rationale is that it is not true. The Scotland Act does not draw a connection, as the Secretary of State suggests, between the amount of taxes devolved to Scotland and the amount of borrowing. The Command Paper associated with the Scotland Bill said:

“Scottish Ministers will be allowed to borrow up to 10% of the Scottish capital budget any year to fund capital expenditure”—

that is, £230 million of an overall stock of £2.2 billion. The Scotland Act drew a clear correlation between the size of the capital budget and the amount that could be borrowed. The Command Paper for the Wales Bill, which the Secretary of State said was just like that for the Scotland Bill, reads:

“Specifically, the Scottish Government’s capital borrowing limit is £2.2 billion while it is taking on responsibility for tax revenues that are currently worth around £5 billion. Hence the ratio between the two is slightly less than 1:2. Applying the same tax/borrowing ratio in Wales would have given the Welsh Government a limit of around £100 million.”

The crucial question is why the Government have moved the goalposts for Wales. Why cannot Wales have the same rationale for its volume of borrowing as the Scots? That would give us about £1 billion-worth of borrowing—between £1 billion and £1.5 billion—rather than the paltry £500 million on offer.

Moreover, given the volatility of all tax returns, how sensible is it for the Government to draw a direct line between the receipts that Wales receives and the amount it can borrow? What if those receipts declined? What if we were in another recession? We would therefore see, I presume, a reduction in the amount of borrowing that Wales could undertake, which would frankly be economic stupidity.

[Geraint Davies]

Does my hon. Friend agree that there is a danger of moving the focus from Wales having its fair share of capital investment—for example, on transport, where there is £5,000 per head for transport in London and about £500 in Wales—because as soon as we get more borrowing powers the Government will say, “You pay for the valleys line electrification—you can borrow the money”? Is this not an excuse for making Wales pay out more from less?

[Owen Smith]

That is absolutely right. That is what we have been most concerned about throughout the passage of this Bill, and we describe it as a trap. The Tory party is seeking to wash its hands of Wales, and it is not interested in funding capital expenditure properly in Wales. We have therefore seen that the valleys line promise was not worth the paper it was written on, and the words of the Prime Minister and the Secretary of State were equally worthless. We are deeply concerned that this will be an excuse for the Tory Government to ask the people with the shallowest pockets in Britain to put their hands deepest into them to fund things that traditionally would have come through general taxation and from the wider benefits of our economic union.

On income tax, let me be clear: we are and remain opposed to tax competition across Britain. We believe in an economic and social union and in the ability of the central state to pool resources, share risk, and share rewards. That is especially true in Wales, as we are a net beneficiary—indeed, the greatest one—of that principle of progressivity and risk-sharing across Britain. That is why we remain opposed to the principle of undercutting one part of Britain with lower taxes in another, which is what the Secretary of State is proposing. We agree with the Government that the principle of progressivity ought to be retained. That is why we agree, broadly speaking, with the notion of the lockstep to tie bands together. But we have deep and abiding concerns about the hidden agenda that the Conservative party has, along with its nationalist colleagues, for greater tax competition in Britain.

We have reason for that concern, because the plans are not terribly well hidden. We have already heard that the leader of the Welsh Conservative group wishes to cut just the top rate of tax and that the economic adviser to the leader of the nationalist party in Wales wishes to do the same, and cut taxes only for the wealthiest in Wales. If we need any further illustration, we simply have to look at this Government’s record: they introduced a millionaire’s tax cut even as they increased VAT, which is paid, regressively, by the least well-off people in Britain.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

indicated dissent.

[Owen Smith]

I presume the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) is pleased, is he, that the poorest of his constituents in Shrewsbury pay more as a proportion of their income as a result of the VAT increases that his party brought in? Or is he not pleased that they are paying that? [Interruption.] If he wants to intervene, I will happily sit down. I give way to his colleague.

[David T. C. Davies]

I am genuinely confused by what the hon. Gentleman is saying. On the one hand, at the Labour party conference, he went out and said that a Labour Government would give the Assembly the powers to vary tax by up to 15%, which is 15p in the pound. He also made that point earlier on. But now he is saying that he does not believe in any sort of competition and so one would presume that he does not think that the Assembly should be able to vary taxes at all. Unless he is suggesting that the Assembly should now have the power to tell central Government the level at which to set taxation, I do not see how he can hold those two completely contrasting positions. Will he please explain?

[Owen Smith]

With the greatest respect to the hon. Gentleman, it is not hard to get him confused—I say that with full respect and friendship, of course.

We have reason for our concern, because of the way in which the Tory Government have cut taxes. Labour believes that taxes should be fair and progressive, and accepts that it is not unreasonable for the Government, as they hand over borrowing powers to Wales, to draw some connection between the amount of borrowing and the amount of taxes devolved to Wales, especially given the massive cut to the capital budget. That is why we have decided that we will support the question of the devolution of taxes being put to the people of Wales, subject to what we have called a triple lock.

First, there must be an agreement that there will be fair funding for Wales, and an acknowledgment that, as Holtham has pointed out, convergence is a disbenefit for Wales. Secondly, we need an agreement that the proposal will leave Wales better off, not worse off. The Secretary of State read out the mechanics of indexation earlier on, but failed singularly to address the question I asked, which was whether the Government have conducted any sort of analysis as to whether Wales will be better or worse off, over time, given the volatility of taxes in both places. I suspect that he has not done that analysis and that is why he could not answer my substantive question of whether Wales will be better or worse off.

[Mr Harper]

I will tell the hon. Gentleman if he gives way.

[Owen Smith]

If the hon. Gentleman is going to tell us whether Wales will be better or worse off, I will be very grateful to him.

[Mr Harper]

I was listening carefully to the shadow Secretary of State about being better off and worse off, particularly with regard to those on lower incomes. In the Budget of my right hon. Friend the Chancellor we increased personal allowances for everyone, including those on the lowest incomes. Why did he and his party vote against those tax cuts for low and middle-income earners?

[Owen Smith]

We will take not a single lesson from any Government Members about how to provide for the most vulnerable people in Britain, because this Government have left people in Wales £1,600 a year worse off and they have overseen the largest reduction in living standards since the 1870s. The last time living standards fell this far was during the time of the Paris commune and the Franco-Prussian war—that is how disastrously this Government have handled the economy in Wales. We will take no lessons—absolutely none—from them.

Given the opportunity, we would put a different question with regard to income tax varying powers for Wales, and we will seek to amend the Bill in order to do so. It would be different in two regards. First, as several Members have suggested, we would increase the amount of money by which tax might be reduced in Wales from 10p to 15p. The two reasons for doing so are very simple. First, we believe it would increase borrowing, given the causal link the Government are drawing between the volume of taxes and the amount of borrowing. Secondly—I would have thought that Members from the nationalist party in Wales would be pleased with this—it would provide a far neater degree of symmetry between what we are proposing for Wales and what we are proposing for England. We remain concerned that constant chipping and changing of the constitution, which the current Government seem keen to allow to continue, is not in the interests of the stability of Britain or Wales. We will seek to legislate to introduce symmetry between Wales and Scotland, both on the model of devolved powers and on taxation.

[Jonathan Edwards]

We welcome the fact that the hon. Gentleman is proposing to increase the level of income tax, but my understanding of what he said over the weekend is that he wants to keep the lockstep but remove the ability to vary the rate up or down such that it would only to be able to move up. Would he, therefore, label his new policy “lockstep-plus”?

[Owen Smith]

No, I would label it as a progressive change and I will explain why we feel the need to introduce such a change.

The second way in which we would change the question relates to our concerns about the fact that this Tory Government and an increasingly right-wing nationalist party in Wales are proposing to cut the top rate of tax. [Laughter.] Nationalist party Members laugh, but the economic adviser to their leader says he wants to cut only the top rate of tax. I do not know what we are meant to conclude from that, but it sounds pretty right wing to me. An alliance between the nats and the Tories in Wales seeks to reduce taxes just for the wealthiest, but we feel that that would be entirely out of step with the progressive values of Wales. That is why we will give the Welsh Government the ability to set a progressive rate for Wales, to guard against further Tory tax cuts for the wealthiest and to ensure that those Welsh values of social justice and fairness in taxation can be preserved by the Welsh people in the event of the Tories wishing to increase the injustice and unfairness of the tax system in Wales and across Britain.

[Alun Cairns]

The shadow Welsh Secretary is giving out so many conflicting messages that I am finding it difficult to follow him. He says that he wants to extend the tax-varying powers by 15%, but he also says that he is against tax competition, and then he says that he only wants to put taxes up. We can have lots of debates about those inconsistencies, but there is one very serious point: every nation and region of the UK is seeking to attract investment. What sort of message is being sent when the shadow Chancellor—[Interruption.] What sort of message is being sent when the shadow Welsh Secretary, who presumably hopes to be a future Welsh Secretary, says that he wants to increase taxes on higher earners?

[Owen Smith]

It is not too hard to confuse the hon. Gentleman sometimes, either, but I thank him for the promotion. Our position is very clear: we are not in favour of tax competition; we are in favour of increased borrowing powers. The way in which the Government have framed the Bill to draw a connection between borrowing powers and the devolved amount of money paid in tax means that we favour increasing that amount so as to increase borrowing powers for Wales. However, the progressive rate is only to be put up in the event of a Tory Government choosing to deepen the unfairness by making further cuts to the top rate. We should worry about that because the Tory party has form on it. It has already cut taxes for the wealthiest, and we know that it will continue to do so.

[Alun Cairns]

Will the hon. Gentleman give way on that point?

[Owen Smith]

No, I will not.

Our proposal to allow the Welsh Government to set a progressive rate of taxation in Wales would allow power to be transferred to Welsh people to guard Wales against the damage to social justice done in Britain by a Tory Government who propose to cut taxes further. The motivation is similar to that for devolution in its first inception: a Tory Government in Wales exercising—in the miner’s strike, the poll tax and other measures—a political strategy that reveals how they turn their face against social justice in Britain and use Wales as a means to exercise such injustice. We have recently seen that in the war on Wales, and the way in which Grant Shapps, the chairman of the Tory party, and the Secretary of State—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. [Interruption.] Order. The hon. Gentleman must not appear to be concerned or to question when he is called to order. [Interruption.] Order. I must say that if Conservative Members are not quiet, the shadow Secretary of State will never get to the end of his lengthy speech. In doing so, I trust that when the shadow Secretary of State refers to a Member of this House he does so, as is proper, by their constituency, not their Christian name and surname.

[Owen Smith]

I am very sorry, Madam Deputy Speaker. I was not, of course, rolling my eyes at your good self, but at the Secretary of State. I put on the record that my inability to recall the name of the constituency of the Minister without Portfolio, might have something to do with the multiple aliases that he deploys outside this House and which make it very difficult to recall how to refer to him within it.

[Mr David Jones]

I would not want the hon. Gentleman to have wasted his eye rolling. Just for clarification, is it his case that the Labour party wants devolved income tax competence to be able to increase the rate of tax for the 4,000 or so who pay the additional rate of tax in Wales, but not to cut the standard rate of tax for the 1 million-plus who pay the standard rate?

[Owen Smith]

I have already made that very clear in this House. I take your admonition that I should be coming to the end of my speech in the spirit in which it was intended, Madam Deputy Speaker, although I believe that I have spoken for slightly less time than the Secretary of State. [Interruption.] If it is significantly longer that is perhaps because I have addressed more of the substance of the Bill than the Secretary of State, who glossed over most of the gerrymandering and the other reasons for it.

Let us be very clear that our proposals to allow the Welsh people, if they so choose at a referendum, to give powers to the Welsh Government to set a progressive rate of income tax would guard against a Tory Government with malign instincts reducing the justice of our taxation system in Wales and increasing the outrageous targeting of Wales that has been described and exposed in other areas in recent days. We will not allow such exposure on the economy to be passed on to Wales. We will not allow Wales to be worse off as a result of the measures, and we will scrutinise the Bill extremely carefully.

17:19

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

Rising to my feet to participate in the debate gives me a heavy attack of déjà vu. I hope my words will be slightly less curmudgeonly than those of the hon. Member for Pontypridd (Owen Smith). I give this small and elegant Bill a warm welcome, because I believe it takes Wales forward. It does so in a small, incremental step, rather than in one of those steps that allows Wales to fall into a large hole and disappear without trace. The Government are looking after the interests of Wales and the people of Wales in the Bill. Long may that continue.

As many hon. Members know, for me, the Bill is part of unfinished business that stretches back not to when I was Secretary of State for Wales, but to my appointment as shadow Secretary of State. I pay unreserved tribute to Paul Silk and members of the Silk commission. The Calman commission did not attract the Scottish National party to sit alongside other members, but I was really pleased when Plaid Cymru accepted the invitation to join the Silk commission. The participation of all the parties involved in the governance of Wales in the Silk commission has made its results more credible. I believe it will contribute towards Wales remaining part of the Union, on which most Opposition Members agree with Government Members. I also believe that the commission will contribute to Wales having increasing self-determination in certain matters, which will be good for the people of Wales and for the devolved Administration.

The trend towards more local democracy must not be at the expense of effective governance. That brings me to a point that became apparent to me over the seven years in which I carried responsibility for Welsh policy in my party. In future, I believe that a confident Wales and a confident Westminster Government should not hesitate to contemplate not only the devolution of powers, but the return of areas of competence to the supra-national Parliament, if it is the wish of those areas or institutions. There is a valid and compelling case for that course of action. That was not apparent in the Silk commission report, but by way of example, it was expressed to me while in opposition and in government, particularly from the university sector—albeit often behind closed doors for fear of repercussions—that a body of opinion wanted the re-coupling of Welsh and English universities in the interests of Wales and of education in Wales.

As we have been reminded, the constitutional position in the Bill is that we are extending the Assembly’s term of office to five years. That is probably sensible given the circumstances, but, for me, the jury is out on five-year terms. I was persuaded by the First Minister that that was the way to go because the UK Parliament introduced a five-year term and we need to avoid a clash of an Assembly election with a general election. However, I question the wisdom of that. All hon. Members know how expensive democracy and elections are. I would have liked to have seen the cost savings that would have resulted from running those elections together and any effect on turnout. It does not matter which part of the UK people are in, there is no doubt that they are being turned off by democracy—we are seeing diminishing returns of voters going to the ballot box. Perhaps running those elections at the same time would have increased participation at the ballot box. It might also have been easier to explain the relationship between the Assembly and the UK Parliament.

[Chris Bryant]

I am grateful to the right hon. Lady for giving way because I rather agree with her. Voters would probably prefer to have two elections on the same day. That would make far more sense—I have argued for it since 2010. Historically, general elections have tended to be every four years, even when we had seven-year terms, because either a Government had run out of steam or it felt right to move on and have an election. We are now moving everything towards five-year terms. My anxiety is that that is less democracy and less accountability.

[Mrs Gillan]

The hon. Gentleman makes a good point—it is unusual for us to agree on anything, as he will attest —but we need to examine the matter before we set everything finally in concrete. Those on both Front Benches and anybody involved in the business of government should keep an open mind. Rather than saying, “It will be five or seven years for ever,” we should agree to revisit the matter at some stage. Constitutional arrangements are important, but the engagement of the electorate is perhaps one of the most important aspects of democracy.

[Albert Owen (Ynys Môn) (Lab)]

The right hon. Lady talks about holding elections on the same day, but I believe she voted for the police and crime commissioner elections to be held in the autumn, leading to a low turnout. Her stance on this issue is unclear.

[Mrs Gillan]

The fact that we had those elections on a separate day and the turnout was low is part of the experience that informs what I am saying now. I want to maximise engagement with the electorate, as I am sure does the hon. Gentleman. Unlike much of the debate so far, I am not making a partisan point on this issue. It is more a question of democracy and engaging with the electorate.

[Jonathan Evans]

In the United States, the electorate does not find it difficult to elect insurance commissioners, sheriffs and a range of public officials while also choosing members of the Senate and House of Representatives.

[Mrs Gillan]

My hon. Friend is right. The trouble is that in Wales we never get a breathing space from elections. We have an election almost every year. When we looked at the timetable over the past four or five years, we were relieved of an election in only one year. There is much to be said for putting the elections on one day, but particularly the Assembly elections and the general election.

My right hon. Friend the Secretary of State will not be surprised to hear that I am sad about one particular omission from the Bill, although I will probably attract howls and squeals from both sides of the House. I am sorry that we did not take this opportunity to reduce the number of Westminster constituencies in Wales. When Scotland gained its additional primary legislative responsibilities, the Labour Government reduced the number of MPs in Scotland, and that should have happened in Wales. The job that is done at a cost of £66,396 in an English constituency is done by an MP, an Assembly Member and half a list Assembly Member in Wales, at a cost of some £147,000 in salaries alone. Democracy is expensive, but the boundary changes should have been made and the number of MPs from Wales reduced.

[Mr Hain]

Is the right hon. Lady saying that somehow Welsh MPs work less hard than they used to, or do not work as hard as she and others with English constituencies do?

[Mrs Gillan]

The former Secretary of State and I have engaged on this topic before. A constituency such as Arfon has only 41,138 electors and Chesham and Amersham has 70,000, so—in the interests of fairness and equality, the need for which is often spouted by the Opposition—we should look at equalising the number of constituents across constituencies. Democracy costs dearly—

[Mr Hain]

The right hon. Lady has not answered my question. All she has to say is yes or no. Do Welsh MPs work harder or less hard than she and her colleagues in English constituencies do?

[Mrs Gillan]

The right hon. Gentleman knows that many Welsh seats have fewer constituents than many English seats, and he also knows that many of the responsibilities are devolved—

[Mr Hain]

Yes or no?

[Mrs Gillan]

Well, the right hon. Gentleman can answer yes or no to my question. Does he think that the salary costs alone for every Welsh constituency— amounting to £147,00 compared with just over £66,000—are fair? Yes or no?

[Mr Hain]

The right hon. Lady has not answered my question. She has changed the question. She has traditionally been hostile to devolution, so she is now inventing all sorts of other issues. The simple fact is that we are not second-class MPs because we are from Wales: we are on the same level as she is, until her Government change that.

[Mrs Gillan]

I am not going to trade insults with the right hon. Gentleman. He has 57,823 constituents on the roll, as of 1 December 2010. I have never, ever said that a Welsh MP was a second-class MP, as well he knows. However, if he chooses to go down that line, I have to say that the boundary change and the reduction in the number of MPs should have been carried out and I am sorry it was blocked by vested interests.

Let me turn to the financial provisions in the Bill. I have long thought that the Welsh Assembly Government—soon to be known as the Welsh Government—should understand better and share the responsibilities of tax raising that go with the luxury of spending taxpayers’ money. I therefore welcome the steps in the Bill to bring that sense of responsibility and stronger financial accountability for Welsh Assembly Ministers, as well as the option for Welsh residents to make their views on tax powers known through a referendum.

[Geraint Davies]

I have already made the point that the secret plot is to reduce the overall block grant and then give the powers to Wales, but is not part of that plot, as the right hon. Lady is now revealing, to reduce the number of MPs, lower the voice of Wales in this Chamber asking for a fair share of national assets and say, “You can have fewer MPs and you can raise your money yourself,” so that we have a gagged set of Members here? That is all part of what she is saying, is it not?

[Mrs Gillan]

I said that there would be squealing about what I was about to say before I started that passage of my speech, and indeed there has been. The hon. Gentleman really does not do me justice with those remarks.

It has always been the case that no matter how the annual financial settlement fell, it was always possible for the Assembly to aim criticism at Westminster for tightening the purse strings. No matter where the responsibility actually lies for the poor outcomes, the finger has always been pointed towards Whitehall and Westminster. The provisions in the Bill move towards reducing the opportunity for abrogating responsibility, which, particularly in the fields of health and education, lies squarely with the Labour Administration in Cardiff Bay.

The new funding framework moves from almost exclusive block funding to two revenue streams. The block grant part will remain dependent on the Barnett formula, which, even though I believe it is nearing its sell-by date, should remain firmly in place as long as we are required to continue reducing the deficit left by the last Labour Government, particularly in the light of the convergence arrangements from the October 2012 agreement. The new funding stream of business rates and the Welsh landfill and land transaction taxes—coupled with a Welsh rate of income tax following an affirming referendum—means that the Assembly will now have a real incentive to grow the economy and more responsibility for funding its spending. However, it also means that the Assembly will have an independent revenue stream to support capital borrowing—a welcome flexibility, particularly for making decisions on infrastructure funding.

I also welcome the flexibility that the Treasury is giving to the Welsh Assembly Government on borrowing to start the much-needed improvements to the M4, as well as the cash reserve powers. The UK Government will provide the Welsh Government with the ability to pay surplus tax revenues into a cash reserve that can be drawn on when future revenues are lower than forecast. This will provide the Welsh Government with a mechanism to manage the volatility in their budget resulting from the new tax powers.

I also welcome some of the inter-governmental arrangements that spring from the Bill, including the Government’s response to the Silk commission’s part I report, in recognising the need to ensure that institutional and governance arrangements continue to be appropriate as changes are made to the financial powers of the Assembly and Welsh Government—in particular, the fact that the Office for Budget Responsibility has agreed to the Government’s formal request that it starts to forecast Welsh taxes in the autumn statement 2014 and biannually thereafter. I look forward to the Wales Office letting us know the details of the OBR’s relationship with the Assembly and the Welsh Government, which I understand will be subject to further discussions.

The Government have also agreed with the Welsh Government to set up a bilateral ministerial committee to oversee the transfer of these financial powers. I was pleased to note that an early priority for the Committee would be the consideration of further details relating to the operation of the new budgetary arrangements—including the block grant adjustments—that will accompany tax devolution, and the cash management arrangements.

I have long believed that there should be better co-operation between the Assembly and the Government, and I hope that in the future the Wales Office will consider better arrangements both inter-departmentally, within the Government, and with the Assembly. One of my great hopes is that there will eventually be a forum in which Assembly Members and Members of Parliament could sit at the same time and debate subjects that are of interest to Wales. I give the Bill a warm welcome, and I shall be following its progress in the House, because it is a major constitutional Bill for Wales.

Let me end by paying a very special tribute to a man who for many years was my “shadow” in the House of Lords, Lord Roberts of Conwy. Back in 2008, he was asked by the Prime Minister and me to conduct a review of devolution in Wales. Wyn Roberts was a terrific colleague, and he carried out that review painstakingly and after consulting a broad spectrum of opinion. The genesis of much of the Bill, and indeed the Silk commission, was in his work. Following the publication of the report, he said:

“The question of governance in Wales will eventually be settled in the broad public interest and not in anyone's partisan interest.”

I think that the Bill is another building block of Welsh governance, and it has, I hope, been presented to the House in the spirit of Wyn’s wish that the broader interest be served. I wish it a speedy passage through the House, and I offer my congratulations again to the Ministers, the Department’s officials and the Silk commission, who have, I believe, produced it in the interests of Wales.

17:36

[Mrs Siân C. James (Swansea East) (Lab)]

Labour Members broadly support the Bill, but, along with others, I shall seek to make improvements to it in Committee. It is an important Bill which gives vital borrowing powers to the Welsh Government, and paves the way for Welsh control of business rates, stamp duty and—if it is voted for—a referendum on income tax. It is also the first piece of Wales-specific legislation that the Tory-led Government have produced in four years.

There is a great deal to welcome, but I want to concentrate on the proposed borrowing limits. I am keen to establish a clear blueprint in relation to the borrowing powers and the consequences for the Assembly Government: a business plan, as it were, providing the flexibility that is necessary to meet the requirements of a modern financial system, especially given the maturing role of the Welsh Assembly.

The capital budget of the Welsh Government has already been reduced by nearly 40%, which has resulted in even greater hardship for the citizens of Wales and further swingeing cuts in public services. Borrowing powers are essential to the Welsh Government, and will be increasingly important to future Administrations. They must have the flexibility that will allow them to react to changing markets, and to make the long-term adjustments that will be required if they are to meet the challenges ahead. The M4 relief road is just one example of the infrastructure projects that the Welsh Government might choose to fund if they were in a position to borrow appropriate moneys; adequate borrowing powers will ensure that other equally important projects can be funded.

Labour Members recognise that some limited powers are on offer, but they are just not enough. We have serious reservations about the amount, the rules governing the settlement, and the unfavourable comparisons to other devolved bodies. Along with my colleagues, I shall be keeping a watching brief on the borrowing powers settlement as the Bill progresses. The Bill states that a limit of £500 million will be imposed for current spending, to cope with the fluctuations in, for instance, tax receipts, along with another limit of £500 million for capital projects. Again, that is simply not enough. The settlement for Northern Ireland, whose population is less than half that of Wales, gives it the capacity to borrow up to £2 billion, a sum that is a great deal larger than the one that is considered appropriate for Wales. That, too, is unacceptable.

As the Minister will no doubt recognise, I am very sceptical about the proposed borrowing levels. In evidence to the Welsh Affairs Committee the Minister said the borrowing limit would increase to £1 billion if further income tax powers were devolved. In addition, further clarification was sought at a recent Welsh Grand Committee. At the morning sitting on 5 February this year, several of my colleagues sought clarification of how the £500 million borrowing limit had been reached. Despite being given ample opportunity to share the formula for how this limit for Wales was reached, the Welsh Secretary avoided giving a definitive answer. It appears there is still some vagueness in this key area.

I feel like one of these children in a classroom: did any other Member sit with a child next to them who had his hand around his work because he did not want to show his workings out so we could copy them? The Minister is a little bit like that. We would like to see how he did his workings out—how he reached those numbers, how they are going to affect us in Wales and how we can improve them.

It has been suggested by the Silk commission that the borrowing settlement for Wales be based on the Scottish model, but we have again heard today that Scotland has a higher limit: it can raise up to £2.2 billion. It is not right to say that we are on a similar level to Scotland or Northern Ireland. We are at a disadvantage and there seems to be some confusion.

[Mr Harper]

I looked at the Wales Bill financial empowerment and accountability document published by the Government and I think the Secretary of State set out his workings here very clearly. According to my reading of it, the borrowing level relative to the revenues is more generous than that applicable to Scotland. I may have misread it, but that is my reading of the document. Perhaps the hon. Lady should take a look.

[Mrs James]

I thank the hon. Gentleman for his intervention and I will look at those figures again. I must say they were a bit of a challenge and I do not consider myself an unintelligent person. I think there are questions we have to ask, and this is the place to ask them. Again, we come back to the Northern Ireland question: why can Wales not be trusted to raise the money it vitally needs and will be needing in the future? When the formula is applied to Wales, the sums simply do not add up. I seek further clarification from the Minister on this matter.

I appreciate that when stamp duty and landfill tax are devolved, that will provide the Welsh Government with an independent revenue stream worth around £200 million a year. However, these taxes will not be devolved until April 2018, four years from now. We have to have the borrowing powers now. We have to have them set at a level that is appropriate for us in Wales and that will allow us to grow and develop. We need those resources as soon as possible to mitigate the effects of Tory cuts to the Welsh budget. As the party of devolution, we cannot accept a settlement that places us in a restrictive position regarding borrowing.

[David T. C. Davies]

I thought I heard the hon. Lady say that there had been Tory cuts to the Welsh budget, but as far as I am aware there have not been any cuts whatsoever to the Welsh Assembly budget; it has remained at the same level over the last few years.

[Mrs James]

Well, out there on the streets life is very tough and I think the hon. Gentleman is wrong. I disagree with him: we are living every day with the effects of Tory budget cuts—long term, every day—and perhaps we should discuss this further in a different debate under different circumstances. I disagree with the hon. Gentleman on that matter.

Wales deserves the very best settlement, so we shall address this Bill positively while being ever conscious that it needs to reflect the evolving demands of an emerging Government. Welsh Labour and the Labour-controlled Welsh Government always have served, and always will serve, the needs of the people of Wales, encouraging greater self-determination for our citizens and ensuring that adequate powers are devolved whenever possible. I welcome the Bill, and I will support aspects of it, but I ask the Minister to address the issue of the borrowing powers.

17:44

[David T. C. Davies (Monmouth) (Con)]

I am not going to be able to give a warm welcome to the Bill; a slightly frosty and formal welcome is probably the best I can manage at the moment. However, I would like to thank the members of the Welsh Affairs Committee, who worked extremely hard throughout January to scrutinise the Bill in time for the Secretary of State to introduce it. I would also like to thank the Secretary of State and his colleagues for accepting some of our recommendations. None the less, we are in a slightly depressing cycle at the moment, in which Members of the Welsh Assembly demand extra powers, a range of non-governmental organisations and other bodies—many of which get some or all of their funding from the Assembly—go along with those demands, then the press jump in, followed by politicians from all the parties.

I was amazed to hear the hon. Member for Pontypridd (Owen Smith) at the Welsh Labour conference the other day making a promise that the Welsh Assembly would have even more powers to raise taxation if he had his way. Today, however, he has come to the Chamber to say that Labour does not like what is on offer, it does not think that there will be a referendum and it does not like tax competition. There is clearly ambiguity there. He is promising greater powers to the Welsh Assembly but at the same time trying to reassure others that those powers would never be implemented. Most people will be able to see through that. At least most parties are able to set out a position.

My own position is clear: I do not want the Assembly to have any kind of tax-raising powers. Members of Plaid Cymru also have a clear position: they want it to have as many powers as possible. We have a right to know what Labour actually stands for in this regard. This worries me, because I know that Labour Members are Unionists, but they do not seem to realise that we are sleepwalking into a disaster. One day, perhaps 10, 20 or 30 years hence, we are going to wake up and discover—[Interruption.] Yes, I will come to the Conservative party in a minute. Hon. Members must contain themselves. We will wake up and discover that we have created de facto independence in Wales simply by giving it one power after another, without making provision to take any of them back.

I am well aware that there are members of the Conservative party, and other parties, who support that course of action. A kind of auction process appears to be taking place, in which one person says, “Let’s give the Welsh Assembly this power”, and all sorts of other people who do not want to be perceived as being opposed to Wales jump on the bandwagon and agree with them. There are members of the Conservative party for whom I have the utmost affection but with whom I completely disagree on this. They seem to take the view that if we give the Assembly enough powers it will hang itself, after which we will be in power. I have a horrible feeling that we might end up dangling alongside it, however, because the Labour party will remain in power to misuse those extra powers, and we will be no better off as a result.

[Susan Elan Jones (Clwyd South) (Lab)]

I hate to see the hon. Gentleman looking so unhappy. I suggest that the solution comes in the form of two excellent words used by the leader of the UK Labour party at the Welsh conference: “reserved powers”.

[David T. C. Davies]

There is a solution. It is one that we all need to think about, and I hate to say this, but it comes from the Liberal Democrats. It takes the form of a fully federal system. The only way to stop this march towards ever greater powers going to the Welsh Assembly and to Scotland is to draw a line in the sand and say, “Okay, we’re going to give certain powers to Wales, Scotland and Northern Ireland, and maybe to London and other regions of England, but we will not go beyond that line. There will be a federal Parliament in London with fully laid-out powers and a constitutional court to deal with any issues over who has what.” That is the only way of stopping this process. If we do not stop it, I can guarantee that we will wake up in 20 or 30 years’ time to find that the whole of the United Kingdom will have fallen apart. At least Scotland is getting a vote on this. It is having a fully fledged debate on the pros and cons of independence. We are not having that in Wales. Instead, the Welsh Assembly is being given a little bit more power every couple of years, and there is no way of getting any of that power back.

[Wayne David]

The hon. Gentleman has been called early in the debate, so would he be kind enough to clarify whether he is speaking as an individual Back Bencher or as Chair of the Welsh Affairs Committee?

[David T. C. Davies]

Obviously, I am speaking as an individual Back Bencher; it was hard to get any agreement on certain of these issues from the Welsh Affairs Committee. Let me make it clear that I am not speaking for anyone in the Conservative party either—I am entirely on my own on this one, and probably always will be.

I would like to see one improvement that can be made to this Bill. If we consider the powers the Welsh Assembly has already been given, we can see that it has not done terribly well. We have had the sight of the Welsh Minister for Education and Skills apologising, on Boxing day, I believe it was, for the lamentable state of education. As someone who has been through the state school system there, and who has three children in that system, I feel that very strongly. Nor have we seen a good performance from our national health service. Large numbers of people in cross-border areas such as Monmouthshire are desperate to be treated by the coalition Government-run NHS in England. We have even had the spectacle of a Labour Member of Parliament being banned from going before the Health and Social Care Committee in the Welsh Assembly because she was likely to tell a few home truths that members of that Committee did not want to hear. There has thus been a failure even to carry out the proper scrutiny role.

What I would like to see from this Bill is the opportunity not to take powers away from the Welsh Assembly, but to recognise that where there are problems, individuals ought to be given the choice. Somebody in Wales who is ill and wishes to be treated in England should have the right to access the NHS in England, with the cost of treatment being deducted from the block grant. Similarly, if someone in England was happy to wait twice as long as they needed to and be treated in Wales, they could be treated in Wales, with the cost of their treatment being added to the block grant. That would be an excellent way for us to maintain the commitment to devolution while allowing everyone to enjoy the benefits of a national health service.

[Chris Bryant]

The hon. Gentleman thinks it would be much better to move to a federal system. My problem is that that denies the history of all the different parts of the United Kingdom: the whole of Ireland was a kingdom until the partition and so on; Scotland had a completely different legal system even when the Crowns were joined together; and Wales never had a separate legal situation. Asymmetric devolution is actually the most sensible way of progressing.

[David T. C. Davies]

That is a reasonable intervention from the hon. Gentleman. I respond simply by saying that a federal approach is not a perfect solution, but it is probably the least worst solution, and it is better than waking up in 20 years and finding that we have fully fledged independence. Wales has had a slightly separate legal system; I believe that Henry VIII allowed Wales a measure of independence, except for Monmouthshire, which was brought into the Oxford assizes—we do not need to go into that now.

[Hywel Williams]

I do not want to detain the House, but Wales did have a separate legal system for many centuries, codified by Hywel Dda.

[David T. C. Davies]

You rightly told me off last time, Madam Deputy Speaker, for misusing the privilege of being called early and I do not wish to be told off again. What I would say is that I am a democrat and I recognise that much of what has been given to Wales has come about as a result of referendums. What is on offer in the Bill regarding stamp duty and land tax is not that significant. As for giving borrowing powers, I am a pragmatist and if they are going to be used for the M4, I would very much like to see an M4 relief road, so I will willingly go along with that. And of course, income tax powers will not be devolved without a further referendum. I would certainly be encouraging people to vote no in such a referendum, and perhaps for the first time I would be on a different side of the argument from the Secretary of State. Nevertheless, I recognise democracy and I recognise that he is offering a referendum. I appreciate the changes in the Bill which he has made as a result of the scrutiny by the Welsh Affairs Committee. My welcome, frosty and formal as it is, stays in place and I look forward to seeing the Bill progress through the House.

17:54

[Mr Peter Hain (Neath) (Lab)]

I rarely agree with the hon. Member for Monmouth (David T. C. Davies), but I always get great entertainment from his sincere and intelligent extremism. He made a very thoughtful speech, for which he deserves credit, but may I correct him on one point about the national health service? I think he will find that more people cross the border from England to be treated in Welsh hospitals than go the other way.

[David T. C. Davies]

That is true, but these people do not do that by choice; they have no choice, and many of them are actively campaigning to be treated back in England and do not want to be treated in Wales.

[Mr Hain]

The facts seem to speak for themselves. We can have an argument about the degree to which people can express a preference, but the hon. Gentleman and his colleagues, led by the Secretary of State and the Prime Minister, persistently rant against the Welsh national health service as part of their war on Wales and completely distort the facts on the ground.

[Mr Harper]

rose—

[Mr Hain]

I will give way, although my speech is not about the Welsh NHS; I am merely responding to a point made by the hon. Member for Monmouth.

[Mr Harper]

I was not going to respond, but I cannot let what the right hon. Gentleman just said stand. Thousands of my constituents live in England and passionately want to be treated by the English NHS, according to the rules and the rights they have in law, but because their GPs based in England are registered with the NHS in Wales they are forced to be treated in Wales according to the NHS rules. They do not like that prospect and I am doing my best to change it, so please do not pretend that they have run away from the English NHS by choice, because they absolutely have not.

[Mr Hain]

In that case, I think the hon. Gentleman will find that the same applies for Welsh citizens on the Welsh side of the border. All I am saying is: let us have an intelligent debate about this, rather than rantings based on a misrepresentation of the facts on the ground.

Let me get down to my speech. In focusing on clause 2 of the Bill, I wish to record my pride at taking the Government of Wales Act 2006 through Parliament as the then Secretary of State, not least because it provided for the full law-making powers the Welsh Government are now using to protect the people of Wales from this Government’s disastrous policies, including on tuition fees and on the creeping privatisation of the national health service, which is not being applied by the Welsh Government. The fact that the Conservative party, the only party in this House to vote against the 2006 Act, now seems to have accepted that devolution is a sign of progress—I welcome that—but on the question of dual candidature it has sadly regressed. In section 7 of the 2006 Act, I amended one clause from the Government of Wales Act 1998 in order to prevent candidates from simultaneously standing both in a constituency and for a region, whether as a list candidate or as an individual—this Bill will disgracefully reverse that reform.

[Alun Cairns]

On that point—

[Mr Hain]

I am going to develop the point and then I will take an intervention. I want to remind colleagues of the reasons for the 2006 change. I did not act for politically partisan reasons, as was alleged by opponents of the change; I acted for democratic reasons. As one of the Ministers who also took the original 1998 Bill through the Commons permitting dual candidature, I never imagined for a moment then the abuses it would produce and the antipathy it would create among voters in Wales. Voters have never understood the widespread practice that has occurred since the Assembly was established in 1999, whereby candidates rejected by a particular constituency then secured back-door election as Assembly Members through the regional list and were even able to claim to represent the very constituency that had rejected them. Three of the four defeated candidates in Clwyd West in 2003 were subsequently elected to the Assembly through the regional list. Those very three people in Clwyd West—in the Secretary of State’s constituency—who were booted out by the electorate ended up as Assembly Members, competing against winning Assembly Member Alun Pugh.

[Alun Cairns]

The right hon. Gentleman talked about the Welsh electorate’s antipathy to the arrangements. Will he remind us what the Electoral Commission’s view was, following its long consultation on whether or not there was a need to change policy? What advice did it give him as the then Secretary of State for Wales?

[Mr Hain]

The Electoral Commission disagreed with me, and, not for the first time from my personal experience, it was wrong.

[Jonathan Edwards]

Does the right hon. Gentleman recognise that the Labour party has also had candidates that stand on the list and in constituencies? In 2003, on the North Wales regional list, Sandy Mewies Lesley Griffiths, Carl Sergeant and Karen Sinclair stood both in constituencies and in the region. In South Wales Central, Rhodri Morgan, Lorraine Barnett, Sue Essex, Jane Davidson, Jane Hutt and Leighton Andrews stood in both the region and the constituencies, and in Mid and West Wales, Christine Gwyther stood in both.

[Mr Hain]

Yes, indeed. That is my exact point. I am not making a politically partisan point; I am making a democratic point. The practice clouded political accountability and denied voters their right to reject a particular candidate at the ballot box. A change made by the Government of Wales Act 2006 requiring candidates to choose whether to stand for a constituency or on the regional list put the voters back in charge. It cannot be right for losers to become winners through the back door, despite having been rejected by voters. That is an abuse of democracy.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

Surely the rejection is of the party in question. The system is there to get a little bit of equality across the parties. It is not about the individuals.

[Mr Hain]

That intervention interests me. Is the hon. Gentleman saying that whoever stands for whichever party, even if they are deeply opposed by the particular constituents whom they seek to represent, cannot be challenged because they are standing on a party label?

[Chris Bryant]

Is not the point also that Wales is not the only place in the world that has a top-up system to enable diversity within the legislature, but it will be the only place in the world where that practice of standing both on the list and for the first-past-post seat is used?

[Mr Hain]

I bow to my hon. Friend’s superior experience and knowledge. I think that the system applies in Scotland.

[Chris Bryant]

It does in Scotland, but I mean outside the United Kingdom.

[Mr Hain]

It may well be the case that it exists outside the United Kingdom.

[Mr David Jones]

I am grateful to the right hon. Gentleman for giving way. The hon. Member for Rhondda (Chris Bryant) is entirely wrong. Is it not the case that Wales is the only country in the world where, under this electoral system, dual candidacy is presently banned?

[Mr Hain]

I am not sure about that, but what I can say is that we should look at the experience in Wales. If there is no such bar in other countries, then perhaps there was no such abuse there. There was widespread abuse in Wales, practised by 15 of the 20 list Assembly Members who used taxpayers’ money to open constituency offices in the very seats in which they were defeated. They then used those resources to try to win at the following election by cherry-picking local issues against the constituency AMs who had beaten them.

[Alun Cairns]

rose—

[Mr Hain]

I will not give way, because I want to make some progress. While all that was going on, someone in Wales said to me:

“If I want to defeat constituency candidates because I don’t like them and I succeed and they are defeated, why should they pop up on the list claiming to represent me?”

That is the point. There is an honourable, constitutional and necessary role to be played by list Assembly Members across the whole region that they represent. There is no justification for seeking to abuse the system by getting involved in local constituency matters to try to win back a seat at the following election using that position and that resource. That is the fundamental point.

[Guto Bebb (Aberconwy) (Con)]

Will the right hon. Gentleman give way?

[Mr Hain]

Not for a moment, no. The Government of Wales Act 2006 put the voters back in charge. If they did not want to elect somebody, they did not have to do so. The Act stopped the prevailing situation before then in which Assembly candidates could decide to place a “both ways” bet, by standing in both categories in order to win, even if they were kicked out by the electorate. To his shame, the Secretary of State is seeking to reintroduce that both ways bet.

There was an unholy coalition of Conservatives, nationalists and Liberal Democrats opposed to abolishing that abuse. Now they have reincarnated that unholy coalition in defiance of the popular will. Why are they so afraid of taking their choice to the people? Why are they so afraid of losing constituency elections that they need the lifebelt of standing on the lists as well?

[Guto Bebb]

rose—

[Mr Hain]

Perhaps the hon. Gentleman can answer that question.

[Guto Bebb]

It is the case that the Welsh system of electing Members to the Assembly is replicated in many parts of the world, but the only country that has a similar ban is Ukraine. The Bevan Foundation, a Labour party think-tank, is of the view that the ban should be withdrawn.

[Mr Hain]

I have no idea whether the abuse that we have seen in Wales, which I am now documenting for the House, applied in Ukraine as well. Lord Richard chaired the commission—[Interruption.] I will now present a lot of detailed evidence on that abuse for the sake of the hon. Members who are seeking to intervene and the whole of the House. Lord Richard chaired the commission that reported in 2004. He recommended the extra powers for the Assembly, which my 2006 Act delivered. He told the Welsh Affairs Committee:

“There is something wrong in a situation in which five people can stand in Clwyd, none of them can be elected, and then they all get into the Assembly. On the face of it, that does not make sense. I think a lot of people in Wales find that it does not.”

That is not me, a former Secretary of State who banned the abuse, speaking, but Lord Richard who carried through an eminent report.

The eminent Welsh Academic, Dr Denis Balsom—again, not a politically partisan figure—said in his evidence to the Richard commission:

“Candidates use the list as an insurance against failing to win a constituency contest. This dual candidacy can also confuse the electorate, who may wish to consciously reject a particular candidate only to find them elected via the list. It should remain a basic democratic right not to elect a particular candidate or to be able to vote a Member out.”

That is a right that the Government, supported by Conservatives and members of other parties in Wales, are seeking to deny the electorate. That is not democratically defensible.

[Mr Harper]

I am listening to the right hon. Gentleman’s argument, but I do not follow it at all. When we get a ballot paper in a first-past-the-post election, we have to choose a candidate—we have to vote for somebody. There is no option to say I do not like this person and to cast an anti-vote. I do not follow the idea that someone can vote against someone. They are choosing to vote for who they want to represent them in the Assembly or in Parliament. I do not follow the argument.

[Mr Hain]

I do not know what happens in the Forest of Dean, but in every other constituency if a candidate loses, they lose. If the electorate rejects them, if the voters vote against them, they lose. They do not find themselves parachuted back in to the Assembly, from which the voters have barred them, via another route.

[Mrs Gillan]

It was the right hon. Gentleman and I who sparred across the Dispatch Box on that very subject. I think he has a selective memory when it comes to the Richard commission. As I recall it, Lord Richard not only objected to the list system, but recommended that there should be 80 AMs and that Wales should move to that system and employ the single transferable vote, neither of which the right hon. Gentleman chose to take up. That is almost proof that the direction in which he took it was indeed partisan.

[Mr Hain]

Wait a minute, Madam Deputy Speaker. Far be it from me to question whether the right hon. Lady was in order with that point, but the questions about numbers of Assembly Members and a proportional representation system are not within this Bill. They have nothing to do with this Bill. What is in this Bill is restoring the ban on the abuse of dual candidature which was in the 2006 Act, and it is that point that I am addressing.

[Wayne David]

Does my right hon. Friend agree that there is a telling comment tucked away in the impact assessment produced by the Government? It says that the smaller parties want to change to a dual candidacy rule because they

“may have a smaller pool of high quality candidates”.

[Mr Hain]

I could not possibly comment, but since the Government say that, perhaps it is true on this occasion.

I have quoted a Labour figure, Lord Richard, in support of my case, so I shall now quote a Liberal Democrat. Lord Carlile, the former Welsh Liberal Democrat leader, said in June 2005 that

“many in Wales will welcome...the removal of the absurd dual candidacy opportunity.”

In the same debate in the Lords, the former Conservative Secretary of State for Wales, Lord Crickhowell, said:

“The present arrangements are really pretty indefensible“.—[Official Report, House of Lords, 15 June 2005; Vol. 672, c. 1216-1217.]

A Liberal Democrat, a former Labour Member and a Conservative former Secretary of State all agree with me. I think that that helps my case.

I recall, as Secretary of State for Wales, receiving on 9 January 2006 a press release from Helen Mary Jones, in which she described herself as a Llanelli-based Assembly Member, although she was on the list. In it, she complained about money being spent on a hospital in Carmarthen instead of one in Llanelli. However, as the list Assembly Member for Mid and West Wales, she represented both towns and should really have been supporting both hospitals. Had she been discharging her list Member’s duties properly, she would not have discriminated between the two towns or their hospitals.

[Owen Smith]

Why did she?

[Mr Hain]

Indeed, why did she? Why, of all the parts of the list area that she represented, did she target the one place where she had only been very narrowly defeated in 2003, invariably describing herself as the Llanelli-based Assembly Member? As it happens, I admire Helen Mary Jones for her ability and commitment, although not for her belief in an independent Wales. The 2006 Act stopped her describing herself as the Assembly Member for Llanelli, because there was one and it was not her. In the meantime, she campaigned hard and won the seat back in 2007.

The list Assembly Member for South West Wales, Bethan Jenkins, is often described as the Neath-based Assembly Member and is more active in the Neath constituency than anywhere else in the region. She has not yet had the courage to stand in the Neath constituency, but if the Bill goes through with clause 2 remaining within it, perhaps she will do so, safe in the knowledge that being defeated in Neath will not prevent her from being elected—[Interruption.] I will not respond to that intervention from the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards).

In a leaked memorandum written in August 2003, a Plaid Cymru list Assembly Member—now the party’s engaging young party leader—Leanne Wood, was embarrassingly blatant in encouraging abuse of the system using taxpayers’ money. Let me quote from that memorandum for the benefit of the House and my case. She urged Plaid Cymru Assembly list Members to concentrate tens of thousands of pounds of their local Assembly office budgets in their party’s target seats. She urged her party’s list Members to do casework only where it might benefit Plaid Cymru in those target seats and to attend civic or other events the constituency only if they thought there were votes in it.

I will now quote directly from that memorandum, entitled “What should be the role of a regional AM?” It perfectly illustrates the problem we faced before the 2006 Act banned dual candidature in Wales. Leanne Wood was hardly shy about her objectives:

“Each regional AM has an office budget and a staff budget of some considerable size. Consideration should be given to the location of their office—where would it be best for the region? Are there any target seats…within the region?”

She went on:

“We need to be thinking much more creatively as to how we better use staff budgets for furthering the aims of the party.”

She finished off with a refreshing burst of honesty:

“Regional AMs are in a unique position. They are paid to work full-time in politics and have considerable budgets at their disposal. They need not be constrained by constituency casework and events, and can be more choosy about their engagements, only attending events which further the party’s cause. This can be achieved by following one simple golden rule: On receipt of every invitation, ask ‘How can my attendance at this event further the aims of Plaid Cymru?’ If the answer is ‘very little’ or ‘not at all’, then a pro forma letter of decline should be in order.”

I could not have presented my case better than she revealingly did.

[Huw Irranca-Davies (Ogmore) (Lab)]

I am absolutely astonished at what I am hearing from my right hon. Friend. Would he, like me, welcome an intervention from the two Plaid Cymru Members present in the Chamber to distance themselves from that startling abuse of taxpayers’ money?

[Mr Hain]

That is not a matter for me, but I take my hon. Friend’s point with acclamation.

[Wayne David]

Is not my right hon. Friend’s case substantially weakened by the fact that nobody seriously believes that Leanne Wood can be party leader for much longer?

[Mr Hain]

I think I shall move on from that point, despite the great respect I have for my hon. Friend.

All the arguments and evidence I have cited demonstrate conclusively that the ban was not partisan but enhanced democratic standards among Welsh Assembly Members. Indeed, I reminded the House that six Labour Assembly Members, including three Ministers, could have been defeated in the 2007 Assembly elections by a swing of 3% against them—a very small swing. They would no longer enjoy the safety net of the regional list and two subsequently lost. The reform affected Labour candidates, just as it applied to candidates from other parties.

[Alun Cairns]

rose—

[Susan Elan Jones]

rose—

[Mr Hain]

I think I really ought to conclude my remarks.

Surely the principle behind the 2006 Act is right: namely, candidates must make their choices and then voters will make theirs. My right hon. Friend the Member for Torfaen (Paul Murphy), also a former Secretary of State for Wales, put it well in a debate on the then Bill in January 2006:

“The additional member system that we have as a result of the 1997 settlement is fundamentally flawed. People do not understand it. They do not understand how an individual can stand in two ways for the same body on the same day in the same election and be defeated, then get elected a matter of an hour or two later. Equally if not more confusing is the fact that, in my constituency and in those of my right hon. and hon. Friends in the south Wales valleys, thousands upon thousands of people vote Labour on their second vote, yet none of those votes is counted. I do not understand the logic of that. I can understand the technicalities, because I taught the subject many years ago when I was a teacher in a college of further education, but as an elector or as an elected representative, I think that it is terribly confusing and ought to be changed.”—[Official Report, 9 January 2006; Vol. 441, c. 63.]

My hon. Friend the Member for Aberavon (Dr Francis), as the then Chair of the Welsh Affairs Committee, said in the same debate:

“Electoral reform should not get caught up in internecine party politics...the present system is an unloved and confusing creature that causes more grief than it is worth.”—[Official Report, 9 January 2006; Vol. 441, c. 69-70.]

My hon. Friend the Member for Alyn and Deeside (Mark Tami) said:

“Following the last Assembly election, many people asked me how candidates who stood at the election and were defeated—and, in many cases, defeated by a country mile—could find themselves sitting in the Assembly, claiming not only to represent constituents but having equal status with the people who defeated them. How would we feel if a third of this Chamber”—

by which he meant this Chamber—

“were made up of candidates that had stood against us”

before appearing on the list

“they would not have come up with such a system even in North Korea”,

although I confess to having come up with it as a Wales Minister in the 1998 legislation. My hon. Friend continued:

“Once getting into the assembly via the back door, these characters spend much of their time cherry-picking issues and targeting seats that they or their party are looking at for future elections.”—[Official Report, 9 January 2006; Vol. 441, c. 96-97.]

Those are some of the reasons why I introduced the bar on dual candidature. It is astonishing that, for narrow partisan party reasons, the Secretary of State is assisting his own party members in Wales and those of other parties who complained about the ban. After the 2006 Act banned dual candidature, the well-known democratic abuses that had occurred before were not repeated. I find it astonishing that the Secretary of State is reinstating a regime that brought democracy in Wales into such popular disrepute. If he persists, I hope the House of Lords will delete clause 2.

I want to pick up on an earlier point relating to the interesting exchange I had with the Secretary of State. I will read the exchange in Hansard carefully. I was not at all convinced by his answer. Indeed, I remain very concerned, on the question of income tax devolution, that Wales will be cut adrift from richer parts of the United Kingdom and lose out. There have been a lot of warm words about indexation, but I do not find the answers we have been given, or the references in the associated financial documents, to be at all compelling or convincing. I respect the Holtham commission and I respect Gerald Holtham. I understand his points on indexation, but I do not trust a Conservative-led Treasury to honour the commitments in the Holtham commission.

I would be more reassured—this is a cross-party point, because we all want to see Wales doing the best it can—if a clear and absolute commitment was embedded in the proposed legislation for Wales to continue to benefit, regardless of income tax devolution, from the wealth of the United Kingdom. My politics come from a belief in fairness, and the redistribution from richer to poorer regions and from richer to poorer individuals. I do not see how tax accountability, which the Secretary of State exalts, can be a two-way bet. I do not see how having devolved income tax and giving, in the main, the Assembly greater accountability to local voters, will then be protected, according to the Secretary of State’s reassurance, by a kind of indexation that undermines that accountability. That makes me even more suspicious of it. I will be extremely sceptical of, if not opposed to, income tax devolution until I am absolutely sure that Wales will not lose out, for the reasons I have described.

18:23

[Mr Mark Harper (Forest of Dean) (Con)]

I will add one or two extra points. This has been an interesting debate so far, and it has taken me back to the enjoyable debates we had during the passage of the Parliamentary Voting System and Constituencies Bill, which had much the same cast of characters. Indeed, we debated some of the same issues in relation to the Fixed-term Parliaments Act 2011—but I will dwell on the Bill before us.

I am pleased to support the Bill and the process that has led to its introduction. The shadow Secretary of State, who is no longer in his place, criticised the Secretary of State for Wales, for this being only the first, as he described it, Welsh-specific Bill, but I want to thank my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) and my right hon. Friend the Secretary of State for taking a very thoughtful approach. They set up the Silk commission and produced a draft Bill. The Select Committee, ably chaired by my constituency neighbour my hon. Friend the Member for Monmouth (David T. C. Davies), was asked to undertake pre-legislative scrutiny, and the Bill was then brought before the House.

It is important to think these matters through and to get them right. I speak as an English Member representing a constituency on the England-Wales border. The devolution delivered by the previous Government was not very well thought through. I have tried to address the example of cross-border health care in a reasonable way. I am sorry that the shadow Secretary of State is not here, because what he said in response to my question in Wales questions last week was simply not right. All I did was ask a question of the Secretary of State that reflected the fact that thousands of my constituents, who live in England and have the right, under the existing devolution settlement, to be treated according to the rules in England, are currently forced, because their GP in England is registered with the NHS in Wales, to be treated according to NHS Wales rules. That was the only point I raised.

My constituents are concerned when they read about mortality statistics being worse in hospitals in Wales. [Interruption.] I hear someone on the Opposition Front Bench saying that they are smearing Wales. In raising the issue of mortality statistics, I was merely quoting the right hon. Member for Cynon Valley (Ann Clwyd), who said in this House:

“The second warning sign, said Francis, is the level of mortality statistics. In fact, they appear to be dangerously high in many hospitals in Wales.”—[Official Report, 5 March 2014; Vol. 576, c. 930.]

Those are not my words; they are the words of someone who I would have thought that most Members accept is a very loyal and honourable member of the Labour party. I raise the point because, when considering further devolution to the Welsh Assembly Government, it is sensible for this House to ask itself whether existing devolution has worked well and has been properly thought through.

[Alun Cairns]

My hon. Friend refers to his question on mortality rates in Wales and the criticism from the Opposition. May I specifically state that this was a letter—

[Hon. Members]

It’s not in the Bill.

[Madam Deputy Speaker]

Order. Hon. Gentlemen must not shout from a sedentary position. If the hon. Member for Vale of Glamorgan (Alun Cairns) is not in order, I will tell him that he is not in order. I am sure that he will remain in order.

[Alun Cairns]

Thank you, Madam Deputy Speaker. I will do everything I can to remain in order. I want to refer briefly to a point made by my hon. Friend, who was criticised by Opposition Members. It related to a letter from the chief medical officer in England to her counterpart in Wales on the powers of devolution in Wales, seeking an investigation. How could that ever be interpreted as an attack on Wales, when it was from one clinician to another?

[Mr Harper]

I agree. All I did at Wales questions last week was raise a perfectly reasonable point on behalf of my constituents. I quoted something that the right hon. Member for Cynon Valley, a valued Opposition Member, had said—it is in Hansard—and then the shadow Secretary of State suggests that I asked something I did not, and pretends that it is all a smear. That is simply not the case; I am a Member of Parliament raising concerns on behalf of my constituents. The previous devolution settlement was not well thought through and I want to ensure that this one is. I am grateful to my right hon. Friend the Secretary of State for taking a great deal of care with the Bill.

[David T. C. Davies]

As a proudly Welsh MP, I am very grateful for all the support we can get in drawing attention to the state of the NHS in Wales. What does my hon. Friend think of the proposal to amend the Bill to allow Welsh patients who wish to be treated by the coalition Government-run NHS to cross the border, with the funding taken off the Welsh block grant?

[Mr Harper]

I have not had time to study that proposal in detail, but on the face of it allowing patients anywhere in the United Kingdom to have choice is very sensible. That is not a policy that the Welsh Government prefer. I think they said in a letter they sent to me that they prefer “Patient voice, not choice.” They will not allow people to have choice, but they can have a voice, which will then be ignored as the Welsh Government proceed as they want to anyway.

[Geraint Davies]

Will the hon. Gentleman give way?

[Mr Harper]

I will make a little progress before giving way again.

Let me divert a little to address the points on which the right hon. Member for Neath (Mr Hain) focused his speech, which relate to clause 2. I did not follow his argument at all. Although he was making a point about the amendment in the Bill, the thrust of his speech seemed to be a criticism of how the list system operates in Wales. He said that it was a system that we could find only in North Korea, but then he rather shot himself in the foot when he had to admit that he was the system’s author. I know that he is a supporter of proportional representation—

[Mr Hain]

I am not, actually.

[Mr Harper]

Oh, he is not a supporter now; I thought that he was. The system is the one he invented. Given that the Electoral Commission, which is independent of any party, and three of the four parties in the Assembly are perfectly happy with what is proposed in the Bill, I do not think that he can claim that this is being done for partisan reasons.

[Mr Hain]

I was one of the authors, under the Secretary of State at the time, Ron Davies, of the Bill that allowed candidates to stand in both the lists and the constituency, which the Secretary of State is now seeking to reinstate, but I had no idea of the abuse that would take place, for which I think I have provided more than ample evidence. That is the point.

[Mr Harper]

The right hon. Gentleman made two points, one of which I agree is an abuse, from the way he outlined it. Of course, parliamentary resources—I presume the same is true for the Assembly—are given to us by the taxpayer for parliamentary work, not party political campaigning. If that was the thrust of the Plaid Cymru document he quoted, that would have been quite wrong. He suggested that there is something wrong with candidates standing for a constituency and then being elected from a list, but that simply reflects the fact that in a list system, and certainly in the one that was put in place in Wales, it is the party label that gets a candidate elected, not their individual qualities. It seems to me that candidates getting elected by virtue of their place on a list might be a good reason for not having a list system, but it is not particularly offensive or undemocratic.

On voting for or against people, about which the right hon. Gentleman and I had an exchange, perhaps I am naive, but I happen to think that when people vote in a general election they are voting for somebody. I certainly conduct my election campaigns by trying to give people reasons to vote for me at a constituency level and reasons to vote for my right hon. Friend the Member for Witney (Mr Cameron) as Prime Minister, for example, rather than by thinking up lots of reasons why they should not vote for my opponents. I hope that is how my opponent in my constituency will conduct himself as well. That might not be what happens in Wales, but it is how I try to conduct things in my constituency.

[Mrs Gillan]

I recall that there was some reliance on work done by an organisation called the Bevan Foundation, with which Labour Members will be familiar. Part of the qualitative work it did at the time pointed out that, rather than objecting to candidates standing in a constituency and through the list system, people did not understand the electoral system itself. That was the fundamental problem at the heart of the whole electoral system that was set up for Wales.

[Mr Harper]

I suspect that my right hon. Friend, as ever, is spot on. The right hon. Member for Neath, in his lengthy speech, gave some anecdotes about one or two people who did not like the fact that a candidate who had stood in the constituency was then elected on the list, but I heard no evidence of a wider view.

[Mr Hain]

With all due respect, I represent a Welsh constituency, which is not the case for either the hon. Gentleman or the right hon. Member for Chesham and Amersham (Mrs Gillan), I was Secretary of State for Wales and I travelled the length and breadth of Wales, and that matter was raised with me all the time. He mentions the Electoral Commission, which often adopts a kind of academic approach to these matters. That contrasts with the findings of Denis Balsom and other sources of credible evidence from Wales.

[Mr Harper]

Based on what the right hon. Gentleman has just said, it sounds as if he has a number of anecdotes, but in my experience the Electoral Commission, with which I worked closely when I was the Minister with responsibility for political and constitutional reform, takes positions based on evidence. It carries out thorough research and is always scrupulous about not taking a position that could be portrayed as partisan, and it guards that reputation jealously. It does not agree with him, as he acknowledges—I have not always agreed with it—but I would put rather more weight on its views than on his.

[Mrs Gillan]

During the seven years that I was shadow Secretary of State and then Secretary of State, I travelled the length and breadth of Wales, too—usually in much less comfortable conditions—and I talked with many thousands of people right across Wales, including our candidates, and this was not at the top of their list of asks.

[Mr Harper]

As I thought, we have competing anecdotes. I suspect that my right hon. Friend, particularly as she describes the more modest circumstances in which she travelled across Wales, was rather closer to the people, so I put more weight on what she says.

Before that constitutional interlude, I was referring to the fact that my right hon. Friend the Secretary of State has taken a lot of care with this Bill. I want to put on the record my appreciation for the Welsh Affairs Committee’s excellent pre-legislative scrutiny report. The Government have obviously taken the trouble to respond to it and, as the Secretary of State said in his written ministerial statement, have accepted most of its recommendations. I think that was an excellent job. Doing pre-legislative scrutiny on a constitutional Bill is very sensible and likely to lead to a more accurate position.

[Nia Griffith (Llanelli) (Lab)]

I wonder whether the hon. Gentleman, who is so keen to praise the Committee’s report, agrees with its statement that

“as a point of principle, we consider it unadvisable for electoral systems to be changed frequently. Successive changes to electoral systems risk being perceived as partisan by the public.”

That is precisely on the point of dual candidacy. In other words, the Committee is saying, “Let’s keep the status quo.” Does he agree with that?

[Mr Harper]

No. I read the Committee’s report very carefully, and it did not say that we should keep the status quo at all; it said what the hon. Lady just read out. All that the Secretary of State’s proposals will do is return the system to the position that existed before the Labour party changed it in the Government of Wales Act 2006. All that we are doing is reversing it and putting it back to the original position. I read the report carefully and I am sure, knowing how Select Committees work—its Chair confirmed that it was quite hard to get agreement—that those words were chosen very carefully, and it absolutely did not say that we should stick with the status quo. My guess is that if someone had suggested that it said that, it would not have received cross-party agreement.

[Guto Bebb]

As a member of the Welsh Affairs Committee, I did indeed agree to the sentence the hon. Member for Llanelli (Nia Griffith) just read out, because I thought that it referred to the possibility of a further change if Labour won power any time before 2025.

[Mr Harper]

My hon. Friend makes a good point. Notwithstanding that point, the hon. Lady’s Front-Bench colleague, the hon. Member for Pontypridd (Owen Smith), committed at the Dispatch Box to reversing the provision, if I heard him correctly. Her admonition against frequent change should be aimed at him as much as the Secretary of State.

[Chris Bryant]

Will the hon. Gentleman give way?

[Mr Harper]

I will give way one last time before moving on to tax powers.

[Chris Bryant]

I knew that the hon. Gentleman would never be able to turn me down. Most countries in Europe have a fixed constitution, which means that they cannot play around with their electoral arrangements. In recent years we have changed the date of the Assembly elections and the local elections, and then we had to change them again because we had already changed the Assembly elections. The voters of this country must surely feel that we play around with the electoral system far too much.

[Mr Harper]

That does not fit my recollection. Let me think about the change of date for the Assembly election. It was carefully thought through. We consulted the leaders of the parties in the Assembly; I recall that I found out the views of the presiding officers before we amended the Fixed-term Parliaments Bill.

The hon. Gentleman might not agree with the system, but all the parties in the Welsh Assembly agreed to it. The change was made for what was argued to be a sensible reason—to prevent the two elections from coinciding, so that the important issues facing the people of Wales would be properly debated rather than being overshadowed by other issues facing the people of the whole United Kingdom. My right hon. Friend the Member for Chesham and Amersham put the alternative view that the elections should be held on the same day, and the hon. Gentleman has put forward the same view today. However, having separate election dates seems to me perfectly sensible, and that was the view taken by the Government and this Parliament.

[Chris Bryant]

The thing is that we never shorten the mandate; we always lengthen it. Now local authorities in Wales will end up having five years—possibly six—and that will be the second time they have had five years during my time as an MP in Wales. The Assembly is also going on to five years. It feels as if the political class is constantly saying, “Let’s give ourselves a little more time.” That undermines the democratic sense of British politics.

[Mr Harper]

I have listened carefully to both the hon. Gentleman’s points and the one made by the shadow Secretary of State. It seems to me that they were both taking the brave point of view—presumably, it was a commitment from the shadow Secretary of State—that if the Labour party were, God forbid, to win the next election, it would amend the Fixed-term Parliaments Act and reduce the fixed term to four years. I am not sure whether the shadow Secretary of State has consulted his party leader about that, although I hope he has, for his sake. That seemed to be a clear commitment from him. If the Labour party wins the election, we will see whether it reduces its time in office. I know that the hon. Member for Rhondda (Chris Bryant) says that his party voted for a shorter term when in opposition, but I am pretty confident—I said this at the Dispatch Box, I think—that if his party returns to government, it is highly unlikely that it will vote to shorten its term of office. I might be proved wrong, but I doubt it.

I welcome in general the Bill’s proposals on the devolution of tax powers for the clear reason of accountability. As someone with a constituency on the border, I think it wrong that the Welsh Assembly Government, like the Scottish Government, can spend money on enticing business across the border, but are not accountable for raising the money that they use to do that. Proposals to devolve some of the taxes are sensible; it makes absolute sense for there to be more accountability.

On the issue of capital borrowing, I should say that I am sorry that the hon. Member for Swansea East (Mrs James) is not in the Chamber any more. Let me elaborate a little on my short intervention on her. I looked at the “Wales Bill: Financial Empowerment and Accountability” paper that the Government laid before the House. It is a strange plot, to use the word of the hon. Member for Swansea West (Geraint Davies), that is published and laid before Parliament; I thought plots were conducted in secret, but obviously things have changed.

The paper seems clear: it sets the statutory capital borrowing limit at £500 million. That is linked to the £200 million or so of revenue that is initially being devolved. The limit is higher than if it had been set solely by reference to the same tax borrowing ratio that applies to Scotland. In Scotland, there is a £5 billion responsibility for tax revenues, but only a £2.2 billion capital borrowing limit. If my right hon. Friend the Secretary of State had used the same limit in Wales, there would have been a £100 million capital borrowing limit instead of a £500 million one.

My right hon. Friend has met the challenge to show his workings, which were in the paper presented to the House and available to all Members before this debate. He has clearly set out how the Government reached the £500 million limit. As my hon. Friend the Select Committee Chairman said, the limit was increased to £500 million to allow the Welsh Government to proceed with improvements to the M4, should they choose to, in advance of that element of income tax being devolved. The Government judged that such borrowing was affordable for both the Welsh Government and in relation to the UK’s overall position. That seems a sensible position, which has been transparently laid out in the paper.

[Hywel Williams]

For the sake of completeness, I should say that a Treasury Minister gave the same evidence to the Welsh Affairs Committee. As the hon. Gentleman says, it would be a strange plot that advertised itself so comprehensively.

[Mr Harper]

I am grateful for that point, which shows that the Government position is joined up across not just the Wales Office but the Treasury. The right hon. Member for Neath showed an astonishing lack of trust in the Treasury led by my right hon. Friend the Chancellor, whose excellent recent Budget cut taxes for those on modest incomes. The Labour party voted against those—against the fuel duty cut and the tax cuts for modest earners. I find that surprising.

[Mr Hain]

I do not trust the Treasury whoever is in power.

[Mr Harper]

I defer to the right hon. Gentleman, who has been a spending Minister in a number of Departments. For much of that period, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) was Chancellor, so perhaps it is not surprising that he takes that jaundiced view. Having dealt with my right hon. Friend the Chancellor, I have a more positive outlook on Treasury Ministers, and I have yet to be proved wrong.

[Mr Hain]

The only Treasury Minister I trusted was Madam Deputy Speaker, when she was in that Department.

[Mr Harper]

Madam Deputy Speaker, I shall not draw you into the debate. I am sure that, for the sake of your reputation at the Treasury, you would, if allowed, cast off that foul calumny. If the right hon. Gentleman thought that highly of you when he was a spending Minister, you could not have been doing your job as a Treasury Minister properly. We all know that you absolutely were; otherwise you would not have found your way into that Chair. I will close this aspect of the debate just there, before I find myself cut off against my will.

I have some questions for my right hon. Friend the Secretary of State, although I do not necessarily want him or the Minister to respond today; perhaps we can touch on the issues when the Bill returns to the Floor of the House in Committee. If the income tax provisions were devolved, how would they work? I looked carefully in the Bill at the definition of an individual Welsh taxpayer; it is to do with their usual place of residence. How complex will operating the system be for businesses, particularly for small and medium-sized enterprises? In a constituency such as mine, businesses will have staff resident in both England and Wales. If income tax varying powers were to be used by the Welsh Government, I would want to make sure that the burden placed on employers of English and Welsh residents was not significant and that the system was as easy as possible to operate—preferably with as little burdensome administration as possible. I will return to that issue in Committee, to make sure that it has been properly thought through.

I also want to check on the issue of stamp duty land tax. The shadow Secretary of State touched on it in a slightly facetious way when he discussed properties that straddled the England-Wales border. I want to make a serious point about the quality of the mapping involved. May I make a plea for us not to use postcodes in determining which nation the land is in? It is not the Post Office’s fault, but a lot of organisations are sloppy and do not use postcodes properly. They assume that everybody with an NP postcode lives in Wales, including my constituents in the southern part of my constituency. A lot of my constituents, who live in England, get bilingual letters from all sorts of organisations that assume they live in Wales. I hope that my hon. Friend can assure me that we will use a proper mapping system when looking at stamp duty land tax so that we make the right decisions about whether property is in England or in Wales and do not have the sorts of cross-border issues that I have seen as a result of devolution so far.

I support the proposal to move to fixed-year terms offset against the terms for this place. On balance, it is better to have elections in Wales that focus on the issues important to the people of Wales—and ensure that those running the Welsh Assembly and those wanting to be elected to it are properly held accountable—than elections that take place on the same day as a UK general election, because then the arguments would blur. One can argue it both ways—the hon. Member for Rhondda, who is no longer in his place, did so, as did several others when we were passing the Fixed-term Parliaments Act 2011—but I am pleased with the measure.

I have already said that I am happy with the proposal to reverse the change made by the right hon. Member for Neath, and I will say no more about that. We have had a lot of debate about it already, and I do not want to provoke any more.

I notice that the borrowing powers are already available to be used for the M4 development. That is a helpful proposal. I have been having an ongoing debate with some Labour Members about the Severn bridge tolls that is driven by the desire for improvements on the M4 to improve the economic benefits from that corridor. I have proposed a third Severn crossing, although that is not welcomed by all Labour Members if it means an extension of toll revenues. Some of the borrowing powers could enable improvements to the M4 link, which is very important for the economies not only of south Wales but of constituencies such as mine. The proposal is very welcome.

Overall, I welcome the Bill. I am glad that it has been well thought through as a result of the proposals from the Silk commission and that it had pre-legislative scrutiny in this House. I will certainly support it, and I look forward to debating it further on the Floor of the House.

18:52

[Wayne David (Caerphilly) (Lab)]

I will support this Bill, although I have to say that it is very disappointing because it is, I am afraid, a bit of a shoddy compromise. Everyone realises that the Secretary of State for Wales is no enthusiast for devolution—indeed, some people might go further than that—and we know that the Liberal Democrats are quite enthusiastic, so we have a cobbling together of two different opinions, and the Bill suffers as a consequence. Its main proposals, which are modest and relate to the tax-raising capacity of the Welsh Assembly, are very limited. It also has strangely attached to it some new arrangements with regard to the electoral politics of the Welsh Assembly.

Although the first part of the Silk report has been quoted in support of the Bill, there is a great deal of difference between what Silk proposed and what the Government have put before us. For example, Silk states very clearly and boldly that

“for the financial accountability and empowerment of the National Assembly for Wales to be improved sufficiently, it should be responsible for raising a more substantial proportion of its spending.”

That is the core of its proposal. What the Government have given us on income tax-raising powers is a long way from the aspiration articulated by Silk. It is important to recognise, too, that a genuine and fundamental concern has been expressed by many people, including those in the Welsh Assembly, that there is no significant movement on Barnett. This proposal is a real runner only if there is a cast-iron commitment to, and a firm set of proposals on, modifying the Barnett formula as it applies to Wales. Under Barnett, as we all know, Wales is short-changed to the tune of £300 million per year, and that situation will not be addressed by this Bill.

[Alun Cairns]

I am interested in the sum of £300 million because it was presumably derived from the Holtham report, which is now some years old. Gerry Holtham also pointed out that as public spending contracts proportionately, the Barnett formula will protect Wales and the £300 million will decrease. Does the hon. Gentleman agree?

[Wayne David]

The £300 million figure, which is quoted widely and not just by me, is the most accurate figure that we have to go on at the moment. It is widely used by a number of academics as the main basis for the calculation.

[Alun Cairns]

My point is that the figure is several years old. There has been a change in the scale of public expenditure since then, and it is therefore nowhere near £300 million any more. Does the hon. Gentleman accept that, given that Holtham said it in the report?

[Wayne David]

Not necessarily, because an added scenario that Gerry Holtham did not take into account is the austerity package that has been put together by this Government, which has led to huge cuts in the Welsh Assembly Government’s budget. To begin with, those cuts have not kept up with inflation, but all the indications are that they will be significantly deeper. That is an important backdrop to the whole matter that we are tackling.

[Jonathan Edwards]

I totally disagree with the hon. Gentleman. I do not believe that there is a link between the Barnett formula and devolving financial powers, but that is the position that the Labour party has taken, and it is a roadblock. Will he confirm that at the next Westminster election Labour’s manifesto will include a commitment to review the Barnett formula, because last week his colleagues in Scotland were saying that they would rather die in the ditch before Barnett was reformed?

[Wayne David]

The Labour party had in its previous general election manifesto a commitment on modifying the Barnett formula, with the introduction of fair funding and a floor. That is currently Labour’s policy, and I have every confidence that it will be taken forward.

Given the possibility of a referendum on the income tax powers—although that is not very likely—it is rather disappointing that the Government have not learned lessons from previous experience of referendums across the UK, especially in Wales. The Electoral Commission has made the valid point that we need to learn one lesson, in particular, from the previous referendum on whether the Assembly should have law-making powers, when there was no coherent, registered no campaign and therefore there could not be a registered yes campaign. As a result, we did not have the kind of debate on the Assembly’s powers that we should have had, and that is partly why we had such a relatively low turnout. I am slightly concerned that the Government have not learned that lesson and have not reflected it in their legislative proposals.

[Hywel Williams]

I rather agree with the hon. Gentleman. I was very disappointed that the no campaign did not organise sufficiently last time. The question about the referendum that I have asked a number of times is how on earth we formulate a question about lockstep, because given that, with all due respect, many hon. Members, and even right hon. Members, might not quite understand it, I do not know how we are going to present it to the Welsh public.

[Wayne David]

That is a fair point that is worthy of debate.

Another significant constitutional measure is the electoral mechanism by which Assembly Members are elected. A number of Members have already referred to that.

[Glyn Davies]

Will the hon. Gentleman give way?

[Wayne David]

I have not made a point yet. Hang on a second—I will make a few points and then I will give way.

[Glyn Davies]

It is on the Barnett formula.

[Wayne David]

I have moved on from that. The hon. Gentleman has to learn to pay attention. But, I will be generous.

[Glyn Davies]

I was waiting until the hon. Gentleman finished his point before intervening. It was only when he moved on to the next point that I realised he had finished. Is he telling us today that a Labour Government would actually reform the Barnett formula and would then support putting the proposition for income tax powers for the Assembly to a referendum?

[Wayne David]

I do not think I said that. The hon. Gentleman has put forward an interesting hypothesis and I am sure we will consider it at the appropriate time, but it is not relevant to the discussion we are having here.

As I was saying before I was interrupted, one of the most significant constitutional changes in the Bill is the proposition that we should change the method of election for the Welsh Assembly—that there should be a revision of what was agreed in the Government of Wales Act 2006. Like other Members, I have been travelling around Wales listening to what members of the public have to say. Reference has been made to a report from the Bevan Foundation. I remember that report well, as I was one of the Members who commissioned it. It came to the objective conclusion on the basis of a representative cross-section that, as the right hon. Member for Chesham and Amersham (Mrs Gillan) said, most people in Wales did not understand the system. They also thought it was intrinsically unfair that individuals who put their names forward for election but lose the election should suddenly appear in the Welsh Assembly—most people would assume that, as those people had lost, they would not be elected.

It is fundamentally impossible to explain the rationale behind that or to argue that it is fair. Whatever special pleading we make for small parties because of how difficult it is for them to get together a sufficient number of candidates, it is an unfair proposition.

[Alun Cairns]

Will the hon. Gentleman give way?

[Wayne David]

Yes—do your best to explain it.

[Alun Cairns]

Will the hon. Gentleman inform the House why he thinks that either his anecdotal evidence or his summary of the Bevan Foundation’s reasons for its recommendations are more independent or fair than the work of the Electoral Commission, which was challenged legally to come up with a full consultation, based on evidence, and ultimately to give the Secretary of State a recommendation? The commission did so, and found in favour of the measures in the Bill.

[Wayne David]

It is basic common sense. If someone loses an election, they do not get elected—it is as simple as that. I challenge the hon. Gentleman to explain to anybody in the street why that is not fair. I guarantee that he will fail. Go on—have a go.

[Alun Cairns]

I do not want to labour the point too much, but I remind the hon. Gentleman that in the 2003 election every Labour Assembly Member topped the regional list. That suggests that there is yet another inconsistency. Even the then First Minister, Rhodri Morgan, who I suspect was highly unlikely to lose, topped the list. The Opposition used the system in their interests, in spite of what has been stated now.

[Wayne David]

I am at a loss to understand the rationale behind that. We live in a democracy and have to accept the system that Parliament agrees. That does not mean that we think it is right, because it is not—it is fundamentally wrong. What is being suggested in the Bill amounts to gerrymandering.

I will give a couple of examples of how the regional list system as it stands at the moment is being abused in an immoral way. There is the case of Mohammed Asghar. He was elected to the Welsh Assembly as one of Plaid Cymru’s regional list Assembly Members, but having been elected as such, then decided to cross the House and join the Conservatives. Why did he join them? Was it a great matter of political principle? No. It is said that there was a disagreement about the employment of his daughter, so he decided to cross the House and use the system.

Another, more relevant and contemporary example is that of an Assembly Member called Lindsay Whittle. Lindsay Whittle was elected to the Welsh Assembly as a Plaid Cymru list Member for South Wales East. However, Mr Whittle is also a member of Caerphilly county borough council. He lives in Caerphilly and appears to spend a disproportionately large amount of time in Caerphilly. [Hon. Members: “He lives there.”] He does live there, but he works there as well, irrespective of the rest of his constituency. I put this to the House: can it be that Mr Lindsay Whittle is so interested in the council and in his own particular locality because he wants to stand in the Caerphilly constituency at the next Welsh Assembly elections in 2016? I think that is quite likely. The point I am making is that democracy in this country is based on representation. If someone does not represent people properly, but instead represents their constituents selectively and picks out who they are going to focus on, it is undemocratic and unfair. It is reprehensible for the individual to behave in that way, but it is also reprehensible that they are able to do that under the political system.

If Mr Whittle does indeed stand for re-election in 2016, his calculation will be, “Yes, I’ll have a go at Caerphilly but I don’t need to worry if I lose because I still have the old regional list system to fall back on.” That is a practical example of this unfairness. I challenge any Member to explain to the people of south-east Wales how that can be justified and how it is an example of democracy as we understand it—it clearly is not.

[Hywel Williams]

I am slightly curious. The hon. Gentleman seems to be complaining about Lindsay Whittle doing his job effectively, given that, from what I understand, he is a councillor and he lives in Caerphilly. It reminds me of Lord Foulkes’s remarks about how the Scottish National party is going around deliberately improving services in Scotland in order to be popular.

[Wayne David]

The essential point is that this individual is a councillor representing his small ward on Caerphilly county borough council, but what about the other wards and local authorities in the region that he is also supposed to be representing? What about the other parts of south-east Wales that he is supposed to be representing? The fact is that he has chosen to represent only some people and to pursue their interests for his political advantage. That is not fulfilling a democratic mandate properly.

[Hywel Williams]

There is a well-established principle in American politics that if someone does not do their job right, they are kicked out—it is the “kick the bums out” principle. If Lindsay Whittle is not doing his job representing people as a list Member, surely the electorate will kick him out.

[Wayne David]

The whole point is that people cannot pick and choose who they want on the list. The list is drawn up by the party machines—a closed list. That in itself is undemocratic in my view. People cannot pick and choose. If people are not satisfied with the way that somebody on the list is doing their job, they cannot get rid of that person because the system works to ensure that the vested interests of elites are maintained. Most of those are in the smaller political parties.

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

I am sure that the hon. Gentleman will be voting against this part of the Bill, but does he think that there could be an amendment so that we do not have closed lists but open ones? Would that be an improvement?

[Wayne David]

There is a lot to be said for that, yes. I would take it further. The elections for the European Parliament have closed lists, and there has been a debate about whether those lists should be open. Speaking personally, I think there is a lot to be said for that. Democracy is about fairness, openness and transparency. Those qualities are sadly lacking in the proposals in the Bill.

In an intervention on my right hon. Friend the Member for Neath (Mr Hain) I referred to the fact that in the impact assessment the Government have said that they want to change the 2006 Act because smaller parties say that they have difficulty in coming forward with a sufficiently large pool of

“high quality candidates to represent them in elections.”

That is what it says. [Interruption.] That is what the Government say. In other words, they are saying that, because Plaid Cymru and Conservative party candidates are not sufficiently attractive to the population, the electoral system must be changed to allow those inadequate people to get elected. That is absurd. It is not a definition of democracy. It is an indictment of the paucity of the Government’s arguments.

As I said earlier, I will support the Bill but, as Members will have gathered, I will not do so with any conviction or determination and certainly not with any enthusiasm. Frankly, it is better than nothing, but not much better. I assure the House that we will argue strongly in Committee about many of the issues that I and others have raised, and I hope to goodness that Members will have the common sense and decency to think again.

19:10

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

It is a great pleasure to speak in this debate. Many great political figures in the history of devolution will be very pleased that it is taking place. My predecessor Richard Livsey, Rhodri Morgan, Ron Davies, Lord Wigley and Lord Elis-Thomas will be delighted, although Richard Livsey is in a more elevated chamber than those in the Palace of Westminster.

Although the Conservatives did not embrace devolution to begin with, their contribution has been substantial. I thought that Lord Bourne, who was a regional Assembly Member, might have been based in Brecon and Radnorshire, but he actually lives in Aberystwyth and is now Lord Bourne of Aberystwyth. It is a tribute to this Government that this Bill has been introduced, and that is to be celebrated. I congratulate the Government on moving quickly with the Bill so as to ensure that part I of the Silk proposals can be acted on in this Parliament. That shows real commitment to devolution and I commend it.

My party, both in Wales and across the UK, believes that power and authority derive and flow upwards from the people and that power must be exercised at the most appropriate local level. We have long supported a federal system as part of our vision for the UK’s constitutional future. In order to ensure that our central principles of dispersing power as widely as possible and ensuring that Wales’s distinct challenges can be addressed, we have advocated and supported devolution strongly. We have argued consistently since the establishment of the National Assembly that it should possess additional financial and legal competences. The key to that has been the need to increase the Assembly’s accountability, and I believe that this Bill goes a very long way to doing that.

It is true that a lockstep, which other Members have mentioned, will put some constraint on the ability of whichever Government are in office in Cardiff Bay to use those powers. Although I would prefer not to have the lockstep, the acceptance of the principle of giving income tax powers to the Welsh Government is such an important step that it should not be dismissed.

In their reasoning on the inclusion of the lockstep, the UK Government have argued that the devolution of power to set different rates

“could distort the redistributive structure (or progressivity) of the income tax system and could potentially be detrimental to the UK as a whole.”

I do not want this Bill to be used as a means of establishing tax competition between Wales and the rest of the UK, but we must accept that tax competition is an inevitable consequence of devolution. If we are arguing that Wales should be able to borrow and raise what it wants to spend, it should have the power to tax as it sees fit.

Overall, although I cannot pretend that I would not prefer it if there were no lockstep, under the circumstances I am willing to accept it, if it means the increased accountability and responsibility for the Welsh Assembly that this Bill will deliver.

[Hywel Williams]

I agree entirely with the hon. Gentleman about the lockstep, but if taxes were reduced across all bands we would retain a certain amount of progressivity. The progressiveness of the system itself can vary depending on whether the rate goes up or down, so the lockstep is not a full answer to the question of progressivity in respect of income tax.

[Roger Williams]

I accept the hon. Gentleman’s argument, but that is the form in which the Bill appears, and rather than take the risk of losing the powers, my party is prepared to accept it.

On borrowing powers, I share some of the concerns outlined by my hon. Friend the Member for Ceredigion (Mr Williams), who will speak later, on the issue of writing a borrowing figure into the Bill. In the Welsh Liberal Democrat submission to the Silk commission, we argued for borrowing powers equivalent to those proposed for the Scottish Parliament—a capital borrowing limit of 10% of the total capital budget each year, with a cap at about 10 times the amount. We also asked for a very small amount of revenue borrowing, which would be a better, more sustainable approach to the borrowing arrangements.

In addition to the Bill’s financial measures, I welcome a number of constitutional moves, including those on double-jobbing, five-year terms and the lifting of the ban on dual candidacy. The move to five-year terms will help ensure that issues relating to the Assembly will receive the hearing they deserve during election campaigns. In the 1999 Assembly elections, I stood at both constituency and regional level but failed to get elected in either, so it is not a fail-safe system. Those Assembly elections took place at the same time as local government elections and Carmarthenshire had multi-member wards. There were polling booths with the words, “Remember you can vote for two candidates,” written above them. Obviously, that referred to the local government election, but it confused a lot of electors and resulted in an enormous number of spoilt ballots, because they were not aware of the complexity of the system. I think that having separate election days is very important.

When legislating on a ban on dual candidacy in 2006, the then Labour Government said that the process

“devalues the integrity of the electoral system in the eyes of the public and acts as a disincentive to vote in constituency elections.”

However, in reality it has reduced voter choice and undermined the credibility of the electoral system by punishing parties for being successful. I believe that the Opposition’s often used argument that turnout would diminish because voters would be unprepared to vote in elections in which some losing constituency candidates were likely to be elected as regional candidates is unfounded. Dual candidacy is accepted by the electorate in Scotland and, indeed, for the London Assembly.

We heard from Labour’s Welsh conference over the weekend that Labour would like to see Wales’s powers brought into line with those in Scotland and move towards the reserved powers model. I and my Liberal Democrat colleagues would wholeheartedly support that, but I remind the Opposition that they had 13 years to address those issues. In its 2011 manifesto, Labour made a commitment

“not to seek powers to vary income tax”.

That was a straightforward rejection, so I am very pleased to hear that Labour has changed its view and I look forward to the passage of this Bill through Parliament.

19:19

[Hywel Williams (Arfon) (PC)]

I am very pleased to speak in this debate, because we in Plaid Cymru welcome the chance—at long last—to debate the Wales Bill, modest as it is. We particularly welcome the fact that the Bill is a vehicle for implementing greater financial powers for Wales. Those powers need to be looked at very carefully in Committee, and I look forward to such a debate, as does my hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards). However, we cannot help but feel that the Bill is a lost opportunity to implement the full recommendations of the cross-party Commission on Devolution in Wales, chaired by Paul Silk.

I first want to reflect for a moment on the process and the time that it has taken to get to the Bill today. Following the overwhelmingly successful referendum in 2011—we in Plaid Cymru, as part of the One Wales coalition Government, had pushed for it—and realising the growing appetite of the people of Wales for greater control of their lives, as well as perhaps mindful of the growing appetite across these islands for constitutional change, the Westminster Government set up the Commission on Devolution in Wales to consider the devolution of further powers. Each of the main four parties nominated a commissioner. Eurfyl ap Gwilym served with distinction for Plaid Cymru, and I commend his work and that of the other commissioners.

The commission was instructed to produce two reports—the first on financial powers, and the second on wider policy issues. It was specifically instructed not to look at the issue of funding, namely the Barnett formula. As we have already heard, the independent commission headed by Gerry Holtham noted that Wales loses out on about £300 million each year. I take the point made by the hon. Member for Vale of Glamorgan (Alun Cairns), who is no longer in his place, that the figure varies, but if the UK economy takes off, as we all fervently hope and as the Government certainly hope, the loss will be increased.

The commission produced a highly commendable piece of work in November 2012. Its first report was a complex package of recommendations. I use the word “package” advisedly, because part of our concern about the Bill is that the whole package has not been adopted. We in Plaid Cymru wanted more, as our submission to the commission attests, but we gathered round the compromise that had a chance to work precisely because it was a package of reforms. I know that the commission came to its conclusions after a great deal of hard bargaining.

[Albert Owen]

The hon. Gentleman is making a very interesting point about the balance on the commission, but surely it is the place of Parliament to debate and decide changes in laws, not just to rubber-stamp commissions.

[Hywel Williams]

I take the hon. Gentleman’s point entirely. However, the commission was set up by the Government to look very closely at the question and it came to a unanimous judgment, but they then decided to adopt only some parts of its report. My point is that I wanted them to adopt the entire recommendations of part I of the Silk report. It is disappointing that they did not, because we can see the package of reforms that the commission came to as its conclusion.

It is also massively disappointing that the Government waited so long to respond to the report. We were told that they would respond in the spring of 2013. Then it was pushed to the summer. I remember making the point in the Welsh Grand Committee, when the Secretary of State said that spring officially ends in June, that July in Welsh is Gorffennaf—gorffen haf—which means the end of summer. We waited, and autumn came. The nights were drawing in, the countdown to Christmas began and, eventually, a full year after the commission produced its report, the Government responded.

[Glyn Davies]

I am listening to the hon. Gentleman’s speech with great interest, but does he accept that moving forward with a Bill to recommend tax-raising powers for the National Assembly for Wales is a huge advance in devolution that will, if such powers are granted, transform the Assembly’s authority? Does he agree that introducing those powers in a Bill as quickly as the Government have done—we are debating it today with a view to taking it through in this Parliament—is quite a creditable performance?

[Hywel Williams]

I am indeed very glad that the Bill is before us, as I said at the start of my speech, but I am contrasting the time between the commission reporting and the Government responding. We suddenly have the Bill before us today. I certainly welcome that, but I have no idea why it has appeared so quickly; it is not for me to comment on the lack of other Government business.

I know that the term “a slap in the face for Wales” is very well used, and I hope that it will be reported tomorrow by our friends in the BBC, but I must say that to ignore such a fundamental report—as the hon. Gentleman has just pointed out—for so long is somewhat disrespectful. More importantly for us in Plaid Cymru and for other hon. Members, it is also damaging to the political and economic progress that our country can make. The Welsh Government continue to be denied the powers that they should be able to exercise—they are also denied the funding that they should have—and that were recommended by Gerry Holtham. However, we are where we are—but where are we?

Towards the end of last year, the Prime Minister swept into the Senedd building in Cardiff Bay to a media fanfare and the flashes of cameras, and announced new financial powers for Wales, but the proposals were rather light on detail. Indeed, the Prime Minister had discovered “anti-gravitas”, as I called it at the time, in making a proposal that then seemed to float away. It was not until some weeks later that we learned that all was not as it seemed. The Government had cherry-picked the cross-party Silk commission’s recommendations—accepting some, but only in part, and even omitting others.

The draft Wales Bill was published in January, and the Welsh Affairs Committee, of which I was a member, was tasked with its pre-legislative scrutiny, with a tight turnaround for producing a report. I must say that I enjoyed the process of scrutinising the Bill, and I pay tribute to all Committee members and to the hon. Member for Monmouth (David T. C. Davies), for his chairmanship. Contrary to his rather fierce, if not sometimes eccentric, persona in this Chamber, he was the model of a balanced Chairman, and I was very glad, if slightly surprised, that he acted in that way.

To return to the narrative, the Government then seemed to be in a hurry, and we now have the Bill. The Welsh Affairs Committee sessions took evidence from a variety of independent academics, civil society groups and even elected politicians from both this place and the National Assembly for Wales. Interestingly, even Opposition party leaders from Cardiff graced the Committee’s sittings. That move was not uncontroversial, because the Committee’s purpose is of course to scrutinise the Government at Westminster. Having the party leaders from Cardiff caused a certain amount of head scratching, because it was something of a first. However, it indicated that this was not some humdrum scrutiny exercise of a small Whitehall Department or a minor Bill because, as was pointed out by the hon. Member for Montgomeryshire (Glyn Davies), the Committee was considering part of the blueprint for the next stage in our national political development, and it deserved such a level of scrutiny.

The consensus that began to emerge was that borrowing powers were vital to allowing the Government of Wales, formed of whichever party or parties, to be able to borrow for investment to boost our economy and create jobs. However, the consensus was that the lockstep on income tax rates meant that the provision could not realistically be varied, because the power was unusable. Other than the duo of the Secretary of State for Wales and his Treasury colleague, the Exchequer Secretary—unsurprisingly—all agreed that it would be far better to have the ability to vary each individual income tax band rate.

During sittings of the Welsh Affairs Committee, I pointed out a paradoxical effect of raising or lowering tax rates with a lockstep. If we raise the tax rates with a lockstep, the higher rates are then less progressive than the lower ones: if we raise tax by a penny on the 20p band, we increase it by a twentieth, while if we raise it by a penny in the 40p band, we increase it by a fortieth. We should bear that slightly obscure ratio issue in mind. Equally, a decrease has a similar effect.

The cross-party Silk commission recommended in the first place that we should not have a lockstep. I proposed an amendment in discussions on the Welsh Affairs Committee report—I proposed that the Committee recommended dropping the lockstep. Unsurprisingly, our three friends from the Tories voted against my amendment; the hon. Member for Ceredigion (Mr Williams) and I voted for it; but, unaccountably, Labour members of the Committee managed to abstain. Even though they have publicly declared opposition to the lockstep in the Committee, they did not step up to the plate.

[Jonathan Edwards]

How baffled is my hon. Friend on the Labour party’s position on the lockstep? The First Minister says he wants to get rid of it. The shadow Secretary of State said today that he supports it. Who speaks for Labour?

[Hywel Williams]

I remain baffled—that is all I can say. Irrespective of Labour party internal divisions and wrangling, Labour has said that greater financial powers should have been granted, but now it is possibly saying that they should not be. The Tories remain divided on the lockstep. The greater part of the group in the Assembly complains that income tax powers with the lockstep are unusable, but the other part supported the London party and was given the sack.

I referred to the referendum when the hon. Member for Caerphilly (Wayne David) was in his place. The formulation of the question, if we ever have a referendum, will be extremely difficult, but rather than make the point myself, I shall but quote from the widely respected economist, Gerry Holtham, who told the Welsh Affairs Committee that Welsh politicians are being asked to

“fight a highly losable referendum. Tax is not popular, and, to be frank, neither are politicians at the present time. It is most unfair, but there it is. You are asking them to fight a losable referendum for a tax power they can’t use. It doesn’t look like a high-odds proposition to me.”

I tend to agree with him, particular given the possible complexity of the question, and the possible lack of a no campaign, which has been referred to.

The hon. Member for Nottingham North (Mr Allen), the constitutional expert and Chair of the Political and Constitutional Reform Committee, urged members of the Welsh Affairs Committee to seek to amend the legislation so that the lockstep is removed. He has said that the requirement for a referendum on the limited income tax powers is “ridiculous”. The Secretary of State, however, sung the praises of the lockstep, saying that it could be used to vary all rates and would put Wales at a competitive advantage. He has also noted his opposition to the devolution of long haul air passenger duty, as that would put Bristol airport at a competitive disadvantage. On the one hand, he argues against a competitive advantage, but, on the other, he refers to a competitive disadvantage. That does not seem particularly coherent to me, but there we are. In evidence to the Welsh Affairs Committee, the First Minister seemed to say that he wants Wales both to have a tax competition advantage and not to have one, as expertly adduced in a telling question asked by the hon. Member for Aberconwy (Guto Bebb). That incoherence shows that the cherry-picking of the Silk recommendations falls apart. It is a whole package.

On Labour’s new-found conversion to the need for reform of the Barnett formula, Plaid Cymru has been pointing out the consistent underfunding of Wales through the block grant for well over a decade, but successive Labour Secretaries of State have assured us that

“the Barnett formula serves Wales well”.

I am sorry that the right hon. Member for Neath (Mr Hain) is not here, because those are his words. I know them by heart because I have heard them so often. His consistent standpoint is that the formula serves Wales well and we meddle with it at our peril. I will not intrude on Labour’s private grief and confusion, and the further inconsistency on Barnett that Labour’s leader in the Scottish Parliament seems to generate so effectively and so unconsciously. After 13 years in power when Labour could have sorted the formula, it now cries for fair funding—the hon. Member for Pontypridd (Owen Smith) says that income tax powers without fair funding is a “Tory trap”.

Wales should be fairly funded, as Plaid Cymru has long argued, because every day we lose around £1 million in additional funding. Those figures change, as the hon. Member for Vale of Glamorgan has said—he would no doubt jump up and remind me were he in his place. We lose around £1 million every day, which we could spend on improving our health service, tackling the scandal of poverty or building new schools. For now, the Labour position is no fair funding and no income tax powers for Wales. We know why. That is Labour’s position because it fears that, if we address Barnett, its anti-independence campaign in Scotland will be finally scuppered. Oddly, therefore, the Labour party says in Wales that we must reform Barnett, but the very same unified and indivisible Labour party says in Scotland that we must not reform Barnett.

Meanwhile, the UK Government water down the Silk recommendations to conform to their fundamentally anti-devolutionist view that Wales cannot possibly have something that Scotland does not have. As we have seen this past week, events in Scotland may overtake them all.

[Albert Owen]

May I ask the hon. Gentleman what the view of Plaid Cymru’s sister party in Scotland is? If there is a no vote, which I hope there is, in the referendum in Scotland, will he and the sister party—the Scottish National party—argue for reform of Barnett in Scotland, which could reduce Scottish revenues from the UK Government?

[Hywel Williams]

My job is to represent Wales. The Labour party advertises itself as the unified, indivisible Labour party in England, Scotland and Wales. The hon. Gentleman’s point is bogus.

It is important that we now move forward, whatever the weaknesses hon. Members on both sides of the House might find in the Bill. Realistically, income tax might not be varied for some time, or ever, depending on what happens in the referendum, but the Bill will give access to vital borrowing and investment powers.

The Silk commission produced its second report earlier this month. Plaid Members say that Wales should be moving to a reserved powers model as swiftly as possible. We believe it would make more sense to have a referendum on the Silk part II recommendations. That larger and more substantive referendum would consider both true income tax-varying powers and wider policy powers. We will table amendments to preserve the integrity of the Silk report recommendations. Given that the principle of fiscal devolution has been conceded in respect of the other tax-varying powers, we say there is no need for a referendum on a simple income tax-sharing model. I agree with the hon. Member for Islwyn (Chris Evans), who is in his place, who said today that that should be the case. We will seek to amend the Bill accordingly.

[Mr David Jones]

At the risk of appearing to carp, I should point out to the hon. Gentleman that, a moment ago, he accused the Conservative party of cherry-picking the recommendations of the Silk commission. Is he not cherry-picking, too, when he says that we should dispense with the referendum, which, after all, was recommended by the commission?

[Hywel Williams]

Our argument is on a package of measures, but the Government have cherry-picked. Our ambition—I make no apology whatever for it—is to have both Silk I and II and even more implemented.

[Jonathan Edwards]

The Secretary of State has cherry-picked the Silk commission’s recommendations on the ability to vary income tax. Because he has cherry-picked, why does he not devolve the lockstep without the referendum, and then have a referendum on removing the lockstep? That would be a practical way of moving forward, and of preserving the Silk commission proposals and recommendations.

[Hywel Williams]

That might be a way forward, but I have no idea how we would formulate a coherent question on the lockstep, as I have said. We should work towards all parties committing to a tax-sharing model in their 2015 manifestos, so that that could be achieved without the need for a costly referendum. Then in the future we could possibly have a referendum on the power to vary income tax, along with the wider powers expected as part of Silk II.

Plaid Cymru believes that constitutional change should not happen simply for its own sake, but because it represents the means to create a better society in Wales—more prosperous, more just, more equal and more democratic. That is our positive case. The financial powers recommended in the first report by the Silk commission represent some of the means to achieving that. They empower, but with them comes responsibility—a responsibility that Plaid Cymru would welcome.

Most of the debate has been focused on Wales. As a nationalist, I am pleased to quote an English Member—the hon. Member for Nottingham North again. He said:

“I start from the premise that the UK is the most massively over-centralised of all the western democracies and I find that deeply unhealthy.”

That point is about England and devolution all round—if I may use that 19th century phrase. He continued:

“I welcome this Bill very strongly because it is a step, not a leap—it is a step in the right direction.”

19:41

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

I welcome the Bill, which contains much that will benefit the residents of west Wales in particular. The more I listened to the speeches today, especially from the right hon. Member for Neath (Mr Hain), the more I came to the conclusion that we must be doing the right thing, given the level of opposition that he expressed.

I probably have more in common with my hon. Friend the Member for Monmouth (David T. C. Davies), the Chairman of the Select Committee, than I should perhaps readily and publicly admit. That is because I am not an anti-devolutionist but I am a reluctant devolutionist. I am pragmatic about it and I accept that we are where we are. I am reluctant because, in the time that I have lived in and represented my area, I have never had a business—small, medium or anything in between—come and tell me about the need for further devolution or for further powers to be devolved to Cardiff. In many cases, I have been on the end of contrary suggestions. Very few people say that the one thing standing between them and sustainability and profitability is more politicians, more devolution and more of the confusion that can sometimes result.

Nor have I heard from many members of the public about the need for further devolution. I suppose that that is a contradictory comment, because when put to the test in a referendum the result is somewhat different, but not many people talk to me about the need to devolve the criminal justice system, the police or other such matters. I therefore come at the issue from a very schizophrenic position, knowing that we are where we are—as the hon. Member for Arfon (Hywel Williams) has just said.

My hon. Friend the Member for Monmouth and I come into step on the danger of mission creep. I do not always admit to sharing the views of the former Prime Minister Mr Blair, but I will on this occasion, because he said:

“I was never a passionate devolutionist. It is a dangerous game to play. You can never be sure when Nationalist sentiment ends and separatist sentiment begins.”

That was not entirely different from what Donald Dewar had said at the time that the Scottish Parliament was set up. He very explicitly said that he saw it as the end of the debate about independence—but a few short years later we are on the eve of a referendum on Scottish independence. That troubles me because—as other hon. Members have said—we appear to be travelling in one direction only, towards independence in all but name. The Bill is a chance to put all that to bed. It strikes the correct balance between practical considerations and ideological objectives. Above all, it is a Bill that has the voter, the ratepayer and the business man and woman in mind, rather than the ambitions of politicians, either here or in Cardiff.

I want to touch on one and a half issues—both constitutional—and I shall be as brief as I can, because the afternoon seems to be dragging on into the night. The first issue is fixed-term Parliaments. When I was on the Political and Constitutional Reform Committee, we looked at this in some detail, and there was very little objection to the notion of fixed-term Parliaments. They were felt to have the potential to reduce uncertainty and instability, to give a clear timetable for the next election, and to provide more effective forecasting and the ability to prioritise more effectively. All of that is a given. There was not quite so much consensus on whether the term should be four years or five. The general view is that we are one of a relative minority of countries across the globe that have opted for five years. Nobody considers it to be much of a problem except when a collision of dates occurs, perhaps between elections to this Parliament and to the Welsh Assembly. Even then, the Electoral Reform Society was not particularly alarmed by the fact that the public may have to make a choice between candidates in Cardiff and candidates in Westminster. I agree: plenty of evidence suggests that people are capable of making an informed and intelligent decision in two simultaneous elections.

I am concerned that if boundaries were to change as a result of future legislation, asking people to vote for candidates on different boundaries might cause confusion, and we would need to guard against that. People ask how likely that is to happen, and it is probably some way off, but there is a more immediate problem. If there were to be—God forbid—a yes vote for Scottish independence in September, the whole basis of our future government could be affected by people who will spend only a few months in this House. The question is—and I suspect that Plaid Cymru Members will sympathise, and perhaps even Members from other parties—whether we could legitimately have an election in May 2015, the outcome of which was decided by people who would not be in this House for very many weeks thereafter. That is an argument—I put it no more strongly than that—for deferring the general election until after those matters have been resolved, which would then bring us into collision with the Welsh Assembly elections, now set for May 2016. Although I do not have too much of a problem with a dual election, we need to consider that that might be an inevitable outcome of a result in favour of independence—albeit unlikely—in Scotland later this year.

I do not intend to say much about double-jobbing, although it is an area of the Bill that I was concerned about until I heard the speech by the right hon. Member for Neath, who compelled us to accept his arguments even though they were at odds with the independent evidence available. As I result, I came to the view that I must be wrong and the Bill must be right. It is a bit rich—and I would say this if the right hon. Gentleman were in his place—for a former Secretary of State, who was partially responsible for the legislation and the problems that he highlighted, to go against the only authoritative independent evidence that is available to us from the Electoral Reform Society and the Electoral Commission. To suggest that they are wrong and he is right is taking the House for fools, so I am completely confident that the inclusion of double-jobbing in the Bill is the right approach.

I shall conclude, as I know that other hon. Members wish to round off the evening with a flourish. The tax position is more an area of expertise for my hon. Friend the Member for Aberconwy (Guto Bebb) than it is for me, but the situation is confused, and it would be further confused if we were to expand—perhaps post boundary reviews and all the elections we have mentioned, and taking into account the evidence provided to the Select Committee on our various visits around the country—the number of Members of the Welsh Assembly. It is an extraordinary suggestion that the Assembly in its current form does not contain sufficient expertise to deal with tax-varying powers, if that is what the Welsh nation wishes. Yet academic after academic, witness after witness, has come to us over the last few months suggesting that that is an inevitable consequence of the passage of the proposal. I think that would cause considerable concern in the minds of the business and voting community in Wales. It would be poor timing to suggest that what Wales needed was more politicians rather than fewer. There are cost and electoral implications and all sorts of economic and social considerations. I very much hope that the Secretary of State or the Minister can reassure us that such an outlandish and inappropriate proposal will not come into effect during our lifetime.

[Mr David Jones]

rose—

[Simon Hart]

I was going to finish on that point, but I will take an intervention.

[Mr Jones]

Before my hon. Friend resumes his perch, he will recall that the First Minister indicated that he felt that the Assembly as currently constituted, with 60 Members, could cope comfortably with new powers.

[Simon Hart]

I thank the Secretary of State for his intervention. The First Minister did, and a number of other canny politicians in the Welsh Assembly also came to that conclusion, but the academic and independent evidence tended to point in a different direction. We used the expression “direction of travel” earlier and there seemed to be a slightly surprising thirst for a larger institution in Cardiff than I was comfortable with. I think the First Minister was just guarding against an unhelpful headline in the Western Mail and was being über-cautious, whereas his academic colleagues who gave evidence to the Committee were a little more forthright.

19:51

[Chris Evans (Islwyn) (Lab/Co-op)]

It is always a pleasure to follow the hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart). He is always badgering us—ha, ha, ha!—about the Welsh Assembly.

This Bill is a missed opportunity. It is a Bill of nothing but smoke and mirrors. For too long—since 1999—we have been running around having no satisfaction with the Assembly. We had the Government of Wales Act 2006, which did not settle the constitutional argument. We have had Assembly after Assembly and Welsh Members of Parliament wasting their time talking about constitutional matters. Constitutional navel gazing is okay in the ivory towers of academia, but when the cost of the Silk commission is £1 million, the cost of the Williams report is £155,000 and the cost of the 2011 referendum was £5.89 million, it is time to draw a line. This Bill was our opportunity to do that, but we have had a timid response from a Government who have never, ever secured support in Wales.

[Hywel Williams]

I am slightly surprised that the hon. Gentleman is talking about constitutional navel gazing when all I have heard from Labour Members is speech after speech about the complexities and even the theology of list membership and constituency membership.

[Chris Evans]

I can only speak from my own experience. I use the Blackwood high street test when I go to Islwyn. If I walked down that street now and asked people what they thought of the Assembly, unfortunately I would be met with disinterest from most of them. If I talked about the constitutional arguments we have had today or to anybody tuning in today, they would wonder why we were talking about the Wales Bill. They would be more concerned about health, education and transport than debating giving further powers to the Assembly. That is the simple fact.

What we see in this Bill is an anomaly. On the one hand, we see the Government lifting the ban on dual candidacy, yet they are also banning double-jobbing. It seems to me that there is something fundamentally undemocratic about the way the Welsh Assembly operates. If there is a vacancy or a resignation under the first-past-the-post system, there is a by-election. That is correct; that is the model we follow in this place. However, as the Secretary of State for Wales will know, if there is a vacancy or a resignation from the list, people move up one. That is not democratic; there is no looking for a further mandate.

There are serious problems with our electoral system. First, it is difficult to understand. People in Gwent will say to me, “Why are thousands of Labour votes thrown away and I have a Tory”—or someone from the nationalist party—“representing me, but I’ve not voted for them? What is the point in voting Labour in the first-past-the-post system, yet voting Labour in the top-up system but getting no Labour AMs?” That is the situation we have to face and we are not talking about it. When we talk about dual candidacy, I think basic fairness says that in a race of four people, somebody has got to win and somebody has got to lose. Nobody gets the consolation prize of going to the Assembly.

The most damning case against dual candidacy appears in the impact assessment, which says:

“The Government of Wales Act 2006 modified the original devolution settlement to ban candidates at an Assembly election standing simultaneously in both a constituency and on a regional list. This provision has been considered unfair on smaller parties in Wales who may have a smaller pool of high quality candidates to represent them in elections.”

What the impact assessment is saying is that smaller parties in Wales, such as the Liberal Democrats or the nationalists, might not have enough high-quality candidates to stand; therefore, we should relax the rules on dual candidacy.

I do believe it is right to end double-jobbing. It makes no sense and it does not allow MPs or AMs to represent their constituents effectively. That part of the Bill is right, but the worst thing about the Bill is that we will have to come here again in a couple of years’ time and debate the constitutional settlement. That is turning people off not only the Assembly, but politics in Wales, because all that Wales is dominated by at the moment is constitutional arguments.

And so we come to the great part of the Bill: the devolution of income tax. The Government accepted the Silk commission recommendation that Wales should have the power to vary income tax, subject to a referendum. However, they did not accept the model presented by the Silk commission, which would allow bands to be varied independently. Instead, they would need to be changed in lockstep. If the Government want to commission a report at a cost of £1 million in these economic circumstances, surely they should have included all the Silk recommendations and we could have debated them on the Floor of the House. The devolution of tax-raising powers is not a priority—we can see that in our constituency postbags every week. We need a triple test. We need to talk about the issue of fair funding and a period of assignment to see whether it is in the interests of Wales and the UK to devolve income tax.

We already know that Wales is underfunded to the tune of £300 million, but varying income tax powers will not address the issue of fair funding. Once the power to partially set income tax rates is devolved, the block grant will be reduced by an amount equivalent to the Welsh share of current tax receipts. To accept this power while the block grant underfunds Wales would be irresponsible and lock in underfunding for ever. The Wales Bill does not commit to reform of the Barnett formula either, even though the Secretary of State himself has said that the formula is coming towards the end of its life. Again, that proves that this is only a piecemeal Bill and that we will unfortunately be back here on the Floor of the House, however boring and irritating we find these constitutional debates.

If we are to devolve tax powers, there needs to be further examination by the Treasury and Her Majesty’s Revenue and Customs to see how that will affect tax rates on both sides of the border. When we talk about jobs and the economy, it is also important to note that they are being created only by private sector businesses. We should therefore be speaking to those businesses and asking how their PAYE and payroll systems would be affected by the devolution of tax, but we are not. When we are varying tax powers, we also have to bear in mind that many more people live close to the Wales-England border and have to cross that border than live close to the Scotland-England border. Nearly half the Welsh population lives within 25 miles of the English border, while 10% of the English population live within 25 miles of the other side. That is 6.3 million in total. In contrast, just 4% of the Scottish population live within 25 miles of the English border.

[Jonathan Edwards]

The hon. Gentleman is quoted in the Daily Post today as saying that Wales should have the same fiscal package as Scotland. Is that his position or is it not?

[Chris Evans]

Yes, it is.

The fact that the Welsh border is significantly more densely populated than that of Scotland means that the complexity associated with different tax rates is much greater in Wales, for both employers and employees. Again, however, very little Treasury analysis has been conducted. Members may talk of a Scottish model, as the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) did, but I think that more work must be done. We must have a report. We must know the facts and figures before we proceed further. We must seek a fair system for the whole of the United Kingdom. We cannot allow tax powers in Wales to be different from those in Scotland and England. The one thing that we have to realise is that, for all our constitutional debates, there is not an economic border on the Bristol channel, or to the north-west on Offa’s dyke. Business does not operate in that way. Business will go where business costs are lower.

[Glyn Davies]

The hon. Gentleman is making a very interesting speech. However, I should like him to clarify one point. On the one hand he tells us that he supports the Labour proposition that the Welsh Assembly should be given the same fiscal powers as Scotland and, on the other, he seems to be arguing the complete opposite. Which is it to be?

[Chris Evans]

Perhaps, when I was in full flow, the hon. Gentleman missed the point that I was making. I believe that, before we proceed, there must be a report—an impact assessment, giving facts and figures—on what will happen if we devolve tax-raising powers. That is the way in which business works. An impact assessment is the most effective and efficient way of putting the facts across.

I have spoken for a long time, but let me finally say something about borrowing powers and the devolution of minor taxes. Like many members of my party, including the First Minister, I have called for more borrowing powers. The Welsh budget has been cut by 10% during the current Parliament, and the Welsh Assembly’s capital budget has been reduced by nearly a third. I therefore welcome the borrowing powers in the Bill. As was agreed in intergovernmental talks last year, initial borrowing will be available before the devolution of minor taxes in order to finance improvements to the M4, and those of us who have to travel up the M4 every week will welcome those improvements. The amount must be agreed between the Welsh Assembly and the United Kingdom Government.

Borrowing powers linked to the minor taxes when they are devolved will be limited to £500 million for current spending and £500 million for capital projects. I hope that that will be looked at. If, or when, income tax is devolved, the borrowing limit will increase to £1 billion. If the Government underwrite that, it can be arranged now. The devolution of stamp duty and landfill tax will give the Assembly an independent revenue stream worth about £200 million a year, and it will be interesting to see how that money is spent. However, those taxes will not be devolved until April 2018, three years into the next Parliament.

I believe that we could have had a wide-ranging debate about the devolution settlement, not only in Wales but in this country, but the Government have been timid in their response to the Silk commission, and we are now faced with the inconvenience of having to revisit the Bill. I fear that, instead of talking about the bread-and-butter issues that affect my constituents, we are once more boring them silly with talk of constitutional matters and constitutional reform, which simply switches people off. I support the Bill, but I believe that there is more work to be done on it, and I hope that it will be improved by amendments tabled in Committee.

20:03

[Mr Mark Williams (Ceredigion) (LD)]

It is a privilege to be called to speak in the debate. I was going to say that it was a privilege to be called at an early stage, but it has been a lengthy debate, and we may be here for much longer still. I do not think that the remark made by the hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart) about the debate drawing to a close is quite appropriate yet. In any event, I am delighted to have an opportunity to reiterate Liberal Democrat support for the Bill, which represents another important milestone in the process of devolution. I pay tribute to the initiatives taken by the right hon. Member for Chesham and Amersham (Mrs Gillan), a former Secretary of State for Wales—although she is not in the Chamber at present—and by the present Secretary of State.

At the beginning of his speech, the hon. Member for Caerphilly (Wayne David) described the Bill as a ragbag and a compromise. Of course it is a compromise in part, because two political parties—the Conservatives and the Liberal Democrats—have been working together. That compromise, if it was one, appeared in the coalition document, in which we spoke of delivering the referendum that was a leftover from the previous Labour Government. We also spoke of establishing the Silk commission and enabling it to deliberate, and we spoke of introducing legislation. On all three counts, the coalition Government have delivered what we said we would deliver immediately after the last general election.

I think that it would be a huge lost opportunity if the National Assembly Government did not take advantage of the powers that the Bill provides. Based on the recommendations of the Silk commission, it follows on from the work of Lord Richard, Gerry Holtham and the All Wales Convention, and devolution in Wales has been thoroughly and forensically tested through their reports. The hon. Member for Islwyn (Chris Evans) spoke of the need for a report and the need for more detail, but we have spent the last 10 years constructing the case for fiscal devolution and the devolution of powers. The evidence base is there, which is why the Government are introducing the Bill. It takes us further along the devolution journey to the end of the road—a place where, I believe, we shall have a steady and strong constitutional settlement that will be good for Wales and for the United Kingdom as a whole.

Party politics aside, I think it important to remember that all the great steps forward in devolution have been made when progressive forces in all parties have come together. The referendums of 1997 and 2011 came about because parties worked together in constituencies to promote the cause. As the Secretary of State said, the Conservative party is committed to a referendum if given the opportunity, and I should be pleased to share a platform with him to illustrate the consensus that exists on the issue.

As was said earlier, the success of Silk part I—and, indeed, part II—has been the consensus that was arrived at between all four parties. The contributions of Sue Essex and, more recently, Jane Davidson, along with Rob Humphries from my party, Nick—now Lord—Bourne, Dr Eurfyl ap Gwilym and the other commissioners have been huge, and the outcomes have been achieved on the basis of consensus. Long may that continue—although I am not entirely hopeful, having endured four hours of this debate.

Those of us who embrace localism believe that the key argument for the Bill is about promoting accountable devolution, and establishing a renewed sense of the legitimacy of the Assembly and its Government. I do not deny the legitimacy of any elected Assembly Member—that is a key principle—but I will sometimes deny Assembly Members the capacity to justify their decisions on the basis of the financial decisions of others. The accountability argument is compelling: a Government who spend money but have no responsibility for raising it cannot make their voters bear the full burden of their decisions. That seems to me a very clear and straightforward principle.

I believe that the conspiracy theory that we have heard from Labour Members has no place in the debate. I am sad that the hon. Member for Swansea West (Geraint Davies) is not present. When we were sitting, as we often do, in the Welsh Affairs Committee, I thought that the conspiracy theory was limited to him, but it seems to be remarkably infectious among Labour Members. I think that the principle is clear: if we want our Government to be legitimate, we must link the decisions that are made with the money that is raised.

As the hon. Member—my hon. Friend the Member—for Arfon (Hywel Williams) pointed out, that logic causes my view to diverge slightly from those of some of my hon. Friends when it comes to the issue of the lockstep; but that is a debate to be had in Committee. Perhaps the parameters of devolution in my mind are a little broader than those in the minds of some Government Members, but I do not believe that anything that I have heard from Opposition Members, or anything that we discussed in the Select Committee, should deviate from support for the Bill this evening and in the future. I simply want the Government in Cardiff to have the tools to do the job—to have their hands on the economic levers—which inevitably means the release of borrowing, for instance. This Wales Bill gives the Welsh Government additional tools to grow the Welsh economy and help Wales compete in the global race and create a stronger economy.

I have always considered Paul Silk’s work to be a package, which is how he has described it in one or two briefings to Members of Parliament. I am glad that most of the recommendations have been adopted by the Government, although they have not been adopted in their entirety and there have been allegations of cherry-picking. I also respect what he said about the need for a referendum, and I respect the point made by my right hon. Friend the Secretary of State about how the referendum question on fiscal responsibility was presented to the Scottish people. I just express a slight fear and concern about referendum fatigue. We had the initial referendum in 1997, and we had the referendum in 2011, mercifully scrapping the dreaded legislative competence order process. There were Members who are now on the Opposition Benches who told us that the LCO process would be written on a tablet of stone and would be there for generations. In 2011, we got rid of that, which was one of the worst kinds of sticking-plaster solutions to devolution.

There is the prospect of more referendums after this one, however. Some of us subscribe to the reserved powers model, and some of us very much hope our party manifestos will be strong on Silk part II recommendations, but the pressure will be on for another referendum, and I just express the concern about referendum fatigue. I am not going to be charged with creating the wording of this referendum question, but it would be much better if those varying issues of critical importance to Wales could be bound together in one general question.

[Susan Elan Jones]

I am interested in what the hon. Gentleman is saying about referendums. I well remember the referendum in, I think, February 2011—it was certainly cold enough. Having been told by rather a lot of people in north-east Wales that north-east Wales would vote no, it strengthened the process in terms of full law-making powers that north-east Wales voted very conclusively yes. I think sometimes referendums can do that.

[Mr Williams]

I share that sentiment and referendums can also lead to people in different parties working together to make a compelling case. We would all applaud that, and I think even the good people of Monmouthshire voted yes?

[David T. C. Davies]

No.

[Mr Williams]

Sorry, not quite, but the vote was much better than before. I think there was a bit of a swing of opinion. We certainly welcome the fact that people along the borders voted in bigger numbers for this, although I stand corrected. I am still slightly shocked by the glowing appraisal my hon. Friend the Member for Monmouth (David T. C. Davies) gave of Liberal Democrat policy on federalism; he commended us on that. However, I take on board the point made by the hon. Member for Clwyd South (Susan Elan Jones).

[Mr David Jones]

It would appear that my hon. Friend’s sole, or at least principal, concern about the Bill is the issue of the referendum, but does he agree that when we are talking about whether Wales should have a different tax basis from the rest of the country, that is something that concerns every resident of Wales and people should have their say on that?

[Mr Williams]

I do agree with that. I should, perhaps, make it clear that I was warning about referendum fatigue in the future. I have signed up to the Silk package and he has made that recommendation very clearly, as has my right hon. Friend the Secretary of State. We must be very mindful of that fatigue in the future, however.

The hon. Member for Islwyn talked about the Blackwood high street survey that he unofficially—or maybe officially—makes when he is back in his constituency. He said that nobody raises these issues. I would just say that there is a case to be made in respect of our business community. People come to talk to me about business rates and the lack of clarity on responsibility over business rates, and there is a case for fully devolving them to the National Assembly. Over the past nine years I have dealt with many cases involving this subject. I can think of many constituents who have come to me struggling with issues about where responsibility lies. Therefore, I am particularly pleased that decisions will, because of this Bill, be made closer to Wales and that rates can be more responsive to the needs of Welsh businesses.

The Federation of Small Businesses in Wales agrees that businesses in Wales are facing the most onerous business rates of any constituent nation of the UK. We do not have many options available to us, such as using different multipliers for different-sized firms, and it hits our small businesses hard. Small businesses are the backbone of the Welsh, and particularly the Ceredigion, economy.

The Select Committee addressed that issue. Now that the Government have made their position on it clear, I would like to know how they intend to take forward their policy on devolving business rates completely. We need a clear settlement of business rates, which gives politicians the incentive to be creative on business rate policy and to be accountable for it.

I am also pleased about the Government’s views on the full devolution of stamp duty and landfill tax. It is true that those taxes are not massive generators of revenue; they generate about £200 million a year out of an overall budget of £15 billion, which is 0.3%. However, I welcome the fact that stamp duty and landfill tax could be used to encourage inward investment and business generation in Wales, providing a much needed boost to the economy.

Moving on to the key issue of borrowing powers, the Select Committee urged in our pre-legislative scrutiny report that by the time of the publication of the Bill the Government should have set out how they decided the limits of the £500 million current account and the £500 million for capital account borrowing. That was an incredibly worthwhile report, and I think that the Government should acknowledge that there is a need for pre-legislative scrutiny of all Bills of this nature. Comparing the lobbying and transparency Bill with this Bill, the work we have undertaken on the Select Committee will serve the process very well. I remember that the Welsh Liberal Democrat leader, Kirsty Williams, came before the Select Committee and made the comparison between the settlement for Scotland and the settlement for Wales.

We also talked about, and sought clarification on, the issue of bonds, and I am encouraged that the Government seem willing to consider further whether it might be appropriate for the Welsh Government to issue bonds alongside the other measures.

[Jonathan Edwards]

The hon. Gentleman is reading out a range of measures included in the Bill, which were included in Silk. One measure that was in Silk that was not included in the Bill is the devolution of airport duty tax. How disappointed is he that that has not been included, especially considering that our airport is now owned by the people of Wales?

[Mr Williams]

I know the hon. Gentleman has worked vigorously on this issue. I think that argument is very much in flux. I think there is some way for the hon. Gentleman to convince us that that needs to be included, although I appreciate what he says about Silk being clear on that and the Government having taken a different view.

Many local bodies can issue bonds, such as local housing associations, and, to reference Scotland again, the Scotland Act 2012 allows for the UK Government to devolve bond-issuing powers without any further primary legislation. I believe that there should be parity.

On the subject of borrowing, above all else I think it would be very strange if a national Parliament did not have the borrowing powers enjoyed by the most menial of local authorities. The capacity to do that is important, but important though the question of borrowing is—in particular for the work that needs to be undertaken around Newport and the M4—we should not kid ourselves that borrowing is the sole panacea that will lead to stimulation of the economy. Borrowing ultimately means paying back, with interest. Successful borrowing will be dependent on the competence of the Government doing the borrowing, and it will not solve all the problems.

As I said earlier, we should be striving for a reserved powers model for Wales, rather than facing the spectre of holding a referendum each time a section of policy is handed down from Westminster on a piecemeal basis. That is not to understate the huge strides forward that we have made in the Bill, however. I commend the Secretary of State and the Financial Secretary to the Treasury, my hon. Friend the Member for Bromsgrove (Sajid Javid) for everything they have done to ensure that this issue has been pursued to this point. For a Liberal in Government, this represents a proud moment. There will be an even prouder moment when we have the opportunity to put the Bill on to the statute book.

As I have said, the work of Silk has been a consensual process, with parties from all sides working towards an effective and beneficial devolution process for Wales. I sincerely hope—although I am not totally hopeful—that as we all play our part in passing the Bill through Parliament, the level of consensus that we achieved at the beginning of the process will be resurrected. I do not know what the weather was like in Llandudno at the weekend—it was sunny and clear on the west Wales coast—but it strikes me that a haze might have descended on the town. There is clarity on the Liberal Democrat Benches, and clarity among our Friends on the nationalist Benches, but I have to say that there is deep fog on the other side.

20:21

[Albert Owen (Ynys Môn) (Lab)]

It is a pleasure to participate in the debate. When this matter was last discussed in the Welsh Grand Committee, I was the Chair of the Committee, so I had to remain impartial. I listened to a lot of the arguments, however, and this is my opportunity to express my views on the Bill and the devolution settlement.

I am a proud devolutionist, and I am proud of my party’s record on devolution. That process did not begin with the setting up of the National Assembly for Wales. One of my predecessors, the late Cledwyn Hughes, was one of the architects of devolution. He was the second Secretary of State for Wales after Jim Griffiths, but before Labour came into Government in 1964 he worked in opposition to establish the first Welsh Office and to devolve powers and responsibilities. Democratic devolution then came into being with the setting up of the National Assembly.

I am pleased to follow the hon. Member for Ceredigion (Mr Williams), and I agree with a lot of what he said. He asked about the weather in Llandudno. It has not been widely reported that unity broke out among members of the Labour party in Llandudno. Whether he perceived clarity or not, we certainly had an excellent conference, with unified speeches from the leader of the Labour party in Wales—[Interruption.] The hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) seems to disagree with me on that. I do not think he was there, although I am sure he takes a great deal of interest in the matter.

At our conference, we saw a First Minister and a future Prime Minister agreeing on huge policy issues, including reserved powers. That was radical, and in the tradition of Labour pro-devolutionism. It was an excellent conference, and coming after the Plaid Cymru conference, it is not difficult to compare a good one with a car crash. We heard that Plaid Cymru members had fallen out over issues such as what constituted Welshness. By contrast, we were talking about the economy and the constitutional measures that a Labour Government would introduce, so if the hon. Member for Ceredigion wants reserved powers, I suggest that he tell the good people of Ceredigion to vote Labour. A Labour Government would deliver that. We would deliver on our promise, just as we delivered on our promise to establish a National Assembly for Wales.

The Secretary of State for Wales and I go back a long way politically. When we were debating the setting up of the National Assembly for Wales, we were on different sides of the argument, and I remember that we were on a panel with Lord Dafydd Elis-Thomas. Of the three of us, only two agreed with devolution; the third did not. I welcome the fact that the Secretary of State has now progressed in the right direction, however.

[Jonathan Edwards]

Is the hon. Gentleman saying that the First Minister now supports the lockstep proposals of the UK Government, which the shadow Secretary of State advocated earlier? That is not what the First Minister has been telling the people of Wales for the past three or four months.

[Albert Owen]

The shadow Secretary of State set out the Labour party’s position in Llandudno on Sunday, and that is the position that we will proudly put to the electorate in a forthcoming election. I understand that Plaid Cymru does not support devolution per se; it supports it as a vehicle for independence. That is the difference between us. Yes, we have grown-up conversations in Wales, but the people of Wales elect more Labour representatives than Plaid Cymru representatives. Plaid Cymru is the “party of Wales” in name only. Yes, the Labour party has differences of opinion within it—any modern democratic party does—but we now have a clear position, following our conference, and I hope that we will go on to get a majority Government in this place so that we can change the laws to best reflect the views of the people of Wales.

I agree with my hon. Friend the Member for Islwyn (Chris Evans) to an extent. Whether we like it or not, the people of Wales are not that interested in Silk; they are not that interested in constitutional issues. I and many others have supported devolution for many years, but I understand that not everyone is interested in it. Politics is the art of the possible. I would have liked an Assembly to be established in 1979, but the proposal was defeated convincingly by the people of Wales. I would have liked to see a stronger Assembly in 1997, but I was far more pragmatic and mature by then, and I realised that we pro-devolutionists needed to compromise in order to get the measure through.

I do not accept what the hon. Member for Ceredigion said about referendum fatigue. It is fundamentally important, when we are proposing major constitutional changes such as the setting up of new bodies in Scotland, Wales and other parts, including London, that we should have a referendum. Equally, it is right to hold a referendum when we are proposing to give more law-making powers to the National Assembly for Wales. We should also have one to decide the changes on taxation. I would have liked to see those powers established in 1997, but I know that we would have lost the referendum if we had proposed them at the time.

[Mr Mark Williams]

The clear case for a referendum on this issue was made in the Silk report. How many referendums does the hon. Gentleman envisage us having to endure as we head along the devolution road?

[Albert Owen]

I tried to answer that question earlier when I said that a referendum should be held when we are proposing a huge political or constitutional change. These taxation measures constitute such a change, as did the devolution of law-making powers and the setting up of the Assembly itself. When it comes to significant constitutional changes, I believe in trusting the people. I did disagree with the hon. Member for Arfon (Hywel Williams) when he said, “We’ll just take the recommendations of a commission.” We are a democratic body; we are elected Members of Parliament; we represent people and communities, and we are here to represent their views. Again, I think Plaid Cymru has been caught out slightly, because it is saying, “We want all the bits of the Silk commission, but we do not want the referendum.” Either you want it all or you do not want it all—it is pretty simple.

[Jonathan Edwards]

Surely the powers cannot be used on the lockstep. That is Labour’s position: those bands cannot be varied because of the lockstep. The referendum should therefore be on the need to remove the lockstep to allow the bands to be varied. Surely that should be the basis of the referendum; it should not be a referendum on devolving the lockstep.

[Albert Owen]

That is the hon. Gentleman’s position. I have made my position clear: when there are major changes on taxation, there should be a referendum. I am therefore supporting that measure in the Bill. We would lose most of the people of Carmarthen and Ynys Môn if we started talking about the lockstep. The serious problem we have is that when we eventually go to the people of Wales on a taxation referendum, we have to boil it down—[Interruption.] If he stops chuntering from a sedentary position, I will try to give an answer on a simple question that we understand in the first place. The beauty of a referendum is that we need to boil things down. The question as it is framed now would not be easy, which is what we have to work towards. That is where I am coming from on this issue.

It is very logical that the Bill proposes borrowing powers for the National Assembly for Wales. The hon. Member for Ceredigion talked about the abilities of community councils and town councils to borrow in a way that the Assembly cannot, so this is a natural progression. Many things such as stamp duty and landfill tax can produce the revenue streams to help with that borrowing. It is eminently sensible that that happens.

I repeat that we need to consult the people of Wales and have a referendum on the income tax issues in the Bill, so I support that approach. Not having those things would be out of sync with what we have done in the past, when we set up the Assembly and when we had a referendum on increasing its law-making powers. I supported both those referendums and I would support this one, too, but we have to get it right. I am as confused as anybody who has spoken in this debate about exactly what we are going to be telling the people of Wales. I know this is only a Second Reading and it is right that we debate these issues, but in Committee—that is the place to do it—we shall deal with the nitty-gritty of what the taxation actually means. The figures produced in the explanatory notes and in the Government’s various Command Papers are not easy to digest, so we need to have that scrutiny, which this House of Commons does best, before we finalise things.

There has been much debate about the position outlined by my Front-Bench team, and on that I agree slightly with the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards); those details need fleshing out just as much as any others. The purpose of parliamentary democracy is to have that debate and that parliamentary scrutiny, so that is the way we need to move forward. I have been consistent on the referendums issue, and I believe we must have a referendum if we are to move to being able to vary income tax powers or whatever the end result is of this Bill going through both Houses of Parliament.

I wish to discuss the electoral arrangements, as I am slightly confused as to why these provisions have been bolted on to this financial measure, other than to suit a deal done between the coalition parties and Plaid Cymru to try to get the Bill through. We have heard about the Government of Wales Acts. I supported doing away with the dual candidacy because I thought it was unfair and undemocratic that a person who stands for election in a seat and loses, often comfortably, can then arrive in that democratic institution through another means—that is fundamentally wrong.

When we had a debate in this House some time ago—I cannot cite the Hansard reference—the Under-Secretary told us about the consultation exercise, when people were in favour of keeping the ban on dual mandates.

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

rose—

[Albert Owen]

I am happy to take an intervention if the hon. Gentleman wishes to be helpful.

[Stephen Crabb]

I am glad the hon. Gentleman will take an intervention on that. He will be as aware as anybody that a significant number of the people responding to that consultation saying they were in favour of the ban were Labour Welsh Assembly Members.

[Albert Owen]

I do not know who the people were. The hon. Gentleman may well be right, but Labour is obviously the biggest party in Wales and has a strong voice there, unlike some other parties. It was a consultation exercise—[Interruption.] I am getting chuntering remarks from the hon. Member for Carmarthen East and Dinefwr again, but perhaps Plaid Cymru should also have had enough intelligence to do standard letters to put its view across in this open consultation. The point I am making is that this coalition proposal, supported by Plaid Cyrmru, is on the wrong side of the argument. These parties are doing it for their own political reasons. Nobody has said to me, “Wasn’t it terrible what you did in 2006 when you banned the dual mandate?” Nobody has raised the issue and it is right to leave things as they are. I shall be voting against the measure when the time comes, for the reasons I have given.

Individuals have been mentioned, which is wrong, but I must mention the leader of Plaid Cymru who, when she was elected, made a bold statement that she was not going to stand on the list. She made the brave decision to go before the electorate as an individual and leader of her party. She chose the seat for Rhondda, which she had every right to do, but now she has the jitters. She no longer feels secure in her statement, so she wants the lifeboat of a list place to get her into the Assembly for Wales; that is what this is all about. That is why I point to a deal being done. I smell a dirty deal here between the coalition parties and Plaid Cymru.

[Mr David Jones]

I have to say that the hon. Gentleman has raised a red herring there. I assure him that there has been absolutely no deal with Plaid Cymru. He knows me well enough to know that of all the parties in this House, Plaid Cymru is probably the last one I would ever do a deal with.

[Albert Owen]

I will take the Secretary of State’s word on that, but he is pandering to its views and helping it out. I certainly will not be doing that when it comes to voting on this Bill.

There are lots of things in this Bill that I do support. I have mentioned some already including the borrowing powers, the landfill tax and the stamp duty measures. I will support the Bill on Second Reading if there is a Division, but I will be working with Members from across the House to scrutinise it so that we get to a position where it is sellable to the people of Wales in a referendum, because I am, first and foremost, a democrat and a devolutionist, and a proud one too.

20:36

[Guto Bebb (Aberconwy) (Con)]

It is a pleasure to speak in this important debate. I will be brief, as most of what I had intended to say has already been said, and said quite eloquently. It is important to touch on some of the arguments that have been made today.

Let me start with the issue of double-jobbing. We have had a degree of confusion from the Opposition Benches over the issue of whether or not a list Member can stand in a constituency. Such confusion ill becomes this Chamber, because the argument we have heard is basically one against the d’Hondt system of electing Members to any Assembly, which is one with which I have some sympathy. The decision to choose that system was taken by the Labour Government, by the right hon. Member for Neath (Mr Hain) who is no longer in his place. It is odd to argue that that system is being used in a way that allows people to stand in individual constituencies and on the list in almost every single country that operates it apart from Ukraine and Wales. It is difficult to argue that Wales should be following the lead from Ukraine rather than from any other democratic country in Europe.

That argument is a red herring, and it is undoubtedly the case that the gerrymandering happened in 2006 when the ban came into place. If Opposition Members, who have given us a number of anecdotal stories about the issue, were to go to mid-Wales, they would hear plenty of people talking about the loss they felt when my hon. Friend the Member for Montgomeryshire (Glyn Davies) failed to be returned to the Assembly, because of the change in the legislation by the Labour party. He was a fine Assembly Member, and would have continued to be so if it were not for the gerrymandering of the system. It is clear that this Bill aims to address that matter, and it addresses it in a way that represents the views of the civic society and three of the political parties in Wales. It is a shame that the parochial and partisan nature of the Opposition means that they cannot support this much-needed change.

It is also important to point out that I sympathise with some of the comments made by the hon. Member for Rhondda (Chris Bryant), who is no longer in his seat, in relation to the issue of five-year terms. As a member of the Welsh Affairs Committee, I have supported the recommendation as it stands, but I have some reservations. It is not necessarily the case that I am opposed to an extension to five years to the Assembly term; it is more that I have reservations about taking a five-year term as a norm. I would be fairly relaxed if we decided to move to four-year terms in Westminster and the Assembly.

I fully accept that the argument for a five-year term for the Assembly is to ensure that the two elections do not clash, but I have reservations about whether five years is, in any way, shape or form, better than four. As things stand, the intention of the legislation is to ensure that Assembly elections can be held separately from Westminster elections, which is something that I support. However, I also agree with the hon. Member for Rhondda that we always seem to extend terms rather than reduce them, which is a shame.

Let me turn to the issues of importance in the Bill. My personal view is that the key issue is financial and fiscal accountability. We can talk about all the elements of the legislation, but in truth we are considering an attempt to ensure that the Welsh Government and the Welsh Assembly are accountable for fiscal decisions made in Wales. It is here that we see the confusion in the Opposition’s argument.

Yes, it certainly was a sunny Saturday in Llandudno. As I did not want to impose myself on the Welsh Labour party conference, I was personally in Llanfairfechan, where the weather was also suitably good. However, we should reflect on the confusion that came out of the Welsh Labour conference. When I argued in not one but two Welsh Grand Committees for the concept of fiscal accountability, I was informed in fairly robust terms by the hon. Member for Pontypridd (Owen Smith) that the Welsh Assembly did not need any further accountability. Indeed, I can quote the hon. Gentleman, who is no longer in his seat, directly:

“I have just made the point that I do not believe for a moment that having additional responsibility for tax-varying powers would confer any extra degree of accountability on the Welsh people.”—[Official Report, Welsh Grand Committee, 5 February 2014; c. 18.]

I am delighted to see that he has just returned to his seat. He made those comments on 5 February, yet at the conference on Sunday we had his new Llandudno declaration. Clearly, a road to Damascus conversion occurred somewhere along the A470 between Pontypridd and Llandudno.

[Albert Owen]

It will come as no surprise to the hon. Gentleman that we are a democratic party and our conferences are the places where we make such decisions as a democratic body. I know that he has been a member of other parties, but that is the position of the Labour party. If he wants clarification, perhaps he should ask questions rather than giving opinions.

[Guto Bebb]

I am grateful to the hon. Gentleman for that intervention. I am sure that the Labour party is a democratic institution; it also believes strongly in the hereditary principle, as we have found out from Aberavon.

The hon. Member for Pontypridd made a clear statement in the Welsh Grand Committee on 5 February that there was no need for fiscal devolution for the Welsh Government to have any further accountability, yet in his speech in Llandudno on Sunday he clearly made the point that the further devolution of income tax varying powers so that they were on a par with those in Scotland was necessary to give that accountability.

[Mr David Jones]

I think I ought to tell my hon. Friend that I ventured into Llandudno on Saturday and it was reasonably quiet there. Does he not get the impression, as I do, that far from its being a damascene conversion on the part of the shadow Secretary of State, it is more likely that he has been leaned on by his bosses in London and Cardiff?

[Guto Bebb]

I would not want to offer an opinion on whether the hon. Gentleman has been leaned on or not. There is clearly a significant difference between the comments made in the Welsh Grand Committee on 5 February and the speech delivered in my constituency on Sunday and those differences need to be reflected on, because ultimately I agree with the speech that he made on Sunday. There is clearly a need for fiscal accountability for the Welsh Government. If we are to have grown-up politics in Cardiff Bay, it is important that decisions about spending and raising money should be taken by the elected politicians there. It is a step in the right direction to have a proposal in the Bill that will allow the Assembly, if it so desires, to trigger a referendum to allow a degree of control over income tax to be devolved to the Welsh Assembly in Cardiff. That is the key point about this legislation, which attempts to work with the grain of Welsh public opinion. The income tax variation is not being imposed on Wales; the Welsh Government, or the Welsh Assembly for that matter, are being allowed the ability to ask for those powers and trigger a referendum. The challenge for the Welsh Government will be to ask themselves whether to trigger that referendum or not.

Let me make a brief final point about the tax accountability issue, as I am aware that the debate has gone on for quite a while. The Select Committee had a significant and long discussion about whether we needed a lockstep or not. As some Opposition Members may wish to remind me, we had that debate in the Welsh Conservative party too. My own view is that the lockstep is something I can comfortably live with. The hon. Member for Arfon (Hywel Williams) made an interesting point on the arguments about whether the progressive nature of our tax system would be affected by the lockstep. He argued about whether, if we increased taxes by a penny on the standard rate and a penny on the 40p rate, we would make the system less progressive. The reverse argument can be put. For example, if we reduced the standard rate by 2p and the 40p tax rate by 2p, that would in effect be more progressive because it would give a 10% cut to the standard rate taxpayer and a 5% cut to the 40% taxpayer. As a Welsh Conservative who believes in lower taxes, I am confident that those powers will be necessary to reduce taxes in Wales. If we reduce taxes using the lockstep, the result will be a more, rather than a less, progressive system. The principle of fiscal accountability justifies the imposition of the lockstep at this point in time. As such, I am happy to support the Bill as it stands.

20:45

[Geraint Davies (Swansea West) (Lab/Co-op)]

It is always a pleasure to follow the hon. Member for Aberconwy (Guto Bebb). It is interesting that he should mention Ukraine at a time when Victor Yanukovych is recommending referendums across Ukraine for more autonomy for its regions.

The Bill is, at best, a pig’s breakfast, but when there is nothing else on the table I guess that the parties will coalesce around it. To be fair, one reason why it is a pig’s breakfast is that the constitutional settlement across the United Kingdom is diverse. The settlements in Northern Ireland, London and Wales—

[David T. C. Davies]

rose—

[Geraint Davies]

I am coming to Monmouth in a moment—and Scotland are very different. It is worth bearing in mind that it might not be timely to make concrete decisions when we do not know the verdict of the Scottish people on becoming independent. We do not know whether that decision will gather pace for the devolutionary process in Wales.

[David T. C. Davies]

I just wondered whether the hon. Gentleman could clarify whether the Bill is a dog’s breakfast or a pig’s ear. I have never heard of a pig’s breakfast before.

[Geraint Davies]

It is a new constitutional phenomenon that I have just introduced. I am sure the hon. Gentleman will delight in it, being a person who indulges in that sort of thing.

If I may reference Scotland for a moment, rational and emotional powers are at play. There are people who thought that Scottish independence was going to go down the tube because of currency, the EU and inward investment, but now, of course, the wind is blowing in a different direction. The people of Scotland feel that they are being told that they cannot live without us and there are the emotions of divorce, so there is a mixture of rational economic argument and emotion. The feeling in Wales is that, rather than facing years and years of Tory austerity, we want to decide our own thing. The reality is that if Scotland leaves the UK we will end up with more Conservative Governments, because of the residual demography, and that will change the appetite for devolution.

Plaid Cymru would obviously like Wales to go down the road of independence and it sees this as a stepping stone. It talks about fair deals and fair funding for Wales even in the knowledge—this is an important point on what is behind the Tory agenda, too—that the difference between taxes raised versus expenditure in Wales is about £15 billion. The Conservative plot is to reduce the number of Welsh MPs, give borrowing and tax raising powers to Wales and forget about giving Wales its fair share of both revenue and capital. In the case of Scotland, the difference, coincidently, is also about £15 billion, but it currently makes up that difference in oil.

We therefore have a situation where it is convenient for everybody to go along this path, but the people of Wales want fair funding now. What that means in relation to the Barnett formula, as has been mentioned, is an extra £300 million a year. Wales should have the same needs-based formula as the English regions. It is not difficult to work that out, so that should just move forward.

With regard to capital, like other parts of Britain outside London and the south-east, Wales gets a small fraction of the investment per head that London gets—London gets about £5,000 per head and Wales gets about £500 per head. That is a problem for everyone outside London. If we migrated some of that investment outside London, we could put pressure on the system to make it more balanced. Britain is quite unusual in that respect. In Germany, for example, Berlin does not dominate Munich or Dusseldorf, so there is no necessity for that balancing.

If the response in Wales is, “Well, we are not getting enough money to do our own thing, so we will have to borrow it,” who will pay for that borrowing? That is the real fear, because there is no money on the table for that. Then there is the false analysis that the borrowing needs to be hypothecated against an income stream from income tax or other taxes, and that the amount of borrowing should be determined by the size of those streams. Frankly, that is just false. It is not the case that in order to justify more borrowing we need more income tax devolution. It is the case that the amount of money Wales will get in future, as the Secretary of State argues, will be broadly the same; it will not be distorted by this method.

My right hon. Friend the Member for Neath (Mr Hain) and I fear that we will end up with less money over time because the tax take per penny of income tax is 70% of what it is in England. If we assume for a moment that the global amount of money remains the same, then where does the extra money for paying back the borrowing come from? Well, it comes from nowhere. The reality is that the money would be paid back by top-slicing revenue, which means top-slicing the amount of money for services. That is what will happen if Wales does not get its fair share of UK funding.

We have already seen the signs and symptoms of the stealthy stranglehold that the Tories want to put on Wales, with the recent U-turns on the valleys lines. All of a sudden we hear, “Here you are. You can borrow some money.” A moment ago there was going to be electrification from Paddington to Cardiff and then through to Swansea, including the valleys, but all of a sudden we are told, “Well, the small print states that the Welsh Assembly has to do that, and it can do that by borrowing.” In fact, the commitment to go through to Swansea is not even fulfilled. The Government said that they would electrify the line from Paddington to Cardiff and then from Bridgend to Swansea, but they will not do the bit in the middle. If the Welsh Assembly Government say that they will not do that because they have another priority, which they might have, as is their right, we will have a bit in the middle that is not electrified, and that is not electrification through to Swansea, so the Government have broken their word.

[Albert Owen]

I am a little confused by my hon. Friend’s terminology, because he talks about small print. I do not see any small print. The Prime Minister made a statement to the BBC in which he said that he would pay for electrification to Swansea and the valleys. That was in his statement, not in any small print.

[Geraint Davies]

Perhaps I have been misinterpreted. There was no small print. There was a big announcement, as my hon. Friend has just said, by the Prime Minister, the Secretary of State and others. The small print I was referring to was the weasel words in the long-winded document that was exchanged between Ministers, which presumably changed the headline proposition. It had been, “We will provide this,” and then the Minister argued, “When we went through it all I found here on page 23 that it says that actually it is interpreted in this way, so according to our lawyers the Welsh Government will have to do that.” That is not what we heard on the radio.

[Mr David Jones]

The hon. Gentleman will know that there was a letter, signed by Carl Sargeant, the relevant Welsh Minister, confirming that there was an agreement. Is that small print?

[Geraint Davies]

The Prime Minister said that the UK Government would pay for the electrification of the railway lines, which are essentially UK infrastructure. I think that it is disgraceful, frankly, that while £52 billion is to be spent on HS2, the Secretary of State will not even fight for that extra bit of money for Wales. We desperately need it. He should resign.

[Owen Smith]

I just want to clarify for the House that the Prime Minister said:

“It’s this government”—

I presume he means Her Majesty’s Government—

“that’s putting the money into the electrification of the railway line all the way up to Swansea and, of course, the valley lines.”

[Geraint Davies]

Which valleys was he talking about?

The Secretary of State, in concluding his lamentable speech, said that this bit of legislation would make Wales more competitive, fairer and more accountable and that it would deliver economic growth. If I believed that, I would support the Bill wholeheartedly, rather than in a lukewarm fashion. What is really involved is a “Wonga economics” trick—“You can borrow all this money. Don’t worry, it’ll be all right. You can spend it on the railways and roads. Spend some more and we’ll give you some more and if you tax more you can have more,” and all that. Globally, however, there will not be any more; the money has to be paid back. There will be less overall revenue for core services such as health and education.

Members will be glad to hear that I will not speak for much longer, as people want to wind up the debate, but I want to say that the whole essence of devolving income tax is about competition and confusion. Labour Front Benchers have said that we do not want a competition, and I think it intrinsically wrong to generate more and more different sorts of tax competition across the United Kingdom. It is not healthy and it generates confusion for inward investors. It is not something that we want.

I mentioned the smaller taxes such as stamp duty, which are seen as peripheral and unimportant. However, Boris Johnson has jumped on his hind legs and started squawking that he now wants stamp duty on the back of what we are having in Wales. He wants £1.3 billion. The issue is undermining the national accounts of the United Kingdom. It is no longer about small fry and throwing crumbs to Wales; it is distorting the stability of public economics in Britain, and we need to think about that carefully.

One problem has been that the Silk commission was made up of people who know about the Welsh Assembly and have been inside the system; they were talking to each other and to small groups of people in cold church halls. Questions that were not asked or answered include, “What will happen in a few years’ time if London or Yorkshire wants this? What will it look like?” Some people mentioned cross-border health and education; we can add cross-border tax differences to that. Will such things be a help or hindrance to the people of Wales? There is by no means a clear answer.

The Tories are not generating a regionally balanced economic growth perspective; the majority of economic growth is funded by mortgages and consumer debt in London and we are again seeing the emergence of a twin-track economy. Where will the devolution of different taxes at different rates to different parts of the UK end up, when greedy London wants more than its fair share, gobbling up the core of the resources for Britain as a whole?

Wales is increasingly being pushed into being decoupled from the speed boat of London, which will zoom away. We need to have our fair share of economic stimulus and investment and to a large extent what I have been discussing is a decoy from the real matter at hand, which is to get the right money for Wales now before we talk about the intricacies of tax devolution.

20:58

[Nia Griffith (Llanelli) (Lab)]

We have had a good discussion on the Wales Bill, and a wide range of views have been expressed. We will broadly support the Bill, although we will table amendments in Committee. I put on the record straight off that we disagree with the clause on dual candidacy.

We heard from the right hon. Member for Chesham and Amersham (Mrs Gillan), a former Secretary of State for Wales. She welcomed the Bill and the cross-party participation on the Silk commission. However, she was the only person who regretted that the Bill did not include a clause to reduce the number of MPs in Wales and she felt strongly that there should be no reform of the Barnett formula until the deficit had been brought down—quite what she meant by that, we are not absolutely sure.

The hon. Member for Monmouth (David T. C. Davies), in characteristic form, told us that he saw the Bill as part of a relentless devolution of powers to Wales and likened it to sleepwalking to independence. However, he expressed his support for a federal system. He told us that he would vote and campaign for no in any referendum, although he did rather like the idea of borrowing powers, especially if they led to a relief road for the M4.

We then heard from the hon. Member for Forest of Dean (Mr Harper), who, when he had finished smearing Labour in Wales, got down to the point—

[Mr Harper]

I am sorry, but the only comment I made about the NHS in Wales was about mortality statistics, and I was quoting exactly the right hon. Member for Cynon Valley (Ann Clwyd). If quoting her is smearing, I plead guilty, but I do not think I was doing that; I was raising legitimate concerns on behalf of my constituents.

[Nia Griffith]

Indeed. Perhaps I will move on then. The hon. Gentleman also said that he wanted road bridges to be built with money raised from the Severn road bridge; again, we wonder quite where he is going with that one.

Returning to the Bill, the hon. Gentleman raised valid points about the devolution of stamp duty and land being divided, and referred to confusion between people with certain postcodes whereby, for example, somebody with a Newport postcode ends up, in effect, being put in Wales when in fact they are in England. He also mentioned the complexities of payroll for small businesses in the event of devolution of income tax. I think he is really saying that there needs to be a very thorough impact assessment on all these issues, and we would certainly call for that.

The hon. Member for Brecon and Radnorshire (Roger Williams) emphasised the benefits of holding elections on separate days to avoid confusion, although not all Members agreed. He reiterated his support for the reserved powers model of devolution whereby the assumption should be that the National Assembly for Wales has powers in the devolved areas of responsibility unless otherwise specified.

The hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart) said that it is difficult to find anybody in his patch who is interested in more devolution, so perhaps he spends more time in South Pembrokeshire than in west Carmarthenshire. He agreed with the hon. Member for Monmouth about devolution creep. He also noted his disagreement with the academics who are calling for more Assembly Members.

The hon. Member for Aberconwy (Guto Bebb) found himself agreeing with my hon. Friend the Member for Rhondda (Chris Bryant)—that must be a first—on the idea that if anyone changes the term of a Government, it is always to increase it rather than decrease it, and he was sceptical about the need for an increase to five years.

The hon. Member for Arfon (Hywel Williams), speaking on behalf of Plaid Cymru, expressed severe disappointment that the Bill did not fully reflect the Silk commission recommendations. He described the thorough scrutiny of the draft Bill by the Welsh Affairs Committee and explained the potential difficulties in enthusing the electorate about a referendum on tax. He mentioned the Barnett formula and the need for funding reform and told us that Plaid Cymru would table an amendment to allow for devolution of income tax without a referendum.

The hon. Member for Ceredigion (Mr Williams) reminded us that he is a strong supporter of localism and firmly believes that decisions made should be linked with any money raised. He wants to see a positive impact in terms of working together for a referendum. He compared the very thorough scrutiny of the draft Bill with the complete lack of scrutiny of the transparency of lobbying Bill before it came to this House.

My hon. Friend the Member for Swansea East (Mrs James) talked about borrowing and expressed concern about the unfairness to Wales in contrast with Scotland, where it is calculated as 10% of capital budget rather than being contingent on the devolution of taxes.

My right hon. Friend the Member for Neath (Mr Hain) spoke very eloquently about banning dual candidacy, quoting Lord Richard’s evidence to the Welsh Affairs Committee. He reminded the House of the very considerable, bare-faced abuse of the list system and quoted the leaked memorandum from Leanne Wood, the leader of Plaid Cymru, in which she gives explicit instructions to her party’s list Assembly Members to direct their time and resources—paid for by the taxpayer, Mr Deputy Speaker—to Plaid Cymru’s target seats. He also emphasised the need for shared risk on taxation and making sure that Wales does not in any way miss out if income tax powers are devolved.

My hon. Friend the Member for Caerphilly (Wayne David) expressed disappointment that the Bill falls short of fully reflecting what was in the Silk commission report. He also gave contemporary examples of how the list system is being abused, with list Members neglecting much of their area in order to focus almost exclusively on one part of it, with a view to standing for that constituency—exactly following the advice of the Plaid Cymru leader, Leanne Wood, to ignore constituents’ problems and focus solely on what will bring electoral advantage.

My hon. Friend the Member for Islwyn (Chris Evans) reminded us that people have a lot of concerns, and do not have only constitutional issues on their minds. Again, he was concerned about the large number of people living within easy commuting distance of the border and the effects that any change in tax rates could have on either side of the border. He called for a thorough impact assessment.

My hon. Friend the Member for Ynys Môn (Albert Owen), who is a fervent devolutionist but is not for devolution as a route to independence, said it was vital to work with people and to have a referendum on all important decisions.

My hon. Friend the Member for Swansea West (Geraint Davies) referred to the current dispute about railway funding, saying that it was a good example of his worries that weasel words might mean giving with one hand but taking away with the other. He also said that we should look carefully at what exactly the intentions behind the Bill are.

I turn now to some of the more mundane issues dealt with by the Bill. We very much welcome the devolution of the land taxes—stamp duty and landfill tax. They will provide an independent income stream against which the Welsh Government can borrow. We hope that the devolution of those taxes can take place as soon as possible and that the process will not be subject to any unnecessary delays. We understand the logic of the time scale but we urge that it should not be allowed to slip.

We welcome the borrowing powers that the Bill will legislate for, not least because this Tory-led Government have cut the Welsh budget by 10% over the course of this Parliament and have reduced the Welsh Government’s capital budget by nearly a third. Borrowing powers will enable the Welsh Government to invest in vital infrastructure projects to help boost economic development.

[Jonathan Edwards]

The Labour party continually attack the UK Government—and rightly so—for their huge cuts to capital expenditure in Wales, but the Government are following the exact budget lines set by the previous Chancellor of the Exchequer before the 2010 election. The Labour party set a path to cut capital budgets in Wales by 40%. That is what the UK Government have delivered.

[Nia Griffith]

The hon. Gentleman knows full well that the Opposition have very different priorities from the Government in the way that we deal with budgets and decide what our priorities are. Quite frankly, I think that he needs to do a bit more homework before he begins to make these suggestions.

I turn now to income tax. The Opposition do not accept that there is no accountability without the devolution of income tax. The National Assembly for Wales and the Welsh Government are accountable through elections, and Welsh Ministers are subject to the usual scrutiny procedures. Let us look at councils: more of a council’s budget comes through the block grant than from council tax, but nobody says that councils cannot borrow and that council borrowing has to be contingent on further devolution of some income tax powers.

None the less, we accept that the Welsh Government are slightly anomalous in not having the power to raise revenue. The devolution of a number of minor taxes will rectify that anomaly. It should be noted that in their evidence to the Silk commission the Welsh Labour Government did not actually seek the power to vary income tax. However, since the publication of the Silk commission report we have said that we support the recommendation to give Wales the power partially to vary income tax, contingent on a triple lock. That consists of fair funding, agreed by the Welsh and UK Governments; the power being subject to a referendum; and the power being in the long-term interests of Wales—that is to say that it should tested during a period of assignment.

We would like the Secretary of State to give further details on the period of assignment and to provide reassurances about the ability of HMRC to monitor a Welsh rate of income tax. We believe that further examination is needed of the impact of tax competition arising from different rates of income tax on either side of the border. We want to ensure that that looks at the behavioural aspects of what might happen if income tax rates vary on either side of the border.

Turning to the constitutional issues, we believe that the question of five-year terms is a matter for the Assembly. It may not be practical to table an amendment to that effect, but we want to put on record our belief that it should be something for the Assembly to decide.

On double-jobbing, we are very clear that we do not think that an individual should be an MP and an AM at the same time. It is not practical or fair to the electorate and we certainly support the ban in the Bill.

A number of my hon. Friends have referred to dual candidacy and I want to focus on one aspect of it, namely that the impact assessment notes that more people find it confusing and dislike it than those who favour it, and that smaller parties need the system because they are struggling to find candidates. It is pathetic that some of the smaller parties are finding it difficult to find candidates of the right quality. They should be asking themselves why it is that they cannot find anyone. Is the Liberal Democrats’ problem that no young person wants to knock on doors and explain why the Liberal Democrats propped up the Tories to put up student fees to £9,000 in England while in Wales the Labour Welsh Government pegged fees at £3,500? I cannot see any young person wanting to stand for the Lib Dems. Will young people want to stand for Plaid Cymru when they are worried that they might be told, “If you haven’t got two parents who were born in Wales, you can’t represent Wales”?

[Hywel Williams]

Disgraceful!

[Nia Griffith]

Well, that is the sort of thing we have heard Plaid Cymru say about whether the captain of the Welsh rugby team should be captain or not. [Interruption.] Plaid Cymru Members can shout and protest all they like, but that is what they said only three weeks ago.

[Jonathan Edwards]

A smear!

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I think the hon. Members for Arfon (Hywel Williams) and for Carmarthen East and Dinefwr (Jonathan Edwards) need to calm down a little. In fairness, everybody has been able to put their point of view. I am sorry they do not accept what the shadow Minister is saying, but they cannot shout from the Benches in that way.

[Nia Griffith]

I am not sure how the Conservative party will find people to stand for it when many of its Members are simply rubbishing Wales in order to further their electoral interests in England. It may be very difficult for the Conservatives to find people, but if they can they should not try to overturn the ban on the dual candidacy. That is the whole point, is it not?

[Hywel Williams]

Will the hon. Lady give way?

[Nia Griffith]

I think I have been asked to keep going by Mr Deputy Speaker.

[Mr Deputy Speaker]

Don’t bring me into this! I certainly did not say that. It is up to the shadow Minister whether she wishes to give way, not the advice from the Chair.

[Nia Griffith]

In that case, Plaid Cymru Members have had one intervention already and I think that is enough, especially as they have had a long time today to raise different issues.

We in Llanelli felt let down by the abuse of the dual candidacy system. It was like having a massive cuckoo sitting in a nest in which it did not belong, neglecting all the other constituencies and focusing solely on one, whereas the proper role of a list Assembly Member is to look at broader issues, as Joyce Watson is doing with human trafficking and Rebecca Evans with disability.

We are strongly opposed to clause 2, which would reverse the ban on dual candidacy. Apart from that, we are generally in favour of the Bill and welcome it. I will table amendments in Committee and we will oppose dual candidacy, but all in all we are in favour of the Bill.

21:13

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

It is a pleasure to close this important debate and it is good, as ever, to follow the hon. Member for Llanelli (Nia Griffith), who on this occasion gave an uncharacteristically churlish speech. I want to call her out on her comments about the contribution by my hon. Friend the Member for Forest of Dean (Mr Harper), who is always the model of courtesy and graciousness in his contributions in this House. His remarks about Wales were based on evidence and truth and were carefully made, so I commend him. He is a former Cabinet Office Minister, so he is familiar with issues pertaining in particular to fixed-term Parliaments. This debate has been enriched by his participation. It has also been enriched by the speeches of not one, but two former Secretaries of State. It was good that the right hon. Member for Neath (Mr Hain) and my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan), who is no longer in her place, both gave very thoughtful contributions on issues about which they have a lot of experience.

We also heard from the Chairman of the Welsh Affairs Committee, which did a fantastic job in scrutinising the draft Wales Bill. The speech by my hon. Friend the Member for Monmouth (David T. C. Davies) in fact attracted not just praise from Liberal Democrats, but a slightly backhanded compliment from the right hon. Member for Neath, who described him as having “sincere and intelligent extremism”. As I am sure the right hon. Gentleman knows better than most hon. Members in this House, extremism in the defence of liberty is no vice at all.

We have had a fascinating and wide-ranging debate during the past few hours on matters directly, and sometimes indirectly, related to the Wales Bill. There were excellent speeches from both sides of the House, and I thank all hon. Members for their speeches.

I will limit my remarks to the Bill, but I first want to say that, regardless of points of disagreement, there has been a broad measure of consensus on and support for the Bill by all parties in the House. Just as a Dulux colour sheet has different shades, there have been different shades of support—ranging from frosty and cold by my hon. Friend the Member for Monmouth to rather grudging and unenthusiastic by Opposition Members through to warm by my right hon. Friend the Member for Chesham and Amersham. There has been support for the Bill and, as we go into Committee, we should not forget that this wide-ranging Bill enjoys broad support from hon. Members and parties across the House.

The vast majority of hon. Members clearly support the Government’s move towards achieving a strong measure of fiscal devolution that will give the National Assembly for Wales control of devolved taxes for landfill and land transactions, and enable the Welsh Government to borrow for capital investment. I hope that such a positive position continues as the Bill progresses.

I should perhaps start with the lockstep, a term that few hon. Members had probably heard before the Silk commission did its work, but one with which we are certainly becoming increasingly familiar. I know that the Government’s proposals to allow the Assembly to vary income tax rates uniformly—in other words, in lockstep—subject to a referendum, concern some hon. Members on both sides of the House. Let me be clear that this Government believe that the structure of income tax is a key mechanism to redistribute wealth across the whole of the United Kingdom, including Wales and, as such, that wealth redistribution is properly determined at UK level. The lockstep is consistent with the principle that fiscal devolution should not unduly benefit one part of the UK at the expense of another, which would result in what at least one hon. Member has called a race to the bottom. I am pleased that that position is one that now seems to enjoy the support of Labour Front Benchers, although that was not clear when we last discussed it in the Welsh Grand Committee.

There would be a real risk of a so-called race to the bottom if the Welsh Government were able to set substantially lower rates for higher or additional rate taxpayers without needing to change the basic rate. Far from making the income tax powers unusable, as some hon. Members have suggested, the lockstep makes the powers very usable, as my right hon. Friend the Secretary of State explained at the start of the debate. Devolving income tax would give the Welsh Government a crucial lever to reduce taxes across the board in Wales to make it a lower-tax economy and put money back into the pockets of hard-working people across Wales.

If electors in Wales decide in a referendum in favour of income tax devolution, the Welsh Government would become responsible for almost half the income tax generated in Wales. In reducing the tax burden on working people in Wales, the Welsh Government would reap the benefits of a growing Welsh economy and gain access to a significantly larger revenue stream to finance further borrowing. With vision and foresight, the Welsh Government could grasp that virtuous circle with both hands.

Some Opposition Members, not least the right hon. Member for Neath, raised concerns about how the application of devolved income tax will work in practice. There was some discussion of that in the last sitting of the Welsh Grand Committee, when there was a lot of confusion about whether Welsh budgets would be detrimentally affected by the devolution of 10p of income tax. Following the Welsh Grand Committee, I circulated a letter to all members of the Committee explaining, with a practical example, how that would work. I would therefore hope there would be some clarity, but the right hon. Member for Neath said that there is a risk that Wales will be cast adrift. Let me explain to him that the system of income tax devolution we are proposing protects Welsh funding in two ways. First, the lockstep retains the redistributive structure of income tax across the UK, as I have just described. Secondly and crucially, the block grant adjustment mechanism, which we are calling indexed adjustment, means that Wales is protected from UK-wide shocks. For example, if the UK tax base were to decline, the block grant adjustment will be reduced accordingly. Reducing the block grant adjustment thereby increases the Welsh block grant. Therefore, the finances of the Welsh Government are protected through that mechanism.

[Mr Hain]

I am grateful for the Minister’s views. Is he saying that, if the Welsh Government raise less, Westminster will compensate more?

[Stephen Crabb]

That is not what I am saying. A key principle of the mechanism is creating the incentive for the Welsh Government to create the conditions for the economy in Wales to grow, so that they can reap the fruits and benefits of a growing Welsh economy. The protection kicks in when there are shocks and changes that affect the overall UK tax base. When changes would otherwise have a detrimental impact on Welsh Government revenues, Welsh Government revenues are protected because of the indexation. I shall circulate further information to right hon. and hon. Members.

[Geraint Davies]

Is the Minister saying that there are only upsides? Is he saying that, if the Welsh Government do well and grow the Welsh economy, they get a greater share of overall UK revenue, and if things go the wrong way from their point of view or the UK point of view, they still get that share or more and it never goes down? I cannot believe that.

[Stephen Crabb]

There is a lot of upside in the proposals, which I hope Opposition Members have the intelligence and foresight to recognise. In fact, the Silk commission calculated that Wales would have been better off under the system we are proposing had it been in place in the past decade. That answers the question asked by the right hon. Member for Neath—he asked whether Wales will be better off. The Silk commission estimated that, had the system been in place in the past 10 years, the people of Wales would have been better off. I hope that that also provides assurance to the hon. Member for Swansea West (Geraint Davies), who sees the Bill as a nasty plot and conspiracy.

Some Opposition Members have sought to link the devolution of income tax to so-called fair funding. That is another diversion they are throwing up, and another barrier they are erecting, so that they do not have to contemplate greater and truer accountability for the Government in Cardiff Bay, which they would prefer not to contemplate. The joint statement from the UK and Welsh Governments in October 2012 established a clear process to review relative levels of funding for Wales and England in advance of each spending review. The announcement recognised that levels of funding for Wales relative to England were not currently converging, but that, if convergence in funding is forecast to resume during the period, both Governments are committed to discussing a sustainable and fair solution. The fair funding mechanism agreed with the Welsh Government in 2012 worked very well in practice ahead of the last spending review. I hope that that, too, reassures hon. Members.

Current funding levels are well within the parameters recommended as fair by the Holtham commission. Safeguards are in place to address convergence if and when it resumes. Therefore, the funding regime for Wales should not be seen as a barrier to income tax devolution. That is one more smokescreen the Opposition are throwing up to disguise their basic opposition to, and dislike of, fiscal devolution.

A number of hon. Members mentioned borrowing powers for capital investment. There is clearly a broad consensus on all sides in favour of giving the Welsh Government the ability to borrow to invest in Wales’s infrastructure. Some Opposition Members want the Welsh Government to be able to borrow more than the £500 million permitted under the Bill—some suggested they should be able to borrow a virtually unlimited amount. The UK Government have set the limit considerably higher than we would have if we had used the tax and borrowing ratios we used in the Scotland Act 2012. Had we done that, the borrowing limit would be closer to £100 million, based on the taxes devolved in the Bill. We have set a higher capital borrowing limit of £500 million initially, but with flexibility for that limit to be increased if the Welsh Government gain access to further independent streams of funding, such as an element of income tax. If Opposition Members want to see the Welsh Government have a greater borrowing capacity, they should join us in campaigning for a yes vote in an income tax referendum.

What we are not prepared to accept is reckless borrowing without the means of paying that money back. Borrowing must be commensurate with the independent revenue streams. The Government have not worked hard over the last four years to build a reputation for financial prudence and competence, and tackling Britain’s deficit effectively, only to throw away that hard-earned reputation by allowing the Welsh Government to borrow beyond their means.

The hon. Member for Swansea East (Mrs James) said that she would welcome sight of the “workings-out”—I think that was the phrase she used—to help her to understand how we arrived at the £500 million borrowing limit. I suggest that she looks at pages 26 and 27 of the Command Paper that was published alongside the Bill, which is clear on the rationale and the basis for deciding on the £500 million figure. It is higher than would have applied if we had stuck closely to the Scottish ratios, and that is because we want the Welsh Government to crack on with the job of improving the M4. That was agreed with Welsh Ministers, and it gives them the tools to make progress quickly and to tackle that major infrastructure problem.

The hon. Lady also asked why Northern Ireland’s position was different. Northern Ireland is not a good benchmark for hon. Members to use in comparing borrowing regimes. The Northern Ireland Executive exercise many of the powers and responsibilities that are exercised by local authorities in other parts of the UK. In particular, they collect the equivalent of council tax and business rates and have borrowing powers similar to those held by local authorities.

Opposition Members did not talk much about borrowing, which will have a huge, transformational impact in allowing the Welsh Government to invest in new infrastructure in Wales, and nor did they talk much about the impact of lowering taxes in Wales, creating a low-tax economy and creating new jobs. They saved most of their energy and time for discussing the ending of the ban on dual candidacy. In fact, the right hon. Member for Neath used large chunks of a speech he made in 2006, if my memory serves me right. It has been like “Groundhog Day” as Opposition Members—although I am sure they were reflecting the concerns they have heard in their constituencies—manned the barricades to oppose a sensible measure—

[Albert Owen]

Is the Minister criticising Opposition Members for referring to a measure in the Bill? Surely it is the purpose of a Second Reading debate to talk about the measures in the Bill.

[Stephen Crabb]

I am criticising Opposition Members on two counts. One is the amount of time that they took talking about a relatively minor issue, when they could have used their time to better effect by talking about the real, everyday concerns of the people of Wales who will be affected by the measures in the Bill. I also criticise Opposition Members on this issue because they are wrong. They are in the minority. All other parties support the measure. Wales is the only country with such a ban on dual candidacy.

[Wayne David]

Will the Minister give way?

[Stephen Crabb]

I have been very generous with my time, and I am not giving way again.

The Bill provides the Welsh Government with the means to take active steps to improve the lives of hard-working people in Wales. It will allow the Welsh Government to tailor devolved taxes to best fit the specific needs of Wales; it will make them accountable for some of the money they raise, not just the money they spend; and it will give them the tools to grow the Welsh economy. It also provides them with the means to make much needed investment in critical infrastructure in Wales and, if they choose, to call a referendum to devolve a portion of income tax. It is a Bill I am pleased to commend to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Wales Bill (Programme)

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

That the following provisions shall apply to the Wales Bill:

Committal

The Bill shall be committed to a Committee of the whole House.

Proceedings in Committee

(2) Proceedings in Committee of the whole House shall be completed in two days.

(3) The proceedings shall be taken on the days shown in the first column of the following Table and in the order so shown.

(4) The Proceedings shall (so far as not previously concluded) be brought to a conclusion at the times specified in the second column of the Table.

[Jonathan Edwards]

On a point of order, Mr Speaker. I appreciate that you were not here at the time, but the hon. Member for Llanelli (Nia Griffith) made an unjustified and improper comment about me and refused to take an intervention during her winding-up speech. Is it in order for the hon. Lady to make such a comment? What advice could you give me about securing a withdrawal and what advice would you give the hon. Lady?

[Mr Speaker]

Whatever my capacities, it is very difficult for me to reach a conclusion about a matter to which I was not privy. As the hon. Gentleman sagely observed at the start of his attempted point of order, I was not myself present in the Chamber, so I am not party to the facts. If I were a cynical soul, I would imagine that he was seeking to continue the debate.

[Jonathan Edwards]

indicated dissent.

[Mr Speaker]

The hon. Gentleman assures me, with an air of wide-eyed innocence, that he has no such motivation. I simply counsel him, off the top of my head, that this is not a matter for the Chair—not, at any rate, as things stand—but that he, as a diligent and indefatigable Member, with great versatility, will be aware of the devices that are available to him to pursue this matter to a satisfactory conclusion, but almost certainly not now.

Business without Debate

Monday 31st March 2014 Commons Chamber

Wales Bill (Carry-Over)

Motion made, and Question put forthwith (Standing Order No. 80A(1)(a)),

That if, at the conclusion of this Session of Parliament, proceedings on the Wales Bill have not been completed, they shall be resumed in the next Session.—(Claire Perry.)

Question agreed to.

Delegated Legislation

[Mr Speaker]

With the leave of the House, we shall take motions 7 to 11 together.

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

Representation of the People

That the draft European Parliamentary Elections (Amendment) Regulations 2014, which were laid before this House on 24 February, be approved.

That the draft Representation of the People (Combination of Polls) (England and Wales) (Amendment) Regulations 2014, which were laid before this House on 24 February, be approved.

Social Security

That the draft Statutory Sick Pay Percentage Threshold (Revocations, Transitional and Saving Provisions) (Great Britain and Northern Ireland) Order 2014, which was laid before this House on 15 January, be approved.

Tax Credits

That the draft Tax Credits, Child Benefit and Guardian’s Allowance Reviews and Appeals Order 2014, which was laid before this House on 12 February, be approved.

That the draft Tax Credits (Late Appeals) Order 2014, which was laid before this House on 12 February, be approved.—(Claire Perry.)

Question agreed to.

Delegated Legislation

[Mr Speaker]

With the leave of the House, I propose to take motions 13 and 14 together.

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

Local Government

That the draft Local Authorities (Conduct of Referendums) (England) (Amendment) Regulations 2014, which were laid before this House on 5 March, be approved.

That the draft Local Authorities (Conduct of Referendums) (Council Tax Increases) (England) (Amendment No. 2) Regulations 2014, which were laid before this House on 24 February, be approved.—(Claire Perry.)

Question agreed to.

Delegated Legislation (Financial Assistance to Industry)

Motion made, and Question put forthwith (Standing Order No. 9(6)),

That the Motion in the name of Secretary Vince Cable relating to Financial Assistance to Industry shall be treated as if it related to an instrument subject to the provisions of Standing Order No. 118 (Delegated Legislation Committees) in respect of which notice has been given that the instrument be approved.—(Claire Perry.)

Question agreed to.

Planning Inspectors and the National Planning Policy Framework

Monday 31st March 2014 Commons Chamber

21:33

[Jacob Rees-Mogg (North East Somerset) (Con)]

I am very pleased to bring to the House a petition brought to me by the mayor of Midsomer Norton, among others, that has been signed by so many people, so numerous as the stars in the heaven and as the sand which is upon the seashore.

The petition states:

The Petition of residents of North East Somerset,

Declares that the Petitioners believe that while the principles of the National Planning Policy Framework (NPPF) are worthy, its implementation has led to negative consequences that were not anticipated; further that the Petitioners believe that when the Planning Committee of a local authority, which has a draft Core Strategy, refuses a planning application on strategic grounds, the application is often allowed on appeal by the Planning Inspector on the basis of non-strategic, site-by-site considerations; and further that the Petitioners believe that as a result, unsustainable development in the Somer Valley is being approved on sites often remote from employment and transport infrastructure, in accordance with the priorities and interests of developers rather than the carefully researched and democratically agreed plans of the Local Authority.

The Petitioners therefore request that the House of Commons urges the Government to take the necessary steps to allow Planning Inspectors at appeal hearings to take into account and give great material weight to the cumulative effect of proposed developments; further that the House requests that the Government allows Planning Inspectors to interpret the sustainability principle in the NPPF on an area rather than merely on a site specific basis and further that the House requests the Government to take the necessary steps to allow Planning Inspectors at appeal hearings to give weight to the strategic proposals of a draft Core Strategy while it is going through the lengthy approval process.

And the Petitioners remain, etc.

[P001340]

Planning (Walsall South)

Monday 31st March 2014 Commons Chamber

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

21:35

[Valerie Vaz (Walsall South) (Lab)]

I do not know what to say other than “How do I follow that?” However, the theme of my speech is very similar to that of the petition presented by the hon. Member for North East Somerset (Jacob Rees-Mogg).

Thank you, Mr Speaker, for granting me an Adjournment debate on what is becoming a very controversial issue in Walsall South. What I am about to describe are not only threats to the green belt, but threats to those of us who oppose a planning application in support of it. I refer in particular to an application for 59 large detached houses in Great Barr park.

I am sad to say that one of the developers has already made a complaint about me to the Labour party. I think that is because he believes that I am supporting the residents too much, although I am not quite sure what his grounds are. Moreover, a leaflet has been delivered which makes defamatory statements about me, about my hon. Friend the Member for West Bromwich East (Mr Watson)—who is in the Chamber—and about a residents’ group, the Beacon Action Group, and its chairman Mr Bob Winkle. A personal attack on me has been made by Mr Peter Allen, a consultant for the applicants, who does not live in Walsall South, on the letters page of the Great Barr Observer and the Walsall Advertiser. Both Mr Allen and the applicants appear to want to interfere in my work as a Member of Parliament, but more of that later.

The planning committee of Walsall metropolitan borough council has made two other decisions allowing building on the green belt. It decided that the historic Three Crowns pub should be converted into a single dwelling, and that three additional houses should be constructed, despite the advice of planning officers that that would reduce the openness of the green belt. That was decided in September 2011, but nothing has been built, and the site still lies derelict save for a car wash for which there was no permission. The footprint of the Three Crowns school could have been used as a community building, but there are now to be eight detached houses on the site. According to some of my correspondence with constituents, the planning committee was not given the full history of the site before it made its decision—a decision that the planning casework unit upheld.

However, the development that is causing the biggest controversy and the most personal attacks on people who oppose it is the one on which I want to focus: the development of Great Barr park and hall. My main concern, which I hope the Minister will address, is the use of enabling development to bypass planning law and the national planning policy framework on the green belt. As the Campaign to Protect Rural England suggested in a report published last week, the green belt is not safe. While I welcome the Minister’s written statement of 6 March 2014, local people who are directly affected, and the current framework, are being ignored in the whole process.

Since 2012, when the current owners bought the land, residents of Great Barr park have been unaware of behind-the-scenes discussions with English Heritage and the council, and with the self-styled historical consultant Peter Allen. The site was the subject of an inquiry in 2001, and at a public meeting Mr Allen said:

“Forget any romantic notion of bringing Great Barr Hall back to the way it was in Lady Scott’s time. There is no roof; the stucco and underlying brickwork are badly decayed… all doors and fireplaces have been stolen; floorboards, ceilings and staircases have disappeared”.

Great Barr hall, he said, was

“a derelict shell—that is the…reality.”

That is what he said in 2001, and that is exactly the situation now, with English Heritage saying that there is absolutely nothing of historic value in the building. So why are the developers being able to use this building as enabling development to bypass the planning framework on the green belt? The application fails all the tests set out in paragraphs 80, 88 and 89 of the NPPF, and the developer’s own statement says it will have an impact on the openness of the green belt.

If allowed, this development will extend Walsall, Birmingham and Sandwell into the countryside and the gap between them will be eroded. It will not safeguard the countryside from encroachment, nor does it assist with urban regeneration by encouraging the recycling of derelict and other urban land—all set out in the NPPF.

Then there is the use of agricultural land near Chapel lane. An inspector said at the inquiry that the Ministry of Agriculture, Fisheries and Food—now the Department for Environment, Food and Rural Affairs—

“considers the farmland within the site to be high quality and would object to development.”

What safeguards are there to ensure that the local planning authority is not there to support the developers, particularly when it is clear, and there is a prima facie case, that the development does not meet the NPPF guidance? The planning authority should have refused it if it was applying the NPPF. Instead, it is engaged in an exercise, and a letter on the council website stated

“we would very much like to continue to work with you towards delivering an acceptable proposal.”

Peter Allen’s website states:

“After prolonged and close scrutiny it is now endorsed by, amongst others, Walsall MBC, English Heritage…and the Environment Agency”—

and that was before the residents were even aware of the application. There is now a disclaimer on the website, however.

My constituents were provided with the notice of planning application on 23 December 2013 and given 21 days to respond. How cynical is that! Incensed by this and bewildered, some constituents contacted me. Some who would have been affected did not even receive the notice. The vicar of St Margaret’s church, Rev. Rutter, who knows about the Scott family whose history is based around the church and who built the hall, has not even been consulted on or informed of the notice of planning application. He could have told English Heritage that a reference to a chapel was never located in the hall and has always been in the church.

The Beacon Action Group, which has been around for the last 31 years, set up a public meeting to discuss the plans. On 1 February, two MPs—my hon. Friend the Member for West Bromwich East and I—heard the views of the residents. All those who spoke to me were opposed. We were not there to give our view, but to hear the views of the residents. The plans were up and people could see them for themselves, and they were horrified.

The hall was to become a wedding and conference centre, but there is one already and it is called St Margaret’s church—and conferences have taken place at the nearby Holiday Inn. Agricultural land would be swallowed up by houses: 59 in total across the site, and they would not be affordable homes. Residents who have had access to the park for over 20 years would be restricted to twice a year, and even now some are being escorted out of the park.

There is an ancient woodland called Gilbert’s wood which has a bluebell wood, which Rev. Rutter, who is a botanist, says has taken 200 years to establish, with native English bluebells. An access road will go right through it, but it seems that in the planning statement it was all systems go except for the local residents. English Heritage could have either saved the building or provided a grant, but did neither. It has known about the hall since 2001. Successive owners have promised to repair the hall but this has never happened, and even in the current application the intention is not to do anything to repair the hall until 10 years on.

Why did English Heritage refuse to meet residents who know more about the history, like Rev. Rutter and the Beacon Action Group? I had to deal with the extraordinary situation of an English Heritage officer refusing to meet me unless Walsall council was present—refusing to meet an MP on the site, refusing to listen to residents, and propping up a building which by its own admission has no historic value at all, and allowing its name to be used to endorse the application.

As for the council, it either knows the guidance or it does not. It has outlined no special circumstances, so why is it leading the applicants on? It seems to want to silence the residents, too. The residents have put up posters, some along a grass verge. The council sent a truck along to remove the posters, even though the grass verge was not on Walsall land but on Sandwell land. It is trying to silence the residents. The applicants’ schedule of works states that the hall will not be restored for another 10 years. Moreover, this is not about housing. The council said in 2011, in response to the draft NPPF, that

“there is plenty of capacity for house building not just for the next 5 years but until 2026”.

The green belt is not secure. According to the Minister’s own figures in a written answer to me, of the 419 applications for development that have been referred to the casework unit, 10 have been called in and all the others were allowed. Of the 10, seven are under consideration, one was withdrawn and two were approved. With those odds, my constituents and those of other Members do not stand a chance of protecting the green belt. They do not stand a chance in the face of bullying, threats and intimidation by those who have financial means and who do not want to apply the guidance.

Will the Minister tell me why local authorities are engaging with developers when the guidance is clear? Why are they engaging with developers and not listening to residents’ concerns? Why did the council not consult all stakeholders, including the Merrions Wood trust and the residents of Merrions close, of Birmingham road, for which there are traffic implications, and of Skip lane and other roads? The council is rushing out notices each time it is told that people have not been consulted. Who is it working for? Why is it allowing supporters of the development to say that the authority making the decision has endorsed the proposal as though the decision has already been made?

I ask the Minister to issue further guidance immediately to all local authorities about the green belt, to make them aware of his written statement and to confirm that brownfield sites should be used first in all circumstances. The green belt is under further threat from the general permitted development order coming into force on 6 April, which will allow agricultural buildings to be turned into residential use. Sadly, the statistics and the evidence do not hold up. Will the Minister please reassure me that the green belt is safe?

Back in Walsall South, walking down Chapel lane towards St Margaret’s church, there is a beautiful silence. We know we are in the countryside there, and the church provides a setting for contemplation and serenity. That will all be lost as a result of a few people making life intolerable for the many, and for the generations to come.

21:47

[Mr Tom Watson (West Bromwich East) (Lab)]

I thank my hon. Friend the Member for Walsall South (Valerie Vaz) and the Minister for allowing me to make this brief contribution to the debate.

Mr Speaker, this discussion takes me back to a contribution that you made as a Back Bencher some years ago. There was a debate on how low-flying military helicopters were affecting horse riders, and you sagely warned the Minister that you were not going to go away. My hon. Friend’s contribution tonight has made it very clear to those developers that she is not going to go away either, and I will be standing right behind her. I am deeply impressed with the commitment she has shown to her constituents and mine in raising this important matter, which I hope the Minister will take seriously.

Hundreds of residents in West Bromwich East and Walsall South are opposing this application through the Beacon Action Group, led by the doughty campaigner Bob Winkle. The proposed development is contrary to all Government guidelines on the use of the green belt, including the national planning policy framework, and to local plans in the metropolitan boroughs of Sandwell and Walsall. Walsall council has already identified its housing needs for about the next decade and does not require the use of this prime green belt land. Sandwell council says that if the application as it stands is passed, it could set a dangerous precedent for development on green belt land, not just locally but nationally.

What is particularly concerning about this application is the manner in which the developers have failed to consult the community adequately. Indeed, in my view, they have misled them. They told local residents that English Heritage was in favour of the proposals, but that is not the case. They told Great Barr residents that local historian Peter Allen was in favour of the proposals to modify the dilapidated Great Barr hall, yet they did so without telling them that he had been enlisted as a consultant on the project. They also told local residents that it would lead to the restoration of Great Barr hall, but only in 10 years’ time, and in my view they have not adequately explained how they will pay for it. I just say to the Minister that this application has been a textbook example of how developers can alienate a community and propose to destroy the green belt in the name of profit. Local people believe the proposed application should never see the light of day.

21:50

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

It is a pleasure to reply to the debate secured by the hon. Member for Walsall South (Valerie Vaz), and I congratulate her on securing a debate on an issue of such great concern to her and her constituents. I am sure she was delighted when the hon. Member for West Bromwich East (Mr Watson) said that he was standing right behind her—I am not sure everyone is so delighted when he says such a thing, but I know that in this case it is well intentioned, and certainly for her protection and nothing else. The hon. Lady will understand that I cannot talk about any particular application, but I hope I can reassure her about the protection for the green belt in national policy, the further clarification of the protections we have issued in national planning guidance and routes open to her and the hon. Gentleman should they feel that this or any other application merits further inspection and decision making by Ministers.

First, let me deal with the policy on the green belt. The protections for the green belt in the national planning policy framework are simply as strong or stronger than any protection in any policy that preceded it. Nothing about the policy in the framework has in any way diluted the protection of the green belt relative to the previous position. The NPPF makes it clear that changes to green belt boundaries should be made only in exceptional circumstances, and through a local plan process involving a great deal of consultation with local people and robust examination by a planning inspector. As that policy position is so strong, the latest data show that between 2012 and 2013 just 0.02% of the total green belt changed status—became developed having been previously undeveloped. That is a tiny proportion of the 13% of land in England that has designation as green belt. So I can reassure the hon. Lady that the protections for the green belt remain very strong. I also have to say, as she raised this, that some of the claims made in the recent report by the Campaign to Protect Rural England were simply false and based on a spurious reading of very partial evidence.

The hon. Lady is also right to point out that there is a second test in national policy: when is inappropriate development in the green belt nevertheless acceptable? The policy makes it clear that inappropriate development can be permitted only in very special circumstances, and she referred to her belief that in this case those circumstances have not been demonstrated. We have made it clear in a written ministerial statement, which we then reiterated in the planning guidance to which she referred, that it is very unlikely that unmet housing need, of itself, will be sufficient to provide the very special circumstances to justify inappropriate development in the green belt. That is why in recent times we have called in for ministerial decision a number of planning applications proposing such development in the green belt, because we were keen to ensure that this very important area of national policy was being abided by and adhered to in decisions about green belt development.

That leads me on to the route that is open to the hon. Lady and the hon. Gentleman. When an application comes before a local authority, we as a Government prefer that decisions on it are taken locally, by the local authority. However, there are some applications that raise particular issues that have a greater relevance than simply their local impact. It is possible, in rare cases, to ask for an application to be called in for ministerial decision. The way that that works is that the planning authority will go through its process of determining the application, but before it can issue the decision—before the decision itself has statutory force—the Department and the Secretary of State will have an opportunity to look at the particular application and consider whether to call it in for ministerial decision. If the Secretary of State concludes that it is an appropriate application to call in for ministerial decision, there will then be an inquiry by a planning inspector, who will make a recommendation on that planning application to the Secretary of State. The Secretary of State or one of the other Ministers in the Department will then make the decision on that planning application.

I cannot prejudge whether the hon. Lady will want to avail herself of that course of action—of writing to the Secretary of State to request any application to be called in—nor can I prejudge what the decision might be likely to be in any particular case if she were to do so. All I can say is that many other Members, on both sides of the House, have taken this route on very particular applications that raise issues that are of more than local significance and that are right at the heart of national policy. While it is rare, there have been several cases relating to inappropriate development in the green belt where the Secretary of State has concluded that it is appropriate to call it in for ministerial decision rather than to allow the local authority to determine it.

I hope that that gives the hon. Lady a perspective and an avenue that she might usefully be able to explore.

Question put and agreed to.

21:57

House adjourned.

Petitions

Monday 31st March 2014 Petitions

Monday 31 March 2014

South Stoke Plateau (Bath and North East Somerset)

Monday 31st March 2014 Petitions

The Humble Petition of the residents of the parish of South Stoke and its neighbouring parishes and wards of Bath and North East Somerset, here represented by South Stoke Parish Council and the South of Bath Alliance,

Sheweth that it is the intention of Bath and North East Somerset District Council’s Amended Core Strategy to develop the land known as the Odd Down/South Stoke Plateau with the building of 300 new homes.

Wherefore your Petitioners pray that your honourable House ask Her Majesty’s Government to recognise the importance of the openness of this land, which forms part of the Setting of the Bath World Heritage Site and of the Wansdyke Scheduled Ancient Monument, and to maintain the current Statutory protections of the Green Belt and Area of Outstanding Natural Beauty designations for all of the South Stoke Plateau and so maintain the site free of development in perpetuity.

And your Petitioners, as in duty bound, will ever pray, &c—[Presented by Jacob Rees-Mogg, Official Report, 10 March 2014; Vol. 577, c. 147.]

[P001330]

Observations from the Secretary of State for Communities and Local Government, received on Friday 28 March 2014:

The Secretary of State for Communities and Local Government has made clear to all local authorities the role and importance of land designations such as Green Belt, Area of Outstanding Natural Beauty, World Heritage Site, and Scheduled Ancient Monument. The Government’s objectives for these areas are set out clearly in the National Planning Policy Framework, and all relevant policies in the Framework are a material consideration for a local authority which is working on its Local Plan or determining a planning application.

We have maintained strong protections for the Green Belt. The Framework makes it clear, for instance, that openness and permanence are essential characteristics of a Green Belt. This Government continue to attach great importance to Green Belt as a way to prevent sprawl and encroachment on open countryside, and as a vital “green lung” for many communities. Our abolition of top-down regional strategies removed the threat to Green Belt round many towns and cities.

His quasi-judicial role in the planning system prevents the Secretary of State—and other Ministers—intervening during the process of Plan-making. Draft Plans have to be submitted for formal examination by an independent planning inspector appointed by the Secretary of State, and a strict duty of impartiality is in place. Moreover, whatever Plan is adopted, it is possible that a development proposal affecting this area might come within the Secretary of State’s jurisdiction, so it would be inappropriate to comment on the issues raised in the petition.

The petitioners should also be aware that Green Belts are designated by local authorities, not law or central Government. Alterations to a Green Belt boundary can be made, but only in exceptional circumstances, using the Local Plan process. If any conflict of policy or planning priorities arises, it is for the local authority to weigh all the material considerations and decide what is right for the land in question. The petitioners should continue to ensure that their local authority is mindful of their hopes and concerns.

The Right of Anton Kainga to Remain in the UK

Monday 31st March 2014 Petitions

The Petition of residents of the UK,

Declares that the Petitioners believe that Anton Kainga, a tennis coach in Nottingham and an internationally qualified tennis professional from Malawi, who has exceptional talent and love for the sport of tennis, is unfairly being removed from the UK; further that the Petitioners believe that some members of the tennis club will suffer and will not be able to pursue their chosen career of becoming professional tennis players as a result of this decision; further that the Petitioners believe that during the 11 years he has lived in Great Britain Anton Kainga has inspired children and adults to love and play tennis; further that the Petitioners believe that Anton Kainga has inspired children, with one member of the tennis club being home-schooled so that he can commit to the game and play the qualification round of $10,000 tournaments and Anton Kainga needs to be at this child’s side for him to reach his full potential; further that the Petitioners believe that Anton Kainga is a mentor, best friend, second dad and invaluable coach to this child who understands not only this child’s tennis but his medical condition and further that the Petitioners believe that only Anton Kainga can guide this child towards his dream of a career as a professional tennis player.

The Petitioners therefore request that the House of Commons urges the Home Office to reconsider their decision to deport Anton Kainga and grant him the right to remain in the UK.

And the Petitioners remain, etc.—[Presented on 4 March 2014; Official Report, Vol. 576, c. 9P.]

[P001327]

Observations from the Secretary of State for the Home Department:

Mr. Kainga voluntarily departed the UK on 6 March 2014. He did this whilst detained as an immigration offender, pending his enforced removal.

All and any outstanding representations made by Mr. Kainga and his legal representatives were responded to and substantively concluded prior to his departure. These included the matter of Mr. Kainga’s tennis tutorage, which was raised by a Member of the House and responded to by the Immigration and Security Minister on 6 March 2014.

The Government recognised that although Mr. Kainga had made a contribution with his tennis coaching, he had also exhausted all appeal rights within the United Kingdom and had no lawful basis to remain in the UK under the Immigration Rules, or on a discretionary basis outside of those rules.

The Government decided that his removal was appropriate, legitimate and conducive to the public good for the purposes of effective immigration control, and they maintain that decision.

Written Statements

Monday 31st March 2014 Written Statements

Monday 31 March 2014

Companies House

Monday 31st March 2014 Written Statements

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

I have set Companies House the following targets for the year 2014-15.

Architects Registration Board

Monday 31st March 2014 Written Statements

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

I am today announcing the start of the periodic review of the Architects Registration Board. Periodic reviews are part of the Government’s commitment to ensuring that all arm’s length bodies continue to have regular challenge on their remit and governance arrangements.

The review will examine whether there is a continuing need for the board’s functions architect registration under the Architects Act 1997). Should the review conclude there is a continuing need for the board’s functions it will go on to assess the most effective and value-for-money means of delivery and the appropriate control and governance arrangements needed to meet the recognised principles of good corporate governance. I will inform both Houses of the outcome of the review when it is completed.

A copy of the terms of reference for this review has been placed in the Library of the House.

Nuclear Safety Committee/Nuclear Research Advisory Council

Monday 31st March 2014 Written Statements

[The Secretary of State for Defence (Mr Philip Hammond)]

I am today announcing the start of the triennial reviews of the Defence Nuclear Safety Committee (DNSC) and the Nuclear Research Advisory Council (NRAC). Triennial reviews are part of the Government’s commitment to ensuring that non-departmental public bodies continue to have regular independent challenge.

The DNSC’s remit includes all safety aspects relating to the naval nuclear propulsion plant and nuclear weapon systems, including related issues of design, development, manufacture, storage, in-service support, handling, transport, operational training, support facilities and capabilities, and the safety of workers and the public.

The NRAC is responsible for reviewing the atomic weapons establishment (AWE) nuclear warhead research and capability maintenance programme, including the requirement for above ground experiments and other facilities and techniques necessary to develop and maintain a UK nuclear weapon capability in the absence of underground testing; NRAC also examines AWE’s programme of international collaboration.

The reviews will examine whether there is a continuing need for DNSC and NRAC’s function, their form and whether they should continue to exist at arm’s length from Government. Should the reviews conclude there is a continuing need for the bodies, they will go on to examine whether the bodies, control and governance arrangements continue to meet the recognised principles of good corporate governance.

I will inform both Houses of the outcome of the reviews when they are completed.

Defence Support Group

Monday 31st March 2014 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)]

The strategic defence and security review 2010 set out this Government’s commitment to selling the Defence Support Group (DSG), currently a trading fund of the Ministry of Defence (MOD). This decision took account of the front line’s enduring requirement for DSG’s services, and concluded that, in principle, it was no longer necessary for Government to own and operate these capabilities. Contractor support to maintain equipment, including major platforms, has been recognised practice in the air and maritime domains for many years, so continued support to the land domain by DSG under new ownership is entirely analogous. There is significant potential for the land-focused elements of DSG in the private sector. We intend to structure the sale in such a way as to preserve continuing assured access to the services provided by DSG through a contract for service provision.

Over recent months, the MOD has conducted a pre-qualification process with industry and developed the prospectus on which DSG will be taken to market. As part of these preparations, including market testing and internal assessment, I have decided that the electronics and components business unit (ECBU) of DSG, and its sites at Sealand and Stafford, will be excluded from the sale and retained in the MOD. I have now taken the decision to launch the sale of the land-focused business of DSG.

An invitation to negotiate has now been issued to nine potential single bidders and consortia who passed the pre-qualification stage. The nine parties represent a very strong and credible field of interested parties, demonstrating the high degree of market interest from the private sector and confidence in the DSG sale.

The DSG work force and trade unions are being informed in parallel. The final sale decision will be taken later in the year after final bids have been received and evaluated.

Sustaining the capabilities provided by DSG remains of critical importance to the Ministry of Defence and the British Army. Selling the land business of DSG will be the best way to enable transformation into the long-term partner for the delivery of heavy vehicle repair services to the Army that we now require.

Radioactive Waste (Thermal Analysis Review)

Monday 31st March 2014 Written Statements

[The Secretary of State for Energy and Climate Change (Mr Edward Davey)]

In November 2013, the Nuclear Decommissioning Authority’s radioactive waste management directorate (RWMD) informed my Department of a modelling error in their assessments of the on-site cooling time required for spent fuel from new nuclear reactors before it could be placed in an off-site geological disposal facility (GDF).

RWMD subsequently corrected the error and published revisions of two disposability assessments and a feasibility study that included data from the model. These can be found at: http://www.nda.gov.uk/rwmd/producers/latest.cfm and I have placed copies of these reports in the Libraries.

There is no impact on safety at any existing site, as the corrections only increase the estimated length of time for which spent fuel from any new reactors would need to be kept in interim storage.

All other aspects of the corrected reports remain unchanged and RWMD has confirmed that the error does not affect future planning for a GDF.

My Department has thoroughly assessed RWMD’s corrected figures in relation to a number of previous decisions and policy areas, some of which were debated by Parliament. We have concluded that the corrected figures have no substantive impact on policy or previous decisions, including the Hinkley Point C deal.

I set out below our consideration and findings.

Regulatory Justification of the EPR and AP1000 reactor designs.

My predecessor published decisions in October 2010 that the EPR and AP 1000 nuclear reactor designs were justified in accordance with the justification of practices involving ionising radiation regulations 2004 (“the justification regulations”). These decisions took the form of Statutory Instruments which were approved by both Houses of Parliament in November 2010.

Justification decisions involve assessing the benefits of proposed new radioactive practices against their potential detriment to health. The published decisions took account of RWMD’s modelling of interim storage times.

The justification regulations make provision for the circumstances in which a review may be undertaken. My assessment is that the revised modelling does not create any new health detriments that were not considered during the justification process and does not raise any new issues about the ability to manage interim storage that may impact on the benefits of the EPR or AP 1000 reactors.

I have therefore concluded that the revised modelling does not meet the “new and important” criteria needed to consider reviewing the justification decisions and that I do not need to review my predecessor’s decisions.

Nuclear National Policy Statement and Hinkley Point Development Consent

The nuclear national policy statement sets the framework for development consent decisions under the Planning Act 2008. It was approved by Parliament and designated in July 2011. It included a statement on waste disposal, based on RWMD’s assessments, which made clear that interim storage would be needed on a range of time scales, during which facilities would continue to be effectively regulated.

The material in the NPS was referred to by the planning inspectorate in its advice to me on the application for development consent for the new nuclear power station at Hinkley Point and referred to by me in my decision.

There are no reasons to believe that the regulatory regime could not effectively regulate the increase in interim storage times under RWMD’s revised assessments and I have therefore concluded that there are no grounds for a review of the nuclear NPS or any of the decisions taken with reference to it.

Funded Decommissioning Programmes (FDP) and Waste Transfer Contracts

No decisions have yet been taken on whether or not to approve the funded decommissioning programme for Hinkley Point C. Further to the publication of the corrected reports, the developer has been asked to update their respective FDP submission for the site and this information will be taken into account in any decision.

Euratom Article 37

General data were provided to the Commission in relation to the planned spent fuel storage facilities at Hinkley Point C. This data focused on the overall plans for storage, rather than the storage period, and already takes into account a margin of error that includes the corrected figures.

We have drawn the attention of the European Commission to the re-published reports, as they provide an opinion on article 37 applications, but do not believe that any further action is necessary.

Generic Design Assessment (GDA) and Site licensing and permitting

The original disposability reports written by RWMD were used as evidence in the GDA process and cited in the regulators’ technical findings.

Further to the corrected disposability reports being published, the regulators are working with EDF (the recipient of the GDA design acceptances for the EPR design) to assess if there are any impacts to their GDA decision and findings.

Should any changes be required these will be addressed as part of the wider, ongoing site licensing and permitting process. Similarly any impact to the findings for the AP1000 design would be addressed in any subsequent assessment or site licensing and permitting process.

Nuclear Liabilities Financing Assurance Board

Monday 31st March 2014 Written Statements

[The Minister of State, Department of Energy and Climate Change (Michael Fallon)]

On 10 October 2013, I announced through a written ministerial statement—Official Report, column 31WS—the commencement of the triennial review of the Nuclear Liabilities Financing Assurance Board (NLFAB). I am now pleased to announce the completion of the review.

NLFAB plays an important role providing independent and expert advice to Ministers on the financing arrangements in the funded decommissioning programme (FDP). Under the Energy Act 2008 the operator must submit the FDP to the Secretary of State. Nuclear related construction can only take place once the FDP has been approved by the Secretary of State.

The review concludes that the functions performed by NLFAB are still required and that it should be retained as an advisory non-departmental public body (NDPB). The review also looked at the governance arrangements for the body in line with guidance on good corporate governance set out by the Cabinet Office. The report makes some recommendations in this respect; these will start to be implemented shortly.

The full report of the NLFAB review of can be found on the gov.uk website: http://www.gov.uk/government/publications/triennial-review-report-nuclear-liabilities-financing-assurance-board-nlfab and copies have been placed in the Libraries of both Houses.

Common Fisheries Policy

Monday 31st March 2014 Written Statements

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)]

The UK Government are today launching a package of public consultations concerning the implementation of reforms to the common fisheries policy (CFP).

As part of the reform of the CFP, a new basic regulation and common market organisation of fishery and aquaculture products (CMO) entered into force on 1 January 2014. The new European maritime and fisheries fund (EMFF), which will support our fishing industry under these reforms, is due to be adopted shortly. The package of consultations being launched today covers aspects from all three of these areas.

Securing fundamental reform of the CFP was crucial, but successfully implementing these reforms is of equal importance to ensure that we can safeguard our marine environment and all those who rely on it.

One the most important achievements of the CFP reform negotiations is the phased introduction of a landing obligation, also known as a discard ban. The landing obligation will put an end to the wasteful practice of discarding, preventing fish being thrown back into the sea after being caught unless under very specific exemptions. This will start in 2015 for pelagic fisheries, and be rolled out to other fisheries from 2016.

The consultations launched today set out the Government’s proposed approach to implementing the pelagic landing obligation in England. Some of the main issues that we are gathering views on include how we will ensure our stocks are managed sustainably, how we monitor compliance and how we manage available quota to match it to the catch that would previously have been discarded.

At the same time we are seeking views on how we can best use the EMFF to support implementation of the reformed common fisheries policy. We are also consulting on a new national aquaculture strategy and how we implement changes to the fish labelling legislation in England and introduce new legislation on marketing standards in England and Wales for fishery and aquaculture products.

The CFP reform has attracted interest and passion from many different groups. A key element to making these reforms work in practice will be continuing to work closely with all those affected. This is why my Department will continue to work closely with the fishing industry and other interested groups as we develop our policy to implement these reforms.

UN Commission of Inquiry (Democratic People's Republic of Korea)

Monday 31st March 2014 Written Statements

[The Minister of State, Foreign and Commonwealth Office (Mr Hugo Swire)]

On 28 March the UN Human Rights Council (UNHRC) passed a resolution on the situation of human rights in the Democratic People’s Republic of Korea (DPRK). I would like to update the House on this resolution and the role the UK has played in its passing.

Unlike in recent years, the resolution was not adopted by consensus. In part this reflects the current composition of the Human Rights Council, which is less supportive of country specific resolutions. But it also reflects the fact that this year’s resolution was much stronger, following the horrific findings of the Commission of Inquiry (COI) into human rights violations in the DPRK and the comprehensive recommendations set out in the inquiry’s report. I am pleased to report that the final text of the resolution supports the report and makes clear the need for violators of human rights and perpetrators of crimes against humanity to be held to account. This includes a specific request that the UN Security Council consider referral of the situation in the DPRK to the appropriate international criminal justice mechanism.

The resolution also proposes concrete measures to ensure the work of the COI is continued. The mandate of the special rapporteur is extended and the Office of the High Commissioner for Human Rights (OHCHR) is requested to provide the rapporteur with increased support, including through a new structure to strengthen monitoring and documentation of the situation of human rights in the DPRK, as well as through engagement and capacity building of others working to address this issue. These measures will ensure that whenever and however the DPRK regime is brought to account, the material will be there to build a strong case against those responsible for violations.

The UK played an active role in negotiations on the resolution, working with EU partners and Japan to ensure a strong first draft, with clear language on accountability. Officials lobbied hard to ensure the resolution would pass, as did I both during my own visit to Geneva at the beginning of the Council and subsequently.

The reports of human rights violations in the DPRK that are documented by the COI are systematic and deeply disturbing. It is incumbent on the international community to respond. This resolution is a good start.

On 31 March 2014, during a pre-planned and pre-advised live-fire exercise, a small number of DPRK artillery shells landed in waters south of the Northern Limit Line (NLL) in the Yellow sea. The South Korean military responded with its own artillery fire into waters on the northern side of the NLL. There were no reported casualties. We would urge both sides to exercise restraint and not to retaliate further. We do not believe this incident is connected to the COI.

UN Human Rights Council (Sri Lanka)

Monday 31st March 2014 Written Statements

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

Further to my written ministerial statement of 18 March 2014, Official Report, column 40WS, the UN Human Rights Council (UNHRC) passed a resolution on Sri Lanka on 27 March. This resolution calls for an international investigation into allegations of violations and abuses of international law on both sides during the civil war, and for progress on reconciliation, human rights and a political settlement. The British Government are pleased with this outcome and strongly believe that it was the right decision.

My right hon. Friend the Prime Minister committed the UK to calling for an international investigation following his visit to Sri Lanka last year where he witnessed the situation on the ground first hand. The UK was an important co-sponsor of the resolution, alongside the US, Montenegro, Macedonia and Mauritius.

The passing of this resolution sends an important and strong message to the Sri Lankan Government—that they must address the grievances of the recent past in order to help secure lasting peace and reconciliation, and a prosperous future for all the people of Sri Lanka. The resolution represents a significant step forward in ensuring the truth is established for the Sri Lankan people.

By voting in favour of this resolution, the international community has shown that it has listened to the many independent voices, including the High Commissioner for Human Rights herself and domestic support in Sri Lanka, calling for an international investigation and helped the UNHRC to establish a strong and unambiguous resolution. The United Kingdom will continue to work with the UNHRC and our international partners to ensure proper implementation of this resolution. We encourage the Sri Lankan Government fully to co-operate with the resolution, and to work alongside the international community for the benefit of its people.

It is important also to recognise that Sri Lanka is an extraordinary country with enormous potential and the end of the conflict presents an opportunity for it to become a strong and prosperous nation. This resolution will help to address the legitimate concerns of all communities. It presents an opportunity to tackle the root causes of conflict, continued human rights concerns and set Sri Lanka on the right path for reconciliation. We hope that the Sri Lankan Government will embrace that opportunity.

Alcohol Licensing

Monday 31st March 2014 Written Statements

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

The Government have consulted on whether to relax licensing hours nationally for England matches with late kick-off times during the FIFA World cup in June and July 2014. Following this, the Government have decided to relax licensing hours nationally to mark England’s participation in the tournament.

The relaxation of licensing hours will relate to the sale of alcohol for consumption on the premises and the provision of late night refreshment in licensed premises in England, at specified dates and times only.

Today I am publishing the Government response to the consultation.

A copy of the Government response to the consultation will be placed in the House Library. It is also available at: www.gov.uk/government/consultations/world-cup-licensing-hours.

European Police College (Relocation)

Monday 31st March 2014 Written Statements

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

The Government have decided to opt in to the member state initiative for a regulation of the European Parliament and of the Council to relocate the European Police College (CEPOL) from Bramshill (UK) to Budapest (Hungary) (European Union Document Nos. 2013/0812 (COD), ENFOPOL 395 CODEC 2773 PARLNAT 307).

The current CEPOL Council decision states that the headquarters of CEPOL shall be in Bramshill. The draft regulation replaces the part of the CEPOL Council decision that specifies Bramshill, with a statement that the seat shall be in Budapest. The Bramshill site is owned by the Home Office, and is also currently used by the College of Policing. The site costs the Home Office £5 million per annum to run, and is not economically viable. The Home Secretary therefore decided in December 2012 that Bramshill should be sold. It was placed on the market in the summer with a listing price of £20 million to £25 million, and we are on schedule to complete the sale by March 2015. The sale of Bramshill means that we will be unable to continue housing CEPOL there.

The publication of the draft regulation is an important step towards ensuring that CEPOL vacates the Bramshill site in good time for any sale. Buyers would expect vacant possession, so in the context of securing the sale it is very much in UK interests to support the proposal. CEPOL have been guaranteed occupation of the site until September 2014, as the new site in Budapest will not be ready to house CEPOL until the end of August 2014.

We are keen to co-operate fully in the process of moving CEPOL from Bramshill to its new location. To give CEPOL staff some much needed assurance this process needs to be completed quickly. The regulation has been helpfully progressed in the EU to accommodate our objectives in moving CEPOL from Bramshill.

Annual Assessment of Policing (England and Wales)

Monday 31st March 2014 Written Statements

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

Her Majesty’s Chief Inspector of Constabulary has today laid before Parliament his annual assessment of policing in England and Wales in accordance with section 54 of the Police Act 1996. Copies are available at: www.hmic.gov.uk and in the Vote Office.

Court and Tribunal Reform

Monday 31st March 2014 Written Statements

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

My noble Friend the Ministry of Justice, Lord Faulks QC, has made the following written ministerial statement:

In a written ministerial statement made by my right hon. Friend the Lord Chancellor and Secretary of State for Justice on 26 March 2013, Official Report, column 94WS, he set out his intentions for officials to begin exploring proposals for the reform of the resourcing and administration of the courts and tribunals service.

This work has now concluded and today the Lord Chief Justice, the Senior President of Tribunals and the Lord Chancellor and Secretary of State for Justice will announce a programme of reform to deliver—through the use of modem technology, an improved estate and modernisation of current working practices—a more effective, efficient and high performing courts and tribunals administration that will improve the services provided to the public at a significantly lower cost.

This reform will be led and implemented by the board of HM Courts and Tribunals Service, an agency accountable to the Lord Chancellor, the Lord Chief Justice and the Senior President of Tribunals.

A copy of the announcement the Lord Chief Justice, the Senior President of Tribunals and the Lord Chancellor and Secretary of State for Justice will make will be placed in the Libraries of both Houses.

Individual Electoral Registration

Monday 31st March 2014 Written Statements

[Mr Gary Streeter (South West Devon)]

The Electoral Commission has today published an update on its assessment of overall progress in preparing for the transition to individual electoral registration (IER), which is due to commence in June 2014. This follows on from its assessment published in October 2013. The report also includes its assessment of electoral registration officers’ (EROs) performance in 2013, including its assessment of how well EROs are performing against the first of two new standards that have been specifically designed to support them in preparing for and delivering the transition to IER from June 2014.

The Commission’s report makes it clear that since its last assessment of IER readiness, significant progress has been made. While more work remains to be done to ensure the required IT system and contingency arrangements are in place ahead of the start of the transition in June 2014, other areas of concern—such as the allocation of funding to EROs—have now been resolved. In addition, the Cabinet Office has detailed delivery plans in place for the final testing of the IT systems and has good relationships and agreements in place with their key delivery partners. It will be important for all those involved in preparing the IT systems for use to support the Cabinet Office fully in this final phase.

Progress has also been made in developing contingency arrangements but full information on contingency planning and the technical support available to EROs during the transition has not yet been shared with EROs. The Cabinet Office should finalise the detail of this work and communicate it to EROs and their staff as soon as possible. In the case of both the IT system and contingency arrangements, the Commission will continue to monitor progress closely.

The Commission’s report also sets out the conclusions of its assessment of all EROs’ public engagement strategies and found that they all have the right plans in place to identify the challenges for their particular local area and what mechanisms they will use to engage with residents to maximise registration.

Assessing ERO’s 2013 performance at the 2013 canvass against the existing household registration standards, the Electoral Commission found the vast majority met all their standards. However, five in England did not meet the house-to-house enquiry standard in 2013, down from 30 that did not meet the same standard in 2012. House-to house canvassing is a crucial element in ensuring the registers are as complete and accurate as possible during the transition to IER and the Commission is therefore working with those EROs to ensure they have plans in place for household canvassing as part of the move to IER.

The Commission will continue to monitor and support EROs during the transition to IER, ensuring that they deliver the activities set out in their plans and engagement strategies, to ensure that the potential of IER to deliver more accessible, more trusted and more secure voting registers is realised.

These activities have been designed to ensure that the Commission is able to answer important questions at crucial points during the transition process, including informing the ministerial decision, which will need to be taken very soon after the UK general election in May 2015, on whether to bring the end point for IER transition forward from the current date in December 2016 to December 2015.

The Commission’s report has been placed in the Library and is available on its website here: http://www. electoralcommission.org.uk/.

Grand Committee

Monday 31st March 2014 Grand Committee

Monday, 31 March 2014.

Arrangement of Business

Monday 31st March 2014 Grand Committee

Announcement

15:30

[The Deputy Chairman of Committees (Lord Colwyn) (Con)]

My Lords, welcome to the Grand Committee. If there is a Division in the House, the Committee will adjourn for 10 minutes.

European Parliamentary Elections (Amendment) Regulations 2014

Monday 31st March 2014 Grand Committee

Motion to Consider

15:30

Moved by

[Lord Wallace of Saltaire]

That the Grand Committee do consider the European Parliamentary Elections (Amendment) Regulations 2014.

Relevant document: 22nd Report from the Joint Committee on Statutory Instruments.

[Lord Wallace of Saltaire (LD)]

My Lords, the first five instruments before us today are for debate together. The two sets of referendums regulations and the police and crime commissioner elections order update respectively the rules for the conduct and administration of local authority council tax referendums, referendums concerning a local authority’s governance arrangements in England, and elections of police and crime commissioners in England and Wales. In the main, they do so by applying or copying provisions in the Electoral Registration and Administration Act 2013 and associated secondary legislation, which made a number of changes to the rules for UK parliamentary elections. Noble Lords will be familiar—possibly by now very familiar—with many of these measures, which we have considered in earlier debates on instruments which apply the measures for the conduct of other elections and referendums.

The combination of polls regulations make a small number of changes to the conduct rules and forms used by voters that apply when the poll at a parliamentary election is combined with a poll at another election or referendum. The European parliamentary elections regulations clarify certain issues, mainly arising from the changes made for the conduct of European parliamentary elections by amending regulations made in 2013.

In the main, the changes introduced by all five instruments are intended to come into effect for polls held on or after 22 May 2014, which is the date of the European parliamentary elections and scheduled local elections in parts of England. The changes are designed to improve the accessibility and security of the voting process, and implement a number of recommendations which have been made by, among others, the Electoral Commission and the Association of Electoral Administrators.

The two sets of regulations concerning local authority council tax and governance referendums contain an additional provision on calculating the campaign expenditure limit for campaigners at these referendums. We intend that this should come into force on the day after the two instruments are made. I will set out this change in more detail shortly.

The instruments are part of a comprehensive package of statutory instruments which make various changes to the rules for conducting elections and referendums in the UK. The Government have consulted on the changes with the Electoral Commission and with others such as the Association of Electoral Administrators.

I turn to the provisions in the two sets of regulations concerning local authority council tax and governance referendums, and the PCC elections order. The two sets of referendums regulations change the basis on which the campaign expenditure limit is calculated for local authority council tax and governance referendums. It is currently calculated by reference to the number of electors on the register published after the annual canvass in the year preceding the referendum. However, under the transition to individual electoral registration, a post-canvass register was not produced in 2013. We are therefore providing that in future the limit will be calculated by reference to the register as it exists at the beginning of the referendum period. This period begins at least 28 working days before a council tax referendum, and at least 56 working days before a local authority governance referendum.

All three instruments, including the PCC elections order, update the forms used by voters, such as poll cards and postal voting statements, which are intended to make the voting process more accessible. The instruments also provide for police community support officers to enter polling stations and counting venues under the same conditions as police constables. This will allow police forces additional flexibility in deploying their resources on polling day, and allow them to provide greater visible reassurance to the public. The instruments provide that voters waiting in the queue at the close of poll at 10 pm on polling day, for the purpose of voting, may be issued with ballot papers to enable them to vote or may return postal voting statements or postal ballot papers despite the close of poll.

Members of the Committee may wish to note that relevant revisions in the Representation of the People (England and Wales) Regulations 2001 apply to the local authority council tax and governance referendums instruments, so amendments recently made to those regulations will apply also to these referendums, without the need for further changes to the referendums instruments. Further, the provisions have been copied into the Police and Crime Commissioner Elections (Amendment) Order so that they will apply to those polls. These recent amendments include a requirement for 100% of postal vote indicators to be checked rather than the current minimum of 20%; extension of emergency proxy provisions to those absent on grounds of business or military service; and removal of the restriction on postal votes being dispatched earlier than the 11th working day before the day of the poll.

The Police and Crime Commissioner Elections (Amendment) Order also makes changes to the timing of certain proceedings at PCC elections which will ensure greater consistency with the position at other elections and will facilitate the earlier dispatch of postal votes. In particular, the deadline for candidates to withdraw their nomination is moved from noon on the 16th working day before the poll to 4 pm on the 19th working day before the poll. This will allow postal ballot papers to be printed and therefore issued earlier than at previous elections.

I now turn to the combination of polls regulations. These regulations make a small number of changes to the conduct rules and forms used by voters that apply when the poll at a parliamentary election is combined with a poll at another election or referendum. This includes updating the notice that must be displayed in polling station compartments by making the information clearer for voters. For example, it advises voters to put a cross in the box next to their choice on the ballot paper. The instrument also updates the guidance for voters which is displayed in polling stations when a poll at a parliamentary election is combined with a poll at another election or referendum. The updated guidance gives clearer instructions to voters, including the use of images, to help voters cast their votes.

I turn now to the fifth and final instrument, the European Parliament elections regulations. They, too, make a small number of changes at European parliamentary elections. In particular, they amend the provisions that were inserted by the amending regulations made in 2013 to enable voters waiting in the queue at the close of poll to be issued with a ballot paper and cast their vote at a European parliamentary election. These provisions also enable persons queuing at the polling station at the close of poll in order to return a postal ballot paper or, if they had forgotten to put it in the covering envelope, a postal voting statement to return it.

The instrument before us today ensures that these provisions allowing the return of postal ballot papers apply when a European Parliament election is combined with another poll in England, Wales and Scotland. They also make improvements to the wording on the polling station compartment notice when a European parliamentary election is combined with another poll in England and Wales. The changes reflect the different voting instructions that it may be necessary to display if a European Parliament election is combined with a PCC election or a local referendum because these will, of course, have different voting systems.

In conclusion, these instruments make sensible and relevant changes to the conduct and administration of the polls that they cover in line with those that have been made for UK Parliamentary elections and other polls. They are designed to increase voter participation, further improve the integrity of our electoral system and ensure that the processes underpinning our elections are both more robust and more relevant to the needs of voters. I commend these instruments to the Committee.

[Lord Kennedy of Southwark (Lab)]

My Lords, I have only a few points to make in this short debate. Generally we support the regulations and the order and have no issues whatever with them. I have a couple of general points to make and one or two questions, but, generally speaking, we are fine with these. I will go through point by point. In terms of consultation, I think the noble Lord mentioned a couple of times consultation with the commission and with the Association of Electoral Administrators and such. Can he tell us about what consultations actually go on with the parties? I do not think much goes on. Maybe it is done through the Electoral Commission now, but I do think there should be more direct contact with the parties than there has been. I know that we have the panel meeting after the Electoral Commission’s political parties panel but I do not know whether there is more than that. There would be a surprising amount of unanimity from the parties on these things, as they have a lot of expertise that the Government could learn from. I know that the Government have some contact, but they could do more on that.

I saw in the note about the regulations on referendums that it refers to the issue about queuing at polling stations. Again, I welcome the fact that people will be issued with a ballot paper if they get there by 10 pm. My only slight worry is that while that all sounds well and good, how will it actually be controlled when it happens? We may not have this situation in the local elections happening next month, and perhaps not in the European elections, but at general election time we certainly need to think about how we will look after that. Yes, someone could arrive at 10 pm, but how is that to be controlled? It is quite hard to control and police it, and so on. The Government can make these regulations, but unless they are very specific about how things actually happen, they will just create another set of problems that cannot be overcome in a draughty church hall somewhere at 9.55 pm. If not now, the Government need to look at that sort of thing and be very specific. Presiding officers certainly need to know exactly how to handle these things; there is an issue there.

The point about police community support officers having the right to enter polling stations is, again, a sensible and welcome move. It certainly lifts a burden from police officers and ensures that there can be a uniformed presence in and around polling stations, which is very welcome. I saw that there is an extension of the proxy emergency provisions on the grounds of doing business or service. I am assuming that they are being extended in the same way as for every other category that can have an extension.

Those are probably the only points that I have. As I said, I do not have a huge issue with anything here; the instruments all seem very sensible. I will make one observation. While we will agree these regulations today, and they will go to the House next week, it is all terribly complicated and I look forward very much to the Law Commission coming forward with its recommendations so that we can get something much more streamlined. This should be a relatively simple process, but we have to have instruments for referendums, police and crime commissioner elections and local authority elections when it is really all the same stuff. The sooner we get this all looked at and repackaged, and put together much more sensibly, the better it will be for everyone concerned.

[Lord Wallace of Saltaire]

I share the noble Lord’s feeling on streamlining. There are of course some problems in that, as we have devolved authority to the devolved Assemblies, and as we have introduced a number of different electoral systems—I think there are three or four electoral systems operating now within Scotland, for example—some of this stuff becomes more complicated. We are, as the noble Lord knows, balancing between doing everything we can to make it easier for people to vote and encouraging that, and guarding against fraud. That also requires a delicate balance. However, I agree with him: I hope that it will be possible at some point to simplify the extremely complicated legislation that we now have for these different sets of elections and referendums. Referendums are, after all, still a relatively new dimension of British democracy and perhaps the next Government will take that on, with the assistance of the Law Commission.

On the particular questions that the noble Lord asked, there is no formal process for consultation with the political parties, but I understand that a number of informal conversations are had with them. I will check on that and I promise to write to the noble Lord if there is anything useful that I can say on it, because I take his point about the political parties. Miraculously, I discover that I now have an answer. We meet the Electoral Commission’s political parties panel quarterly and raise the question of new SIs being made. I expect that the noble Lord will be familiar with who attends the political parties electoral panel from the Labour Party. It may indeed have been him—yes, I see that it was.

On the closing of polls, let me say in passing that this was a very small issue last time. It happened in a total of 27 polling stations in 10 constituencies at the 2010 election, with just over 1,200 people being affected. We do not know whether this will turn out to have been a one-off or whether it will become a wider phenomenon in future. We took this decision because we had come up with this problem in 2010, and we expect that the Electoral Commission will provide additional guidance on how we manage this in the future. The noble Lord is entirely right, of course, to say that a situation in which a large number of people attempted to storm a polling station at 10 pm would be very difficult for anyone to handle. We have to hope that that sort of event will not happen. Guidance will certainly be offered to returning officers on the close-of-poll provisions and the Electoral Commission will assist with that. I hope that I have now covered most of the noble Lord’s questions. I am glad that these regulations have received a general welcome and commend them to the Committee.

Motion agreed.

Local Authorities (Conduct of Referendums) (Council Tax Increases) (England) (Amendment No. 2) Regulations 2014

Monday 31st March 2014 Grand Committee

Motion to Consider

15:45

Moved by

[Lord Wallace of Saltaire]

That the Grand Committee do consider the Local Authorities (Conduct of Referendums) (Council Tax Increases) (England) (Amendment No. 2) Regulations 2014.

Relevant document: 22nd Report from the Joint Committee on Statutory Instruments.

Motion agreed.

Local Authorities (Conduct of Referendums) (England) (Amendment) Regulations 2014

Monday 31st March 2014 Grand Committee

Motion to Consider

15:46

Moved by

[Lord Wallace of Saltaire]

That the Grand Committee do consider the Local Authorities (Conduct of Referendums) (England) (Amendment) Regulations 2014.

Relevant document: 23rd Report from the Joint Committee on Statutory Instruments.

Motion agreed.

Police and Crime Commissioner Elections (Amendment) Order 2014

Monday 31st March 2014 Grand Committee

Motion to Consider

15:46

Moved by

[Lord Wallace of Saltaire]

That the Grand Committee do consider the Police and Crime Commissioner Elections (Amendment) Order 2014.

Relevant document: 22nd Report from the Joint Committee on Statutory Instruments.

Motion agreed.

Representation of the People (Combination of Polls) (England and Wales) (Amendment) Regulations 2014

Monday 31st March 2014 Grand Committee

Motion to Consider

15:47

Moved by

[Lord Wallace of Saltaire]

That the Grand Committee do consider the Representation of the People (Combination of Polls) (England and Wales) (Amendment) Regulations 2014.

Relevant document: 22nd Report from the Joint Committee on Statutory Instruments.

Motion agreed.

Anonymous Registration (Northern Ireland) Order 2014

Monday 31st March 2014 Grand Committee

Motion to Consider

15:48

Moved by

[Baroness Randerson]

That the Grand Committee do consider the Anonymous Registration (Northern Ireland) Order 2014.

Relevant document: 22nd Report from the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson) (LD)]

My Lords, the order was laid before the House on 24 February. It is the first in a series of six statutory instruments to establish a scheme of anonymous registration in Northern Ireland. Four of those instruments were published for consultation in September of last year. The changes are being introduced in a series of instruments for technical reasons.

This first order extends provisions made for Great Britain in primary legislation to Northern Ireland, with amendments to reflect some differences in the electoral systems in Northern Ireland. It also makes other changes required to primary legislation for Northern Ireland, predominantly in relation to local elections. Other instruments to follow will include regulations to implement the system of anonymous registration in respect of different elections and to prescribe provisions relating to political donations by anonymous electors.

As noble Lords will know, the full electoral register lists the name and address of everyone who is entitled to vote. This is used mainly for elections and referendums but can be used for other purposes, such as the prevention and detection of crime and eligibility for jury service. It may also be seen on request by any member of the public, under supervision. Anonymous registration ensures that the names and addresses of individuals who are at risk do not appear on the full register. Those at risk may include victims of domestic violence, witnesses in certain criminal cases and other vulnerable people who wish to vote but whose safety could be compromised by the inclusion of their details on the electoral register.

As in Great Britain, individuals will qualify for anonymous registration if the safety of the applicant or of another person in their household would be at risk if the register contained their name or address. I will bring regulations before the House later this year which will detail the evidence required to show that a person is at risk. As in the draft regulations published last September, a person will be able to show that they are at risk either by presenting a court order demonstrating the risk or by obtaining an attestation from a senior professional—for example, someone in the police—stating that they are at risk.

If a person is shown to be at risk, the scheme works by replacing the name and address of vulnerable individuals in the register with a number. A full list of those voters will be held securely by the chief electoral officer for cross-referencing. This prevents their details being available to someone who might try to trace their whereabouts by means of the electoral register.

Anonymous registration was introduced in Great Britain by Section 10 of and Schedule 1 to the Electoral Administration Act 2006. The scheme was not extended to Northern Ireland at the time due to a number of differences in Northern Ireland that needed to be taken into account. These differences included the additional checks on identity used in Northern Ireland to prevent electoral fraud, and the operation of the jury system in Northern Ireland. However, Section 1 of the Northern Ireland (Miscellaneous Provisions) Act 2006 gave the Secretary of State the power to make equivalent provision for Northern Ireland by Order in Council at a later date.

Many of the Great Britain provisions are extended to Northern Ireland without amendment in this order, but there are four main differences between the provisions for Great Britain and those being put in place for Northern Ireland, either in this order or in the instruments that will follow.

First, the duration of an anonymous entry will be longer than it is in Great Britain. Applications for an anonymous entry must be made annually in Great Britain, in the same way as applications for registration. In Northern Ireland, an anonymous entry can last for a maximum of five years. This makes practical sense in the context of the continuous registration system in Northern Ireland. If persons do not have to reapply to be registered annually, it would be onerous to require vulnerable individuals to reapply for an anonymous entry on an annual basis. This difference is also intended to help the PSNI and other bodies manage the greater volumes of applications for attestations that are expected in Northern Ireland because of the security situation there and the number of people who may be considered at risk.

In view of the longer, five-year timeframe in Northern Ireland, this order allows the chief electoral officer to terminate a person’s entitlement to an anonymous entry in some circumstances. The regulations brought forward later this year will set out the details of how the chief electoral officer can make this determination. For example, if the chief electoral officer receives information that a person is no longer part of the household to whom the relevant evidence applies, their entitlement to anonymous registration should be reviewed.

Secondly, as noble Lords will be aware, all voters in Northern Ireland are required to show photographic identification at the polling station to receive their ballot paper. This is incompatible with the principle of maintaining a voter’s anonymity and so, under this order, those with an anonymous entry will not be able to vote in person. Instead, this order makes provision for anonymous electors to be automatically eligible for a postal vote. This is to prevent a person who is anonymously registered being questioned at a polling station about their identity.

Thirdly, linked to the provisions on postal voting, the order makes it possible for an anonymous elector to submit a tendered ballot paper by post. It is possible to apply for a tendered ballot paper when a person states that they have lost their ballot paper or believes someone else has voted on their behalf. However, a tendered ballot paper can usually be submitted only in person at the polling station. Persons with an anonymous entry will be allowed to submit a tendered ballot paper by post instead to prevent them being disadvantaged by the requirement to use a postal vote.

Lastly, persons with anonymous entries will remain eligible for jury service, as they are in Great Britain. However, because jury service selection operates in a different way in Northern Ireland, the provisions in this order that deal with this matter differ from the England and Wales provisions. The order ensures that any anonymous elector information is protected when the jurors list is passed from the chief electoral officer to the Courts and Tribunals Service.

There have been two phases of consultation on anonymous registration in Northern Ireland. The first was conducted by the previous Government in 2008. The second took place in 2013 on the draft legislation. The consultations have allowed us to take account of the views of a range of devolved bodies that will be involved in implementing the scheme, including the Northern Ireland Courts and Tribunals Service, the Police Service of Northern Ireland and health and social care boards, as well as political parties and groups representing those most likely to benefit from the new system.

I hope that noble Lords will agree it is important that people who wish to exercise their right to vote are able to do so without fear or threat to their safety. This order gives vulnerable people in Northern Ireland the same protection as those in Great Britain. I commend it to the Committee.

[Lord McAvoy (Lab)]

My Lords, I am grateful to the Minister for her thorough exposition of the proposed legislation. I should say right from the start—because it always needs to be said in relation to Northern Ireland—that we are fully supportive of the legislation. My honourable friend in the House of Commons, Stephen Pound, in a very entertaining speech, asked a number of questions. Some of them were not, to my book, completely answered, so I will go through them and see if I can get a wee bit more information out of the noble Baroness.

It has been stated by the Minister and others that the necessity for this legislation in Northern Ireland is—as it is in the rest of the United Kingdom—mainly to support women in what they face when being pursued by former partners or husbands or subjected to violence. So the legislation is quite in order.

However, on the higher percentage that is envisaged, it is worth commenting that the higher percentage of anonymous voting approvals for Northern Ireland is, according to the words of Mr Robathan, 40 times greater in Northern Ireland than in the rest of the United Kingdom. That signifies that there is a continuing situation in which people need anonymity in voting, and the sooner we can move away from that, the better. However, the need for this legislation is still quite clear because women have enough to put up with without being subjected to that as well.

16:00

I will follow up something that Mr Pound mentioned, which is the status of court orders from the Republic of Ireland. As noble Lords will know, people move back and forth across the border. A situation can arise in which somebody in Northern Ireland marries someone from the Republic and then moves back to the north. It is clear from what the Minister said in Committee that is not legal to mention other jurisdictions—I think that was the word used, but if not, the noble Baroness will know what I mean. There was therefore a legal bar in establishing full reciprocity. Mr Robathan, the Minister in the Commons, said that in the process of attestation great weight would obviously be given to a court order in the Republic of Ireland. Can the Minister elaborate a bit more on that? It would mean a bit more protection for people moving from the Republic to Northern Ireland if a heavy weight was given to reciprocity.

Mr Pound also mentioned another thing, which he did not seem to get an answer to. The attestation of the validity of the anonymisation approvals are directors of social work or PSNI officers of the rank of inspector or above. He made the point that there are only five directors of social work services in the whole of Northern Ireland and Wales; I do not think that anybody is sure about the number of inspectors. Is that situation okay?

Paragraph 7.4d of the Explanatory Notes says:

“There are also differences between Northern Ireland and Great Britain in the way in which persons with an anonymous entry in the electoral register are selected for jury service. Persons with anonymous entries on the register will automatically be considered for jury service, rather than the juries officer having to make a specific request for details of anonymous entries, as is the case in England and Wales”.

The key bit follows:

“Specific provision is made to protect information of anonymous electors which is disclosed as part of the jury selection process”.

How will that work? I am not clear about that. There has been consultation on this, and it has been supported, so it has to be welcomed.

I hope that we will have a wee bit more elucidation on the points raised in questions by Mr Pound, but I repeat that we are fully supportive of the Government’s proposals in this field. They are absolutely necessary, and they have our full support.

[Baroness Randerson]

I thank the noble Lord for his support on this. I will do my very best to answer the questions that he feels still need to be answered.

The noble Lord is right that the issue of supporting victims of domestic violence is a key mover behind the legislation. It was introduced for Great Britain very specifically at the request of groups supporting victims of domestic violence. But it is also aimed at supporting, for example, people who are part of the witness protection scheme. I am sure that the noble Lord will appreciate that there are far more people in that situation in Northern Ireland than in Great Britain.

There are currently 1,739 people in the anonymous registration scheme in Great Britain. My right honourable friend the Minister of State in the other place referred to the expectation that there would be around 40 times that number in Northern Ireland. This figure is based on the numbers known to have benefited from existing programmes to protect individuals at risk; for example, 1,805 individuals have benefited from the special purchase of evacuated dwellings scheme in Northern Ireland. Of course, this is just one group of eligible individuals. I mentioned the witness protection scheme earlier, but members of other groups might be judged to be at risk, such as prison officers. I could give other examples, but that one number—1,805—shows that proportionately the numbers would be around 40 times greater for Northern Ireland. Therefore, one of the reasons that the anonymous registration will apply for a five-year term is to enable those involved in the registration and attestation process to deal effectively with the number of requests that we estimate will come forward.

The noble Lord also asked whether Irish court orders would be recognised and treated in a spirit of reciprocity. It is very unusual to reference court orders from outside the UK in domestic legislation because to do so would prevent Parliament scrutinising changes to the law. The Government recognise that it is highly likely that some people at risk in Northern Ireland will be beneficiaries of an Irish court order. On the subject of domestic violence, people marrying across the border—with one partner from the Republic and one from Northern Ireland—is obviously a very common thing. Therefore, we will make clear in guidance that, when an attestation is considered, if an applicant holds a similar injunction to those listed in the order from Ireland or any other member state of the EU, an attestation will be made. It is not done in an identical manner. A court order would mean that the anonymous registration would be automatic. An Irish court order would lead to an attestation process, as I understand it. It is important to bear in mind that there is a legal issue here; that is why this is being dealt with in this way.

The noble Lord asked about the level of the staff who will make the attestations. As the number of people registered anonymously is likely to be higher than in the rest of Great Britain, it is important that attestation is seen to be no less rigorous than in Great Britain and that it is very rigorously applied. The Government remain of the view that only people who are eligible to attest applications in relation to Great Britain would also be eligible to attest applications in relation to Northern Ireland. So the process will apply at the same level in both cases. It should not be necessary, however, for people applying for anonymous registration to go in and meet the director of social work or the chief constable. We would expect applications to be considered at a lower level within the organisation, and a recommendation would then be made higher up the chain within the organisation. We have consulted the Department of Health, Social Services and Public Safety in relation to the seniority of social workers who will be eligible to attest applications for anonymous registration. In the case of the PSNI, the attestation will be made at the level of superintendent and above.

I hope that I have answered the noble Lord’s questions and I commend the order to the Committee.

Motion agreed.

Misuse of Drugs Act 1971 (Ketamine etc.) (Amendment) Order 2014

Monday 31st March 2014 Grand Committee

Motion to Consider

16:12

Moved by

[Lord Ahmad of Wimbledon]

That the Grand Committee do consider the Misuse of Drugs Act 1971 (Ketamine etc.) (Amendment) Order 2014.

[Lord Ahmad of Wimbledon (Con)]

My Lords, this order was laid in Parliament on 5 March. If made, the order will specify two groups of new psychoactive substances from the N-BOMe and benzofuran families, as well as their simple derivatives, as drugs subject to permanent control under the Misuse of Drugs Act 1971. The order will also control a number of medicines, namely lisdexamphetamine, zaleplon, zopiclone, and tramadol. It will also reclassify ketamine under the 1971 Act.

The Government have received recommendations from the Advisory Council on the Misuse of Drugs that these drugs are being misused, or likely to be misused. In the ACMD’s view their misuse is having, or is capable of having, sufficiently harmful effects to warrant legislative action under the 1971 Act. My honourable friend the Minister for Crime Prevention was satisfied after consideration of the latest available evidence and the ACMD’s assessments that the conditions that have to be satisfied in order to place these drugs under permanent control were met.

Legislative action is necessary as a result of the potential harms identified by the ACMD. This action will send out a strong message to those who are considering experimenting with these drugs and enable us to target our public health messaging in order to protect the public. It will also enable enforcement partners to prioritise resources accordingly to tackle the availability of these drugs.

N-BOMe compounds are highly potent, new psychoactive substances that are regarded as legal alternatives to the class A drug LSD. Noble Lords will recall that a number of these compounds are currently subject to a temporary class drug order approved by the House. These compounds are permanently controlled as class A drugs under the 1971 Act. Clinically observed health effects of the N-BOMe compounds include hypertension, agitation and aggression, visual and audio hallucination and seizures. Anecdotal evidence from self-reported users also highlighted highly negative effects and unwanted feelings including confusion, shaking, nausea, insomnia, and paranoia. These compounds are extremely potent in powder and liquid form and have a high risk of overdose when misused.

On benzofuran substances, compounds such as 5-APB and 6-ABP are marketed as legal forms of ecstasy. They are most commonly sold under the brand name Benzo Fury. Noble Lords will recall that a number of these compounds are also controlled as temporary class drugs. These compounds are being permanently controlled as class B drugs. The effects of the benzofuran compounds include insomnia, increased heart rate and anxiety, with some users reporting ecstasy-like symptoms. Several deaths and hospitalisations in the UK have been associated with the use of these compounds. There are also risks associated with the long-term use of these compounds, such as cardiac toxicity. As in previous cases, the N-BOMe and benzofuran compounds will be controlled using generic, or group, definitions which capture closely related compounds. This will reduce the risk of chemists tweaking the chemical structures of the compounds being controlled to circumvent our drug laws.

Lisdexamphetamine, a drug closely related to the class B controlled drug dexamphetamine, was introduced to the UK medicines market in March 2013. When administered orally, lisdexamphetamine gradually converts to dexamphetamine, the class B drug. Lisdexamphetamine is being controlled as a class B drug. The ACMD reports that lisdexamphetamine has the potential to occasion the physical and social harms associated with amphetamines as a group, although there may be more differences. Physical effects can include anorexia, insomnia, dizziness, headaches and hypertension. After chronic or high doses, convulsions, heart attacks, strokes and death have also been reported.

Zopiclone and zaleplon are sedatives closely related to the benzodiazepine family of drugs and zolpidem, controlled as class C drugs. The ACMD reports that the number of UK prescriptions for these drugs compared to prescriptions for benzodiazepines has been on the increase. The ACMD reports that the harms from the misuse of these two drugs include a risk of coma, respiratory depression and death associated with the use of excess doses of the drugs in combination with alcohol or other central nervous system depressants. Other reported psychosocial effects include depressed mental activity and alertness, memory loss and amnesia, and personality and mood changes through drowsiness, disinhibition, chronic paranoid behaviour and aggression. Data from the national program on substance abuse deaths—NPSAD—also suggests that these drugs play a minor role in drug-related deaths in the UK, mainly in combination with other central nervous system depressants and principally implicated in episodes of intentional poisoning. The ACMD report concludes that, due to the similarities in the chemical structure and effects of these drugs and benzodiazepines, the potential social harm from the misuse of zopiclone and zaleplon would be similar to the social harms associated with the misuse of zolpidem and the benzodiazepines.

Turning to tramadol, it is of significant medical use for treating moderate to severe pain. It has wide-ranging applications, including the treatment of chronic widespread cancer and musculoskeletal pain. However, tramadol, similar to other psychoactive agents, can be misused. Tramadol’s pharmacological profile increases the risk of adverse effects seen in overdose. Overdose results in drowsiness, constricted pupils, agitation, rapid heartbeat, hypertension, nausea, vomiting and sweating. Seizures are more common with tramadol overdose than with other opioids and occur in up to 15% of cases. In severe poisoning coma, seizures and hypotension—low blood pressure—can occur.

The ACMD’s consideration of tramadol was prompted by concerns from healthcare professionals about the growing misuse of the drug. It revealed an increase in the number of NHS prescriptions for tramadol—from 5.9 million in September 2005 to 11.1 million in September 2012—wide availability on the internet, and an increasing number of deaths in which tramadol was mentioned: 87 mentions on death certificates in 2009 went up to 154 in 2011, representing an increase of 77%. The ACMD reports that the majority of tramadol-related deaths occur where it has been obtained through non-prescribed means. However, overprescribing is also believed to contribute to diversion and misuse.

Ketamine is a synthetic drug used in medical and veterinary practice. It is used as a dissociative anaesthetic and a pain reliever. The ACMD first considered the recreational use of ketamine in 2004, and following its advice ketamine was brought under class C control in 2006. The ACMD reports that evidence of harms from misuse has developed over the years. In addition to well known harms such as increased heart rate and cardiac output, high blood pressure, hallucinations and experiences of alternate realities similar to those found in schizophrenia, long-term ketamine misuse is now known to be associated with a range of chronic problems including chronic bladder and other urinary tract pathology, and damage to the gall bladder, central nervous system and kidneys. The ACMD also reports evidence of acute and chronic toxicity associated with ketamine misuse.

Social harms associated with ketamine use are reported to include a negative impact on families, social skills and participation in social activities. Large doses of ketamine are also known to induce dissociation—intense detachment that can be unpleasant and frightening and can put the user in a position of vulnerability to robbery, assault or, in extreme cases, rape. For all of these reasons, the Government accepted the ACMD’s advice to permanently control these drugs under the 1971 Act and reclassify ketamine as a class B drug. It is intended to make two further related statutory instruments that will be subject to the negative resolution procedure.

The Misuse of Drugs (Designation) (Amendment) (No. 2) Order 2014 will amend the Misuse of Drugs (Designation) Order 2001 to place the N-BOMe and benzofuran compounds in part 1 of the order as compounds to which Section 7(4) of the 1971 Act applies, as they have no known legitimate use outside research. Their availability for use in research will be enabled under a Home Office licence. Drugs that have legitimate uses as medicines will be scheduled appropriately in one of four schedules under regulations to ensure their continued availability and use in healthcare. Specific requirements will be applied to each of these depending on the schedule in which they are placed under the regulatory framework to prevent their diversion and misuse.

The Misuse of Drugs (Amendment) (No. 2) and the Misuse of Drugs (Safe Custody) Regulations 2014 will amend the Misuse of Drugs Regulations 2001 to place lisdexamphetamine in Schedule 2, zopiclone and zaleplon in Part 1 of Schedule 4, and tramadol in Schedule 3 to the 2001 Regulations. These regulations will further place tramadol in Schedule 1 to the Misuse of Drugs (Safe Custody) Regulations 1973, which means that tramadol will be exempted from the safe custody requirements. Ketamine is not being rescheduled immediately after reclassification. It will remain a Schedule 4 Part 1 drug, and will remain available for use in healthcare and veterinary practice pending a public consultation to assess the impact of Schedule 2 status, as recommended by the ACMD, later this year.

These instruments will be laid in time to come into force at the same time as the Order in Council, if it comes into force as proposed. The Government will publicise the approved law changes through a Home Office circular. I commend the order to the Committee.

[The Deputy Chairman of Committees (Lord Colwyn) (Con)]

My Lords, I must congratulate the noble Lord on his pretty well faultless pronunciation. The question is that the Grand Committee do consider the draft Misuse of Drugs Act 1971 (Ketamine etc.) Amendment Order 2014.

[Baroness Finlay of Llandaff (CB)]

My Lords, I echo the Deputy Chairman’s congratulations. Those are pretty difficult drug names to cope with. I have a few comments and a question. The review of zopiclone is welcome. It has often been used inappropriately as a sleeping tablet and viewed as being very safe. The evidence, actually, is not that good for it in terms of patients getting off to sleep. There are lots of other things with sleep hygiene that need to happen to help people sleep. Tramadol has escalated in its prescription and has been viewed as being very safe in the way that physicians have looked at it as an analgesic. I have had a concern for some time that morphine is viewed, with caution, as inappropriate—and more cautiously than may be necessary, because it is a very good analgesic. Therefore, some of these other analgesics, such as tramadol, tend to get prescribed almost too readily and without due caution.

The one I would like to focus on is ketamine. I must declare an interest, having been on the advisory committee of the misuse of drugs sub-committee that was looking at ketamine at the time. I think it is important to record that as a group we were divided on whether ketamine needed to be reclassified. That was because of its clinical use. It is a very useful drug in an emergency. It is a battlefield drug. It has been used in major accidents when you have to get trauma victims out. The safety feature of ketamine is that patients conserve their airway: when you are operating in a collapsed building or on an accident site, when you cannot get access to the person, you may be able to do an amputation under ketamine that otherwise you would not be able to do, because the person will continue to breathe and protect their airway. In fact, they will appear to be conscious. Clinically, I used to use it when I did anaesthetics with children who had severe burns. You could give what is called dissociative anaesthesia: they could turn over and move, but they could tolerate having their dressings changed because they had the analgesia from it.

My question relates to the supply, after reclassification, to hospices where ketamine is used for neuropathic pain. There is a concern—which just fell into my inbox this morning, as it happens—that hospital pharmacies that supply hospices with drugs, particularly morphine, will now have to purchase a licence, at a cost of £5,000. They are concerned that it will make it more difficult for them to have the supply of drugs that they need. I would like a reassurance from the Minister that the legitimate therapeutic supply of ketamine, particularly to hospices and in the community for patients with severe neuropathic pain from malignant disease and from other conditions that are progressive, will not be impeded by reclassification. For some of these patients it is the only drug that will get control over their complex neuropathic pain.

I also ask the Minister whether it will fall under this licensing requirement and whether he will undertake to look at the charge for this licence, which seems to be very high. Voluntary sector hospices are trying to provide a high level of care to patients on behalf of the NHS, bearing a lot of the cost out of their own fundraising, and they want to be linked to a hospital pharmacy because of the quality control and governance assurances that go along with being linked to a hospital pharmacy.

16:29

[Baroness Smith of Basildon (Lab)]

My Lords, I am grateful to the Minister for his explanation and to the noble Baroness, Lady Finlay, for the expertise that she brings to this issue. I assume that when she said that the advisory committee to the sub-committee on the misuse of drugs was split on this issue, the kinds of issues that she was raising were ones that caused the concern. I would be interested in the Minister’s comments on this one.

With such a serious subject, it is a moment of light relief to enjoy the Minister’s pronunciations of the drugs involved. It is one of those rare occasions when I am grateful that I am not the Minister so I do not have to worry about the pronunciations. But the harms of ketamine and the other drugs have been recognised and are alarming. Successive drugs surveys over the past five years have shown that ketamine in particular has become established as a drug of choice for those who go clubbing and for recreational use, and many of those people will have little idea or knowledge of the dangers they face.

There is not really any strong evidence that reclassification will have any great impact on the prevalence of those drugs, and I am concerned about the public health campaigns that are needed. Very clear messaging needs to go out, and it needs to start in school. Recreational drug users in clubs are more discerning than those who are addicted to drugs, and other more vulnerable users, and are therefore more susceptible to such messages because they are legal-high users. If you have spoken to parents who have lost children, or whose children have been harmed or damaged by recreational drug use, you will know that the messaging needs to be much stronger and much better than it is at the moment. There is a danger that the Government will step back a bit and not take a sufficiently proactive role in this regard to prevent the harms taking hold of a number of young people.

I want to press the Minister on a couple of things. One is the FRANK website. Whenever I raised these issues previously, Ministers always told me, “Ah, we’ve got the FRANK website”. How effective is it? It seems to me that for someone to look at the FRANK website, they have to be interested in the first place and want to understand what is involved. We need to be reassured of its effectiveness. We have to aim further than those who seek out the site because clearly it does not have a wide enough reach. We are not reaching too many of the people who are recreational drug users and who go to clubs and raves but do not understand the harm they are causing themselves. I would like to hear some more not just about the FRANK website but about targeting recreational drug users.

We do not oppose this order because we recognise that there are very serious harms. In relation to ketamine, the Explanatory Memorandum talks about the,

“intense detachment that can be unpleasant and frightening and can put the user in a position of vulnerability to robbery, assault or rape”.

It is not just the harm that the drug causes but the harm that is caused to the person who becomes detached and dissociated from their surroundings and therefore particularly vulnerable. There are those who are making significant amounts of money out of causing this harm to others, but I also take the point made by the noble Baroness, Lady Finlay: I am sure that the Government do not want to cause problems for those who require drugs such as ketamine for pain control or other medical purposes. If the noble Lord can give us an assurance in that regard, or even tell us that he will take this away and come back to us, that will be extremely helpful. We do not oppose this order and I am grateful to the noble Lord for his explanation.

[Lord Ahmad of Wimbledon]

My Lords, first, I thank both noble Baronesses and the Deputy Chairman for their kind words. It is always a challenge when you are looking to pronounce words that you are not familiar with. With two young children, now I know the challenges they face—if nothing else, it has taught me greater patience in helping them with their reading skills. Nevertheless, I thank the noble Baronesses for their broad support of the Government’s position, and the Committee more widely. I trust that, as both noble Baronesses acknowledged, the Government have made the case for the order to be approved in the House on the basis of the latest available evidence and the ACMD’s advice.

Approval of this order will ensure that our drug laws are effective in relation to both established medicines and newly developed pharmaceutical drugs entering the UK market that are being sought for misuse. It will also ensure that we are taking effective action on compounds that have no legitimate use outside research and which are already being pushed on to the legal-highs market.

From having done a debate on the issue of legal highs previously in the House, I think that everyone, no matter where they are in the argument, is cognisant of the fact that for anything that is banned today there will be a derivative ready and on the shelves tomorrow. This is something on which we need to be increasingly vigilant. We will of course ensure that those drugs that have a legitimate use in healthcare and veterinary practice continue to be available under a regulatory framework which protects the public from their potential harms.

Before I turn specifically to the questions that were raised by the noble Baronesses, I commend the ACMD for its continuous work and support of our priorities, including on new psychoactive substances. I have already mentioned that the fast pace of the new psychoactive market continues to require us to be ever more careful with the prioritisation of our resources, and underscores the need for closer working within a broader network of partners in the UK and abroad, and the need to preserve the integrity of our drug laws. The ACMD’s advice also reminds us of the dangers of prescription medicine when misused.

I turn to some of the questions that were raised. The noble Baroness, Lady Finlay, speaks with great expertise in these areas. I listened carefully to the issues that she raised. On reclassifying ketamine, as noble Lords are aware, ketamine is already controlled and scheduled, and therefore available for legitimate use in healthcare. As a result, we are able to reclassify it without impacting on its availability for legitimate use. By reclassifying at the earliest opportunity, the Government are sending out a strong message to those who misuse the drug. I assure the noble Baroness that a final decision on scheduling will be made after a public consultation to assess the impact of its schedule 2 status, as recommended by the ACMD.

The noble Baroness asked about other issues relating to its availability. The ACMD has recommended that this subject be subject to a public consultation to assess the impact should ketamine be scheduled, as I have said. As such, ketamine will continue to remain a schedule 4 part 1 drug until a final decision is made on the schedule in which it will be placed following the public consultation.

The noble Baroness made some valid points on availability and the issue of the licensing fee, particularly for hospices. Anyone who has experienced, sometimes sadly and tragically, the absolutely sterling work that hospices do will know that, while it involves great personal tragedy for a lot of the families involved, the role of hospices in the lives of those who are perhaps at their final point is quite incredible. The Government are cognisant of the incredible role they play in community and society. I therefore say to the noble Baroness that licensing requirements will come into play only after rescheduling. I have already mentioned that in the context of the public consultation. On ketamine, I will look at Hansard again to see whether there are any outstanding questions.

[Baroness Finlay of Llandaff]

I have a supplementary question to that very helpful answer. Can the Minister assure me that the public consultation will specifically target hospices which may not be aware of, or may not be on the circulation list for, major consultation? They may be quite important prescribers and users of ketamine, particularly because they are away from the main hospital site, so patients can safely receive fairly potent drugs that protect their airways. That becomes particularly important.

[Lord Ahmad of Wimbledon]

I am sure that that is very much the case. However, I will counter the noble Baroness’s suggestion by asking her, if she is aware of the names of those bodies, to please forward them, and I shall ensure that officials include them in the official notice of consultation.

The noble Baroness, Lady Smith, raised a couple of questions about talking to FRANK. I remember that when I first came across this website in local government, my first question was, “Who’s Frank?”, because he seemed to know an awful lot. Of course, FRANK is the website used to share information. The noble Baroness makes a valid point about ensuring that the support and information that is available should not be restricted to just one particular website. Whether we are talking about institutes of higher education or about clubs et cetera—wherever drugs may be used for recreational use—it is important that people are informed about the availability of this website. I have taken on board a couple of suggestions that the noble Baroness made. I also say to her that drugs education is part of the science national curriculum at key stages 2 and 3. Provision in this area can be built also through personal, social, health and economic discussions. The Talk to Frank website was relaunched. More than 35 million people have now used it and millions have called the FRANK helpline.

[Baroness Smith of Basildon]

The Minister said that 35 million people have used the website. Is that 35 million individual users, or have there been 35 million occasions on which somebody has looked at the site?

[Lord Ahmad of Wimbledon]

I would suggest that it is the latter: it refers to hits on the website. The noble Baroness’s point is well made and I understand it.

The noble Baroness made some very practical suggestions. I think that we are all at one in believing that we need to tackle the misuse of drugs. If so-called “legal highs” are still available on the market, they should be made available in an orderly fashion. Wherever information can be shared, it should be shared as widely as possible through the healthcare system and any other social support system—the FRANK website is one such example. If there are suggestions as to where other tools can be used to ensure that we make this information more readily available, I am sure that we would all welcome them in terms of sharing best practice. As I said in my opening remarks, when I was in local government we encouraged the sharing of information through local healthcare providers and the local healthcare system to ensure that information was available to all.

Finally, on the new psychoactive substances review, the Government are conscious that more needs to be done to tackle the emergence of new psychoactive substances. This is why my honourable friend the Minister for Crime Prevention is leading a review by an expert panel on how the UK’s response to new psychoactive substances can be enhanced beyond the existing measures. The expert panel’s primary purpose is to look at how the current legislative framework can be strengthened, as well as at the health and educational aspects of the challenges that we face. The expert panel is expected to report its findings to Ministers in late spring.

I thank both noble Baronesses who participated in this debate for their broad support. They have both made useful suggestions on how we can move this forward. I hope that noble Lords will find that this legislative measure is conducive to ensuring that the public are protected as much possible from the harm caused by drugs that can be dangerous when misused. I commend the order to the Committee.

Motion agreed.

Criminal Justice and Police Act 2001 (Amendment) Order 2013

Monday 31st March 2014 Grand Committee

Motion to Consider

16:43

Moved by

[Lord Ahmad of Wimbledon]

That the Grand Committee do consider the Criminal Justice and Police Act 2001 (Amendment) Order 2013.

Relevant document: 13th Report from the Joint Committee on Statutory Instruments.

[Lord Ahmad of Wimbledon (Con)]

My Lords, I shall speak also to the draft Misuse of Drugs Act 1971 (Amendment) (No. 2) Order 2013.

The Government seek to control khat as a class C drug under the Misuse of Drugs Act 1971 to protect the public from the potential harms associated with this drug and the threat posed from its international trafficking. The legislation has been drafted to come into force on 26 May, four weeks after the Privy Council’s approval.

As required, the Government have consulted the Advisory Council on the Misuse of Drugs, the ACMD, which provided a scientific assessment of the medical and social harms of khat use. We again thank the ACMD for its comprehensive report. It advised that there was no robust evidence to identify direct causal links between khat use and the associated medical harms beyond the risk of serious liver toxicity. It reported that some individuals use khat in a dependent manner. Although it concluded that it is difficult to disentangle the prevalence of khat use as a cause or a symptom of societal harms, we are concerned that we risk underestimating these harms due to the absence of robust evidence. The Government carefully considered this advice alongside broader policy factors, including some communities’ concerns that khat use is associated with societal harms that affect them—especially vulnerable users and their families as a compounding factor to family breakdown, unemployment and barriers to integration.

16:44

Since the Dutch Government banned khat in January 2013, new evidence has indicated that the UK is at serious risk of becoming a single regional hub for the international trafficking of khat to other EU and G7 countries. It is banned also in France and Germany. In addition, the majority of other EU countries have already controlled khat. In France, the latest seizures of khat en route to other EU countries where it is banned continue to show that it comes via the United Kingdom.

To ensure that there is proportionate law-enforcement response to khat possession offences here, we are introducing an escalation framework that has been developed with the support of the police. In addition to the use of “khat warnings” for a first simple possession offence, the separate draft order laid by the Ministry of Justice will extend the use of penalty notices for disorder to the offence of simple possession of khat when it is the second time that the offence has been committed. Anyone caught possessing khat for the third time or more will face arrest. Serious and repeat offenders involved in the illicit supply, importation and exportation of khat will face the full force of the law.

The two draft orders will be complemented by negative instruments. In accordance with ACMD advice, we will designate and schedule khat as a drug that has no recognised legitimate use beyond research. Another negative instrument will set the financial penalty for the khat PND at £60. I commend the two orders to the Committee.

[Baroness Finlay of Llandaff (CB)]

My Lords, I, too, must declare an interest, having been on the sub-committee looking at khat, when we heard a very different story because, as the Minister has indeed set out, there are no medicinal uses for it. The evidence that the UK is becoming potentially a route and hub for distribution is particularly worrying, as is the effect within those communities on home life and the domestic instability that has occurred. I can understand why there is a push to put this legislation forward because there is a need to say that the drug is not safe and recreational in the ordinary sense, and that there are harms associated with it due to its psychoactive nature.

[Baroness Smith of Basildon (Lab)]

My Lords, over a number of years, successive Governments have looked at banning khat, and the evidence for doing so is less robust than that for ketamine. That is clear from the evidence base in the Explanatory Memorandum and the Government’s assessment of the options. We agree with the Home Secretary’s analysis that the arguments are finely balanced—a point made by the noble Baroness, Lady Finlay—and consider that the benefits of a ban could outweigh the risks. However, we seek a number of assurances from the Government that are needed before that is clear.

We should look at the reasons for considering a ban and the risks of such a ban. The reasons for considering a ban are, first, the social and possible health harms associated with the drug. My understanding is that khat is not easily comparable with other drugs because it is consumed almost entirely within the diaspora of the Horn of Africa countries: namely, Somalia, Yemen, Ethiopia and Kenya. Overall just 0.2% of the UK population have used khat, but some 50% of Somali males are thought to be users, and up to 10% of them are daily users. This makes it very hard to separate the social harms of khat from wider social issues faced by the Somali community, and to a lesser extent the Yemeni and Ethiopian communities. That said, we have received clear representations from within the Somali community about the problems of khat. In her report, the Home Secretary cited the support of 32 groups representing the Somali community. The support for a ban from within the Somali community is clearly articulated in the report on banning khat, removing segregation and promoting integration, which looks at the community perspective and to which some 27 groups are signatories.

The range of social harms with which khat has been associated include low-level public disorder, and there are claims that khat is linked with some criminal behaviour. UK Somali women often cite excessive expenditure on khat for the diversion of household funds as a major cause of marital tension and family breakdowns. It can also be linked with idleness and benefit dependency, and seems to be a key factor in unemployment, low attainment and social exclusion. However, neither the ACMD nor the Home Office review has been able to isolate khat as the cause of those phenomena, because they all seem to be specific to specific cultures. For example, the phenomena are seen in the Somali communities that use khat but not in the Yemeni ones. Therefore, it appears that khat use, and possible dependency, is part of a cycle of behaviour that is extremely damaging, and which leads to a range of social problems and to social exclusion.

Khat has also been linked to health harms, including liver toxicity, as the Minister mentioned, and tooth loss, as well as to health issues that relate to the manner in which it is consumed. More seriously, it has been linked to depression, paranoia and even psychosis, and is cited as a key reason for higher than average acute mental health problems in the Somali community. However, as with all social harms, it is hard to isolate khat from wider factors that impact particularly on the Somali community, such as social deprivation. Therefore we are not able to say that khat is the direct cause of those problems, although it seems that it exacerbates them.

If we look at paragraph 4.3 on page 1 of the Explanatory Memorandum, we see that:

“The ACMD advises that there is no robust evidence to show a direct causal link to adverse medical effects, other than a small number of reports of an association between khat use and significant liver toxicity. It also finds some of the adverse outcomes are associated with khat use i.e. a complex interaction of khat with other factors to produce the outcome, but that there is no evidence that it is directly caused by khat use. The ACMD further advises that, from the evidence on societal harms, it is often difficult to disentangle whether khat is the source of community problems or whether, to some extent, its prevalence and use is symptomatic of the problems for some individuals and groups within that community”.

To understand the difficulties, I turn to pages 9 and 10 of the impact assessment, under the heading, “Evidence Base”, which states:

“Anecotal evidence reported from communities in several UK cities link khat consumption with a wide range of social harms. Research into these concerns has been undertaken but no robust evidence has been found which demonstrates a causal link between khat consumption and any of the harms indicated”.

The Home Secretary makes clear in her Written Statement to Parliament, which is Appendix A of the impact assessment, that although the ACMD report,

“recommended that khat should not be controlled, the ACMD acknowledges that there is an absence of robust evidence in a number of areas and that there are broader factors for the Government to consider when making its decision. The decision to bring khat under control is finely balanced and takes into account the expert scientific advice and these broader concerns”.—[Official Report, Commons, 3/7/13; col. 56WS.]

Therefore we accept that this is finely balanced and that the Home Secretary’s decision takes broader factors into account other than the medical or scientific.

We also have to examine the risks of banning khat. In assessing risks, we have to consider the risk of the UK becoming a hub for illegal exports to other EU countries and the US, which have already implemented bans—a point made by the noble Baroness, Lady Finlay. That phenomenon has been identified in Sweden and in the Netherlands, but is there any evidence that that is happening here in the UK? The khat ban was first announced in July last year, shortly after the Netherlands ban had come into force. Has any evidence emerged since it was first announced? Khat imports into the UK were falling until last year; has there been a change in pattern since the announcement?

When we look at the impact assessment, that risk is not included as a non-monetised benefit. Neither is any impact on law enforcement agencies considered, other than a reference under “Risks”, on page 16, that enforcement costs may be high initially, as:

“Evidence from other countries which have controlled khat suggests that levels of demand may not reduce immediately after the ban comes into effect, if at all. This could mean that if offenders are caught, enforcement costs may be higher soon after the ban though they may fall afterwards”.

I did not find that kind of figure in the impact assessment. It is also at odds with the expectations under the heading “Justice” on page 19 of the impact assessment,

“that the khat industry will ‘self-regulate’”,

and that legislation to ban khat would have,

“a minimal impact on the criminal justice system”.

However, there is a significant risk that it could damage community relations. Notwithstanding the support for a ban, as quoted above, the Home Office report Perceptions of the Social Harms Associated with Khat Use makes it clear that khat use is both common and widely accepted within the Somali, Yemeni and Ethiopian communities, so to ban khat would be to criminalise an established and accepted social practice. The impact of that has to be fully understood and handled carefully. The Home Office report also signifies that for many khat use is a key cultural signifier and, often, a deliberate attempt to identify with the wider diaspora.

I turn to the equality assessment. Was this signed off by the Minister, or should it have been signed by a Minister? It does not appear to have been but he might be able to give further advice on that. If so, which Minister has signed it off? The escalation framework, referred to by the Minister, is very important and is laid out in the annex. Apparently, it was decided as part of the review of stop and search. Is the rest of that review also available? It is clear that without proper policing measures this could significantly damage community relations for the Somali and Yemeni communities. That will impact on the Prevent agenda, so it would be helpful to know from the noble Lord whether there were discussions with those responsible for that agenda on what their considerations were of how this could be managed. The point is that it is not clear cut.

We have four issues that we wish to raise with the Government, and which we consider would have to be done if they were to proceed with a ban. There must be regulations and some moves taken to ensure that it is effective and properly monitored. Consideration should also be given to the significant risks.

First, we seek a commitment from the Government to keep this matter under review. Specifically, we would need to see a review after 12 months that looked at the impact of reclassification, and the impact on organised crime and community relations. We would want that to include the monitoring framework outlined by the Home Affairs Select Committee in, I think, the second recommendation of its report. We understand that the Government are collecting some of that information in relation to drugs. However, that is not enough because khat is unique among drugs in that it is focused in the Somali and Yemeni communities. Some specific data will need to be collected on community relations and a separate review into khat should be published. The kinds of things we would be looking at in order to fully understand the implications of that decision are on-street stop and searches, and the numbers of arrests and out-of-court disposals.

Secondly, there are issues around policing. Because khat is highly prevalent in the Somali and Yemeni communities, the introduction of a ban on khat would allow any Somali or Yemeni male to be subject to stop and search. This causes enormous concern in those communities. It could have a detrimental effect on community relations and, in turn, undermine the Prevent agenda, as I have mentioned. This is a particular risk in the Somali community, where khat is a social drug and is linked to numerous businesses including cafes and community centres. The policing will need to be sensitive to that risk and we would want to see a specific policing strategy, agreed by the ACPO leads for drugs and the Prevent agenda. This plan would have to be in force before the ban itself is enforced. I understand the escalation agenda and I welcome it, but we need to have that policing plan in place before any ban is enforced.

I have two more points. One is on health and education. There has to be a programme of engagement and support for Somali communities to educate them about the dangers of drugs and alcohol. What we do not want to see in these communities is khat being replaced with alternative drugs or alcohol, which leads to further problems. A World Health Organisation report referred to that issue as being a specific risk in the banning of khat; so it is an issue which has to be taken seriously.

17:00

The fourth issue is what we would require to be in place if this ban were to go ahead. We want the Department for International Development to continue to work with the Kenyan Government to alleviate the effects of the khat ban on the Kenyan economy. I am sure the Minister is aware of the Home Affairs Select Committee report that raises serious concerns about the economic impact in Kenya.

I understand that this is a balanced decision that is being made. It is not clear cut, but I think in order to proceed we need assurances that the demands we are making have to be examined, including around implementation, to ensure that the risks do not outweigh any benefit.

[Lord Ahmad of Wimbledon]

My Lords, I thank both the noble Baronesses for their contributions. While brevity was the call of the day in the contribution by the noble Baroness, Lady Finlay, the point was made very well that whatever policy we pursue, we want to ensure that we have the desired effect. One of the deep concerns which emerged, and which is behind the Government’s proposal, was the concern over London or the UK becoming a hub. That is not least because, when we are working alongside our European partners, some would perhaps argue that other countries across Europe, Holland being one of them, which have more liberal policies in these matters than we do have already implemented such bans.

I think the noble Baroness, Lady Smith, raised the issue of changes in the pattern. One of the latest figures that we have seen for trafficking evidence is that between January and March 2014 there were 17 seizures of khat. Eleven and a half tonnes of khat were seized while being taken from the UK to France, en route to other countries. While it is just a small window, there has been a change, and I share those statistics with the Committee.

The decision to control khat under the Misuse of Drugs Act 1971 and to adopt an escalation framework for policing khat possession offences was the outcome of a long and thorough consultation process. For the benefit of the Committee, this included research and inquiries into community perceptions and international evidence, which were led and published by the Government and then of course shared with the ACMD, and the ACMD’s own public evidence-gathering sessions and fact-finding visits about community concerns in England and Wales. I will come to some of the specific questions that the noble Baroness, Lady Smith, raised.

The Home Secretary has made clear that the Government’s decision was finely balanced, as the noble Baroness, Lady Smith, also acknowledged. My right honourable friend the Home Secretary also made clear that we do not dispute the ACMD’s scientific assessment of evidence on harms. The working protocol with the ACMD recognises the broader policy factors that the Government have had to consider alongside all available evidence on medical and social harms to inform drug control and classification decisions. The ACMD’s advice helped us to understand the complexity of issues surrounding khat which, in some communities, required our most careful attention.

Beyond the control of khat, we have responded positively to the ACMD’s recommendations on health and community-based interventions that we need to support and that can be tailored to meet local needs. Indeed, that was one of the concerns the noble Baroness, Lady Smith, raised. Public Health England has updated its joint strategic needs assessment guidance for local public health commissioners to this effect. It will advise them with reference to the ACMD’s recommendations and support providers to take appropriate action in centres of khat use, including preparations for a potential influx of khat users and their families once they find that the drug is no longer available.

The Alcohol and Drug Education and Prevention Information Service provides a tool kit for schools to meet local needs, which will include khat where necessary. The Government have also planned communications activity, including targeted community messaging in the lead-up to the control of khat and afterwards. Khat factsheets have been prepared for local organisations and front-line staff to communicate to users and their families the potential harms of khat, the implications of the law change and where to find locally available support. These factsheets will be made available in four key languages in addition to English: Arabic, Amharic, Somali and Swahili.

This co-ordinated response will support the delivery of our drug strategy aims in these communities to protect the public from drug harms, support dependent and vulnerable users into recovery, and support integration. The Government are fully committed to providing support to anyone who needs it to lead a drug-free life, and to promoting equality of chances among all our communities and citizens, regardless of background.

Law enforcement was another issue raised by the noble Baroness, Lady Smith. The law enforcement response has been developed taking into account the localised and international nature of the khat trade. Law enforcement activity will start at our borders, due to the trade’s heavy reliance on airfreight and rapid transportation to the point of sale. It will then be for police forces to deal with any residual activity involving khat where there is a local issue. Our escalation policy and targeted messaging aim to reduce the risk of criminalising small groups of individuals by providing opportunities for local agencies to work with vulnerable users and their families in a sensitive and proportionate manner. Information about local support services will be more readily available.

Before I finish this section, the noble Baroness, Lady Smith, asked about the support being given to police and what plans are in place. There is national police guidance in the khat possession for personal use intervention framework, which was produced in January 2014. If she has not yet seen a copy of that, I will be happy to provide it to her. She raised issues about the equality statement and Ministers’ knowledge. Ministers were aware of the equality statement and were fully involved with it, but it was signed off by a senior civil servant.

On social harms enforcement, these harms are quite difficult to assess in certain respects—which I suppose applies to any drug, but it is particularly true of khat. We recognise that there is a need for close monitoring. In that regard, perhaps I may turn to some of the specific questions on this issue raised by the noble Baroness. On reviews, as recommended by the ACMD, we will continue to monitor the situation on khat, as we do with all other banned drugs. We recognise the need to review the outcomes of policies specific to khat in local communities, in addition to the collation of local and national data on prevalence, treatment and seizures, as we do with other drugs.

Nationally, we have reintroduced a question on khat use in the Crime Survey for England and Wales and will create a khat-specific offence recording code to monitor local law enforcement and criminal justice agencies’ response to khat-related offences. The noble Baroness referred to the use of stop-and-search powers. As was announced by my right honourable friend the Home Secretary last summer, we will keep the use of stop-and-search powers, which are used too frequently in the Government’s opinion, under constant review.

On the law enforcement response, I have already alluded to the national policing guidance. This has been developed specifically for khat and will ensure that the police response to possession offences is consistent, proportionate and—most importantly—sensitive to local issues and community relations, which was another concern expressed by the noble Baroness. Warnings issued by police will be recorded locally and penalty notices for disorder will be available nationally. It is our belief that the combination of our escalation policy and communications activity will help to reduce the risk of criminalising users by providing opportunities for local agencies to work together to signpost vulnerable users and their families to available support services.

On health and education—another concern raised by the noble Baroness—Public Health England will, first, share and promote effective partnership working among local agencies responding to khat-related concerns; secondly, highlight the need to tailor drug prevention initiatives where appropriate; and, thirdly, continue to use the Alcohol and Drug Education and Prevention Information Service toolkit for schools to meet local needs, which may include needs in relation to khat. In its letter to the Home Secretary, the UK Somali network stated:

“As community leaders we have been in discussion with Local Authorities, Health Bodies and the Metropolitan Police Service to reduce any disruptions to society and with further guidance and support from all Government agencies, we will put in the necessary framework or safety net for the most vulnerable that require treatment and prevention at the local level”.

We know that this is already happening effectively with local authorities at a local level.

The noble Baroness also asked about the wider, international concerns relating to specific countries, including Kenya in particular. We will of course communicate UK khat policy updates throughout all our international posts. With regard to Kenya, the Home Secretary has set out the Government’s response to the Home Affairs Select Committee’s report on khat, including the concern raised about the potential impact of a UK khat ban on the Meru region’s khat industry. We of course appreciate the associated concerns that have been raised about livelihoods, and that is why the UK continues and will continue to deliver a number of projects in Meru county throughout the Kenya market access programme, which is intended to better enable low-income households to participate in a range of value-added markets. For example, this programme currently supports work on aquaculture, livestock and improving the productivity of agricultural communities in Kenya. The Government are also considering how best to improve the commercialisation of rangelands, including through supporting investment in the livestock value chain, tourism and leisure, as well as in other value-added markets. It is our belief that through these objectives and working together with the Kenyans we will achieve the objective of lifting some of the poorest Kenyans out of poverty and providing Kenya with an exit from aid.

I trust that I have answered most of the questions. It is notable that the noble Baroness rightly raised some specific issues about communities that are impacted by khat, the Somali community in particular. Perhaps I may share a quote from Mohamed Ibrahim, who is chair of the London Somali Youth Forum, in his letter to the Home Secretary in July 2013. He wrote:

“I would like to inform the Government that Somali youths, community/mothers and professionals are fully behind such ban, because this about unlocking their potential as citizens, removing barriers to progress”.

I assure noble Lords that we will continue to monitor the situation in the UK, which will help to develop the evidence base for future research into understanding the links between khat use and its associated harms, as the ACMD has recommended.

[Baroness Smith of Basildon]

I am grateful to the Minister, who has made every effort to address the points that I raised. He is right—this is a finely balanced decision. I am a bit disappointed with some of his answers. I know he made an effort to address them, but I raised specific points that were not out of the blue because I spoke to the noble Lord, Lord Taylor, and his office last week. There have also been discussions over the weekend between my colleagues in the other place and the Government. I would like to consider further the points that the noble Lord has made. The implementation of this measure is so important. When something is finely balanced, the implementation has to be very sensitive, and he has not been able to satisfy me on my specific points about the review or about policing. I should like to consider whether a further debate on the Floor of the House is needed, but I am grateful for the noble Lord’s efforts to address a number of the points I raised.

Motion agreed.

Misuse of Drugs Act 1971 (Amendment) (No. 2) Order 2013

Monday 31st March 2014 Grand Committee

Motion to Consider

17:13

Moved by

[Lord Ahmad of Wimbledon]

That the Grand Committee do consider the Misuse of Drugs Act 1971 (Amendment) (No. 2) Order 2013.

Relevant document: 13th Report from the Joint Committee on Statutory Instruments

Motion agreed.

Disabled People: Independent Living Fund

Monday 31st March 2014 Grand Committee

Question for Short Debate

17:14

Asked by

[Baroness Campbell of Surbiton]

To ask Her Majesty’s Government what arrangements they are putting in place to ensure that disabled people currently in receipt of money from the Independent Living Fund will not be left in hardship when the Fund is wound up next year and the responsibility for Fund recipients is handed to local authorities.

[Baroness Campbell of Surbiton (CB)]

My Lords, independent living lies at the heart of disabled peoples’ participation in their community. My interest in this concept is both personal and professional. Independent living support has enabled me to gain an education and enjoy a fulfilling career. Without it, I would be incapable of doing anything beyond the walls of my home. I am not alone; there are thousands just like me, who have been liberated by this support.

On 6 March, the Government issued a statement announcing, for the second time, their intention to close the Independent Living Fund, the ILF. Only the date of closure has changed: it has been put back to June 2015. Their first attempt at closure was challenged by a small group of disabled people who took the case to the Court of Appeal in 2013. The court ruled in their favour, announcing that the Government’s decision was unlawful under the public sector equality duty. The courts recognised that ILF users will be “significantly disadvantaged” if they have to rely solely on existing local authority provision, and that something more is expected of the Government to fulfil their obligations under the Equality Act and the UN Convention on the Rights of Persons with Disabilities.

One of the judges stated that if the forthcoming legislation on social care, or the code of guidance on transferring responsibility for ILF users to local authorities,

“does not arrive in time or turns out to be too anaemic in content to enable the Convention principles to be brought to bear in individual cases”,

then there would need to be reconsideration as to whether the public sector equality duty had been fulfilled. He also warned that,

“the level of Treasury funding for … this class of ILF users in transition back to”—

local authority provision—

“in particular is so austere as to leave no option but to reverse progress already achieved in independent living”.

I look forward to hearing from the Minister how the Government have addressed the concerns raised by the courts. Their equality impact assessment offers precious little reassurance on either count.

The Government’s decision to close the fund was not a surprise. Like so many government-funded initiatives to support disabled people’s independence, it fell prey to Treasury cuts and a shaky case for non-duplication and rationalisation. While the ILF budget has risen to the region of £290 million, this money helps over 18,000 severely disabled people, many of whom were previously dependent on expensive residential care or traditional day services. One of their biggest fears is of being forced to return to such provision when ILF funding ceases.

Times have changed. We now recognise that all Britain’s citizens, including those with the most severe disabilities, should enjoy the same life chances, freedoms, and responsibility to contribute, as everyone else. The days of mainstream institutionalised care should be behind us. As the deputy president of the Supreme Court said last week, when ruling that three disabled people had been deprived of their liberty in comfortable care facilities:

“A gilded cage is still a cage”.

Today, six out of 10 ILF users have some form of learning disability, and people—

[The Deputy Chairman of Committees (Lord Bichard) (CB)]

My Lords, there is a Division in the House. The Committee will adjourn for 10 minutes.

17:19

Sitting suspended for a Division in the House.

17:29

[Baroness Campbell of Surbiton]

To continue, today six out of 10 ILF users have some form of learning disability and people with significant learning disabilities are the highest single group, making up 33% of all users. About one-third of these use their ILF grant to enable them to live in supported accommodation. They and their families have paid tribute to how it has changed their lives, improved their health, expanded their horizons and, for some, opened up training and job opportunities. It became apparent when the fund was closed to new applicants in 2010 that this group would be particularly disadvantaged. The ILF told the Dilnot commission that:

“Many of these people have previously lived in residential care or long stay hospitals ... Local Authority representatives have told us that supported living placements for this group are becoming harder to finance since ILF stopped accepting applications”.

The Government’s consultation responses and impact assessment make it quite clear that ILF users will face a reduction in funding. This was confirmed by the response to the consultation from the Association of Directors of Adult Social Services and the Local Government Association:

“As ILF recipients transfer into the LA system in 2015, and are subsequently reviewed against”,

the local authority assessment criteria,

“the value of the personal budget calculated through the Resource Allocation System … will generally be at a lower level than the initial ILF/LA budget”.

Disabled people and their families are acutely aware of this prediction. They see their autonomy, independence and well-being slipping away. It is not surprising that they want to save the ILF because they mistrust local authorities’ ability to deliver independent living outcomes—outcomes which enable them to live in the community and not simply survive, the latter now being described by many as “clean and feed” provision.

Scope’s recent research evidence also indicates that local authority social care eligibility criteria and assessment based on personal care needs cannot hope to replicate ILF outcomes. It is true that equivalent funding is being transferred to local authorities, on a formula based on ILF estimates of what it would have paid recipients in each authority. However, the Government and local authorities are adamantly opposed to protecting this money via ring-fencing, so there is no guarantee that the funds will be used to support those transferring from the ILF. I can see the temptation to plunder the fund now: for mending potholes, funding crisis care or simply balancing the books. Let us not forget that the sum involved is a tiny fraction of further cuts planned in local government funding.

The Government giveth and the Government taketh away. For better or worse, the Government have decided to close the ILF. My concern now is that without proper protection and monitoring, the new process and procedures for delivery will fail to meet the 21st-century rights of disabled people to independent living, as articulated in Articles 19, 24 and 27 of the UN Convention on the Rights of Persons with Disabilities. It is clear that the courts share this concern.

Policy responsibility for future support for ILF users now passes to the Health Secretary and implementation falls within the framework set out in the Care Bill. I am a little bewildered that the Health and Social Care Minister is not responding to this debate: surely we are here to debate the future of independent living support, not the past. Along with my fellow Peers, I have worked closely with the Government to ensure that disabled people’s rights and responsibilities are embedded in the Care Bill: Inclusion London, Disability Rights UK and Scope have all produced constructive research evidence and practical ideas, shaping the continuity of care provisions, assessment procedures and much more. I want to see this model of collaboration throughout the ILF transition. In addition, regulations and detailed statutory guidance on the assessment of needs being prepared under the Bill must specifically address the needs of those transferring from the fund. Can the Minister confirm whether this is happening?

We have only 15 months to get the new structure for delivering independent living support fit for purpose. I am therefore asking the DWP, DCLG and the Department of Health Ministers for two immediate actions. The first is to initiate a reference group to oversee and monitor the effects of the ILF transition for two years. This group should work along the same lines as the current continuity of care group which involves disabled people, including myself, Government officials and local authority practitioners. Secondly, the Ministers for Social Care and Local Government should develop statutory regulation and guidance to ensure that the current principles and resources secured for independent living purposes continue after the transfer.

Without that twofold plan the Government are in jeopardy of undoing 30 years of independent living development, which has brought the most severely disabled people out from the shadows of dependency services. Let us ensure that they do not return to the back room, watching TV, or end up in 21st-century “gilded cages”. I look forward to hearing the Minister’s response, and very much look forward to this debate.

17:35

[Lord Cormack (Con)]

My Lords, I can say “Amen” to that. We are all greatly in the debt of the noble Baroness, Lady Campbell, not only for the way in which she has introduced this debate today but for the shining example that she gives us all, day in, day out, when she is in this building. I first became conscious of her presence on a Sunday afternoon in August. I was listening to “Desert Island Discs”, and had to pull into a car park because I did not want to be early for my lunch until I had heard everything that the noble Baroness had said and had chosen. That was the most inspiring episode of that programme I have ever heard. We have here someone who has overcome enormous disabilities to be a leader, and is a Member who plays a very full part in the deliberations of your Lordships’ House. We should listen with respect and care to what she has said.

It seems that the die is cast as far as the Government’s decision is concerned. Personally, I regret that. We now have to ensure that the things that could happen do not happen. We must not give the disabled in our midst a postcode lottery, and there has to be a guarantee of help which is at least the equivalent of that to which they have become accustomed. However, inevitably, there is a feeling of real concern and doubt in the disabled community, and I hope that when my noble friend comes to sum up this debate, he will be able to put all our minds at rest. There is a duty upon whoever is in government to help those who are least able to help themselves without the sort of assistance that they have had over the past 30 years. Coming in from the cold, out of the shadows—one can use various expressions. However, the fact is that this fund has enabled people to fulfil themselves in a way that was not possible before. What we all need, as we struggle with life, is independence, security and stability.

For many of us, it is not too difficult to have those three things, but for those who labour under great disability, it is. I cannot begin to say that I understand fully or even partially the sort of obstacles that the noble Baroness has so valiantly and inspiringly overcome. However, we all have problems from time to time that make us just a little aware of those obstacles. When I broke my arm once, and for six weeks could not use my right hand at all, I became a little conscious of them. Last year, as some of your Lordships will know, I was hobbling around with a stick because I had a particularly bad back. I thought that I faced spinal surgery—and thank God I did not. However, during that period I became acutely conscious of what some of my colleagues in this House have overcome. They are an inspiring example to us all.

I cannot understand the logic of winding up the fund. I find it difficult. But it is incumbent upon the Government to answer with real conviction, dedication and determination the points put by the noble Baroness, Lady Campbell, in her concluding remarks. Knowing my noble friend, in this place and in another one, I know that he is a man of real compassion and I hope he will be able to set our minds at rest.

It really would be appalling if in June 2015, when we are all celebrating the birth of the rule of law in the meadows of Runnymede in June 1215, we foreclosed on some of those in our society whose need is particularly great. If anyone deserves practical compassion, it is the noble Baroness and those like her. I thank her for all she has done. I thank her for the inspiration she gave us this afternoon, and I look forward in hope and expectation to the Minister being able to put our minds at rest.

17:40

[Baroness Hollins (CB)]

My Lords, I congratulate my noble friend on introducing this debate and on her advocacy for the right of disabled people to live independently. My own interest derives from my work as a psychiatrist with people with learning disabilities for more than 30 years, and as the mother of two disabled adults.

The Independent Living Fund provides important support for more than 18,000 disabled people. I know that many people with a learning disability, particularly those with profound and multiple learning disabilities, have benefited from the fund. The Government’s view that such a discretionary fund should be subsumed into the mainstream social care budget of the local authority might perhaps be an agreeable one if social care were not being so horribly squeezed already and if people with disabilities were not already being adversely affected by cuts to welfare benefits.

My noble friend referred to the serious delays to progress in the post-Winterbourne View programme that aims to move people who are in institutional or supposedly specialist hospital care back into their home communities. This has been held up. Local authorities seem to have no incentive: it is cheaper for cash-strapped local authorities to admit people to NHS or private specialist hospitals than to provide skilled suitable support for them at home.

In the past three years, an estimated £2.68 billion has been cut from adult social care budgets—a figure cited by the Association of Adult Directors of Social Services. Of course, the result has been a tightening of the eligibility criteria, meaning that many people have already lost much-needed support. The Care Bill, a very welcome piece of legislation, sets a national eligibility threshold that is intended to bring consistency across the country. However, the Government have said that they will set the threshold of care at “substantial”, meaning that many people—I am thinking here of people with learning disabilities—will lose out and find their independence threatened. Such a restriction will undoubtedly leave local authorities struggling to deliver on the new well-being principle set out in the Bill.

Organisations such as Mencap, which assisted with research for my speech today, and others within the Care and Support Alliance have highlighted the impact on those with mild and moderate needs losing care as the threshold rises. A few hours of care a week for someone with a mild learning disability might be the difference between living independently and being alone and lonely at home. It might mean being supported to get out into the community, being involved in leisure activities, being helped to organise money and pay bills, and being less vulnerable to exploitation. Last week I watched a play performed by a theatre company of actors with learning disabilities. The play was called Living Without Fear. The actors illustrated graphically the lives of people with inadequate support living at home, and the kind of disability hate crime and exploitation that some people with inadequate support will face.

Many people rely on relatively cheap and low levels of care. The loss of such care risks isolating them and denying them independence—something, of course, that is central to this debate. The Independent Living Fund supports a number of people with low or moderate needs. It is members of this group who might well be hit twice. The focus of the fund on supporting independence could be lost by being subsumed into a general adult social care budget. One worry I have is that the welcome move toward supported living for people with learning disabilities will be slowed down now with a retreat to a residential warehousing model of care, which we have been working so hard over the past 30 years to turn around.

Like the noble Baroness, Lady Campbell, I look forward to the Minister’s response on how the transition will be handled, particularly in light of the increasing financial constraints faced by local authorities. I am interested in the Minister’s comments on how the effects of the abolition of the fund will be evaluated and reported.

17:46

[Baroness Wilkins (Lab)]

My Lords, the Government have been given the clearest of warnings that their plans to close the Independent Living Fund and transfer its responsibilities to local authorities could relegate thousands of disabled people to residential care—either that or they would be living such reduced lives that they would be deprived of their current ability to live independently, have a family life, be educated, be employed, do voluntary work and contribute to their communities. Is the coalition Government honestly willing to accept this? Do they understand the wholly justified fear that this decision has generated?

I congratulate the noble Baroness, Lady Campbell, on securing this debate, and I look forward to the Minister’s response to her positive suggestions on ways in which this miserable situation can be alleviated. It is just not possible for the Government to deny that we have a crisis in social care. Only this past week, the Nuffield Trust reported that a quarter of a million older people have lost their basic social care over the past four years due to cuts in council budgets. The report’s authors warned that the NHS and Government are now “flying blind” in planning services for vulnerable people because there is no way of assessing the true impact that social care cuts are having on their lives.

Over the past three years, £2.68 billion has been cut from adult social care budgets despite the increasing numbers of working-age disabled people needing care. Research contained in the report The Other Care Crisis last year found that this is having a significant impact on the ability of disabled people to live independently; 40% of respondents said that the social care services do not meet their basic needs, such as washing, dressing or getting out of the house. How can the Government support a policy which now probably condemns another 20,000 to join that fate?

This is the situation we face, yet somehow the Minister for Disabled People, in his Statement on 6 March, could say:

“The key features that have contributed to the Independent Living Fund’s success, in particular, the choice and control it has given disabled people over how their care and support is managed, are now provided, or are very soon to be provided, within the mainstream system”.—[Official Report, Commons, 6/3/14; col. 143WS.]

I take it that the Minister was basing his argument on the Care Bill, with its very welcome introduction of the well-being principle in Clause 1. But this principle does not include key concepts of independent living, such as choice, inclusion and equal participation.

How soon will it be that a local authority argues that a former ILF user’s well-being is being met in residential care, despite it being totally against the individual’s wishes or choice? All attempts by the Labour Opposition in the Commons to include independent living in the well-being principle were voted down by the Government. Moreover, as we constantly argued during its passage, the Care Bill has little chance of achieving its aims without sufficient finance. First it has to overcome the current £1.2 billion shortfall in funding social care for disabled people under 65, let alone care for older people. I feel sure that the Minister will cite the £3.8 billion joint health and social care funding—the so-called “better care funding”—as the solution. Welcome as this is, it is not new funding. NHS England and the Local Government Association have pointed out:

“The £3.8bn pool brings together NHS and Local Government resources that are already committed to existing core activity”.

The fundamental question that lies behind this debate is whether social care is capable of delivering a right to independent living. Disabled people have been striving to establish this for the past 30 years. Far from abolishing the ILF, we need a system which builds on the way it has enabled thousands to live ordinary lives. We need a system based on universal principles, which funds the additional costs that disabled people have—of all ages and across the whole range of impairments and long-term health conditions. It needs to be a nationally consistent system, with no element of postcode lottery.

The noble Baroness, Lady Campbell, has proposed to the Government a way to alleviate the misery of the policy they are adopting. I hope that the Minister will grasp it and at the very, very least persuade his fellow Ministers to ring-fence the ILF funds when they are transferred.

17:51

[Lord Low of Dalston (CB)]

My Lords, I am grateful to the noble Baroness, Lady Campbell, for initiating this debate on replacement arrangements for the Independent Living Fund. Closure of the ILF potentially represents a crisis in funding to support the independent living of a significant group of some of the most severely disabled people in the United Kingdom.

The ILF is a national scheme providing financial support for almost 20,000 disabled people to live independently in the community rather than in residential care. It was originally set up in 1988 as a temporary measure to mitigate the impact of implementing new community care legislation and a review of social security benefits for disabled people which was being undertaken by the Government of that time.

However, the desire of disabled people to live more independently was vastly underestimated. Within its first year, the fund attracted 900 applications a month, later rising to more than 2,000. The fund proved very popular. It worked very well. It met a real need and, as a result, has survived to this day, supporting nearly 20,000 disabled people, many of whom have some of the most severe and complex needs.

In June 2010, the Government closed the fund to new applicants. In December 2012, they proposed to abolish it altogether. In November 2013, the Court of Appeal ruled against the Government’s decision to abolish the fund. However, on 6 March this year, as we have heard, the Minister for Disabled People announced his intention to close the fund anyway, on 30 June 2015.

The Government’s thinking is that the ILF should close and funding will be transferred to local authorities so that current claimants can be supported through the mainstream adult social care system. I recognise that the ILF is something of an anomaly, falling as it does on the DWP budget and sitting outside the mainstream system of social care funding. However, sometimes it is appropriate that the imperatives of bureaucratic tidiness should give way to the pragmatism of what works.

I acknowledge that the Government have said funding from the ILF will be transferred to local authorities and the devolved Administrations. However, this must be judged against the state of social care funding. Cuts to local authority budgets of more than 20% since 2010 have had a devastating impact on social care provision. The amount spent by councils on adult social care has fallen by £2.8 billion, or 20% between 2011 and 2014, and the Audit Commission’s Tough Times 2013 report, published at the end of last year, found that while reductions in adult care accounted for 14% of council cuts between 2010-11 and 2011-12, they will account for 52% in 2013-14.

Consequent pressures on local authority budgets have meant that thresholds for care have risen dramatically, meaning that fewer disabled people qualify for social care. Since 2008, 97,000 fewer disabled people aged 18 to 64 have received social care, and even those still eligible for care experience the rationing of support. In these circumstances, the Government’s assertion that the social care system will simply pick up where the ILF left off is unrealistic in the extreme. This is especially the case when it is realised that the £320 million that the ILF currently costs will not be ring-fenced when it is transferred to local authorities.

As the Government have stated their intention to set the new national eligibility threshold at a level equivalent to “substantial”, the more than 3,000 ILF claimants in group 1, a significant proportion of whom have low or moderate needs, will likely not receive any support to live independently once the fund closes. Without this support, ILF claimants will find it harder to live independently and risk being forced to live in residential care, breaching Article 19 of the UN Convention on the Rights of Persons with Disabilities, which sets out the equal right of all disabled people to choose to live in the community and government’s duty to take effective and appropriate measures to facilitate this right.

Like everybody else, I want to ask the Minister what replacement arrangements for the fund it is proposed will be put in place. With the closure of the ILF, I want also to ask whether the Government will commit to developing a strategy for local and central government to support disabled people to live as independently as possible. As part of such a strategy, will they make independent living a key outcome for delivering social care for disabled people?

The ILF system, however flawed, exists in recognition of the fact that people with high support needs are at particularly high risk of social exclusion. They face particular barriers to living independently in the community and their needs in this regard are not adequately addressed by mainstream provision. By taking away the support provided by the Independent Living Fund, the Government, whether intentionally or not, are sending a message that independent living for disabled people is not a priority for either local or national government. That is at the heart of the concerns that disabled people who receive support through the ILF are expressing.

17:57

[Lord Kirkwood of Kirkhope (LD)]

My Lords, it is a pleasure to follow the noble Lord, Lord Low of Dalston. I entirely agree with his concluding point that the needs of people who have multiple impediments are not being properly taken account of. I join others in congratulating the noble Baroness, Lady Campbell of Surbiton, on introducing this debate. She is being entirely realistic in the demands that she makes, and I support both of them. I hope that the Committee will not allow the Minister to duck both the propositions that she put: first, her idea of a reference group to monitor the two-year period that is just about to unfold; and secondly, the possibility of regulations and guidance that would continue thereafter. These are both entirely appropriate and I agree with her desire to bring them about.

Like some other colleagues, I am a refugee from the days when the 1988 regulations were put in place by that great man, Lord Newton, and Nick Scott. Those were the days of an enlightened Conservative Administration—some of us remember that. There was a real problem in 1988, and Tony Newton cut through some of the difficulties of moving the supplementary benefit into the new social security system and was enlightened enough to set this thing up.

We would be moving in entirely the wrong direction if the Independent Living Fund was closed. One of the books I received for Christmas—I am still reading it because it is very, very thick—is Andrew Solomon’s Far from the Tree: Parents, Children and the Search for Identity. It is inspiring and I recommend it to the Minister in particular because it might occupy his time and prevent him from getting involved in anything more nefarious in the department. It is an inspirational book because it shows what can be done with proper support. It also shows what can be done regarding employment if there is adequate support.

The simple point I want to make is that if you look at the work being done by the noble Lord, Lord O’Donnell, on the question of well-being and the inadequacies of using GDP and simple monetary ways of measuring some of these issues faced by severely impaired individuals, we are missing an opportunity. Some of the case histories that Andrew Solomon considers in his book represent positive contributions to the families. In those cases, not only is well-being demonstrably and undeniably increased but they create a business case for preventive spending for the long term. If people get into work, they do not need nearly as much financial support. With assistance, they can trade their way out of difficulty.

Looking forward, the idea is not easy and is still novel. We should be testing whether systems such as the Independent Living Fund can be reconfigured in a way that considers spending as preventive. The reference group that we are thinking about setting up here—I hope that the Minister can consent to that—could additionally be tasked with looking at individual examples in which severe impairments are faced by family members and at how they can be turned around into success stories, and in which the well-being of everyone involved can be increased. That is a very interesting aspect of public policy that we are missing at the moment, and from which we are stepping away by closing the Independent Living Fund. We are doing the wrong thing. I would personally agree to the setting up of a reference group such as that suggested by the noble Baroness, with guidance to examine in a more informed way the issues and possibilities for preventive spending.

Like my noble friend Lord Cormack, I am already a signed-up member of the fan club of the noble Baroness, Lady Campbell of Surbiton. I will therefore follow her lead and support her in every way that I can in trying to establish the reference group that she is asking for.

18:02

[Baroness Grey-Thompson (CB)]

My Lords, I thank my noble friend Lady Campbell of Surbiton for tabling this debate.

In my time in your Lordships’ House, I have had the pleasure of participating in, among others, the passage of the Welfare Reform Act and the legal aid Act, and the Care Bill. Through the legislation that has been passed we will see some of the biggest changes to the lives of disabled people in many, many years. While there have been varying amounts of media coverage over the welfare and legal changes, the effect of disbanding the Independent Living Fund has happened rather under the radar—perhaps because the role and funding available has been gradually eroded over time.

Inclusion London has argued that the ILF provided both value for money and value for disabled people. The ILF has only about 2% overhead costs, compared to 16% on average, for local authorities. The £350 million the ILF costs in government funding each year supports around 20,000 disabled people. This equates to, on average, £17,500 per person, equivalent to approximately £337 per week, or £48 per day. This compares—I was going to say “very well”—extraordinarily well to the notorious Winterbourne View private hospital, where the average cost was £3,500 a week.

The user base of ILF is mostly young disabled people; only a small percentage, around 6.4%, is over 65 years old. The ILF has had consistently high user outcome satisfaction, ranging from 94% in 2009-10 to 97% in 2012-13. Perhaps that was because it was centred on the person. I, like many, was extremely disappointed that the journey of the ILF appears to have been so tortuous recently and that disabled people, having been through the High Court case, were thrown a lifeline only to have it removed again. That was very ably explained by my noble friend Lord Low.

18:04

Sitting suspended for a Division in the House.

18:14

[Baroness Grey-Thompson]

My Lords, it is important to remember that the Independent Living Fund was designed to give disabled people the same rights as anyone else: to work, to socialise, to have a family, to participate in society and—I know it sounds a bit dramatic—just to live. That was brought home to me when a number of people got in touch with me because of this debate. Fran said that it enabled her,

“to live, not just exist”.

Right now, I feel very lucky that, at least for the time being, I do not have care or support needs.

We are debating this issue at a time when the media coverage surrounding disabled people is inherently negative. You only have to scan the coverage to see that they—or rather, “we”—are being portrayed as scroungers and skivers who are a drain on society. The size of the welfare budget is endlessly debated, but what it widely encompasses is usually not. Scope’s report, which was launched this morning, highlighted how little attitudes have changed in many areas over the past 20 years.

My real worry is that it will become “too expensive” for disabled people to live independent lives. If the funding is not ring-fenced, a disabled person’s independence is balanced against a contribution to, say, upgrading street lighting. There is a real danger that it becomes a decision about the benevolence that we choose to bestow on disabled people rather than something that should be clearly defined.

I mentioned that a number of people got in touch with me, and this is a snapshot of what I was told. Sue told me that they would move from being able to fit care plans to people’s needs to having to plan around care visits. Jackie said that once the ILF goes, so does the safety net around disabled people. Rachel said that disabled people are frightened for their future, and that they may be made to live in care homes. Fran, who I quoted earlier, gave a very balanced response:

“By employing and managing my own support, I create full time permanent jobs for personal assistants on a living wage at zero profit (I manage, including paying Tax and NI and recruit my staff for free) rather than carers on zero hour contracts on min wage with private companies profiting. Also it has been strongly evidenced that this central fund costs less than equivalent social services support per hour, due to low central administration and overhead costs, so care packages will need to be cut to create any saving. I am deeply scared this is putting thousands of Disabled people back to the pre-1980s era—unseen, institutionalised or trapped at home with inadequate support”.

I believe that the time to save the ILF in this format has passed. However, I like the idea put forward by the noble Lord, Lord Kirkwood, that we need to reconfigure what we are doing. It is essential that what happens from here, and the protection of the budget, get the urgent consideration they require.

17:46

[Lord McAvoy (Lab)]

My Lords, I add my congratulations and thanks to those of colleagues who thanked the noble Baroness, Lady Campbell of Surbiton, for her integrity in bringing us here and for the quality of her presentation. The quality of presentations from other colleagues has also been first class.

The closure of the Independent Living Fund is a truly reprehensible decision, which is already causing recipients of the fund immeasurable hardship. The fund has served disabled people well. For those in receipt of the fund there is now a continual anxiety and fear about what comes next.

Like other colleagues, I press the Government to say what arrangements they are making to communicate with recipients of the fund and with local authorities. Responsibility will be devolved to local authorities from June 2015, but there remains no comprehensive strategy for implementation. Is it really the case that local authorities have no information on how the fund is to be devolved, divided, or maintained? What discussions are the Government having with local authorities?

Even more importantly, what is being done to inform recipients of the changes being made and to guide them through them? The closure of the ILF is already adversely impacting upon recipients lives; many feel ignored and marginalised. Worryingly, the Government’s equalities analysis, which the courts forced them to carry out, is full of imprecision. The Government seem unsure of the actual effects their policy will have. Some £262 million will be available to local authorities and devolved Administrations in place of the ILF in 2015-16, but what will happen after that date? The money being given to local authorities, as I think every Member of the Committee has mentioned, is not ring-fenced. Local authorities’ social care budgets were cut by £893 million in 2012-13 and will be cut by a further 28% in 2013-14. It would be unsurprising if cash-strapped local authorities used this money to mitigate the effect of these cuts. What protections are the Government putting in place to ensure that this money is used appropriately? Why is the money not being ring-fenced?

It is clear that local authorities will have to apply their own assessment and eligibility criteria unless the Government build in some form of protection on transfer. Why have the Government not done this and what assessment has been made of this likely postcode lottery? That concern was also raised by the noble Lord, Lord Cormack.

It has been suggested that existing social care support assessments provide a means for determining support. However, in submissions to the Government’s consultation, several local authorities reported that group 1 users may not meet social care criteria. The equalities assessment noted:

“For those Group 1 users not in receipt of any support from their local authority, the loss of ILF funding will most likely have a significant effect”.

This represents 40% of group 1 users. There is a clear identification of risk to these people. What is being done to address this?

There is a disturbing lack of information on what is going to happen after June 2015. It is essential that recipients and local authorities have more information and are kept informed. What guarantees are the Government planning to ensure that former ILF funds are spent correctly? What protections will there be for group 1 recipients who are not in receipt of local authority support? These issues are already causing immense distress to disabled people and, if they go unaddressed, will cause serious hardship. Like the noble Lord, Lord Kirkwood of Kirkhope, I fully support the call of the noble Baroness, Lady Campbell, for a reference group. If there is no one there to fight the corner of people who are less able than the majority around them, they will in my opinion inevitably suffer. I call on the Government to respond to the noble Baroness’s call for a reference group.

18:22

[Lord Bates (Con)]

My Lords, first, like all noble Lords in this debate, I pay tribute to the noble Baroness, Lady Campbell of Surbiton. My noble friend Lord Cormack was absolutely right in his tribute to her as a shining example in this place, and he gave me the injunction to listen to her with care and respect. That is absolutely what we will do in the way in which we are responding to the debate, and in seeking to provide the assurances that are being sought.

We have heard about the valuable role that the Independent Living Fund has played and continues to play in enabling severely disabled people to live independently. The noble Baroness, Lady Campbell, talked from her personal experience, and the noble Baroness, Lady Grey-Thompson, referred to the feedback that she had received from people who had written to her. The reality is that the Independent Living Fund had been a significant success. The noble Lord, Lord Low, referred to the popularity of the fund when it was instituted in 1988. Over the past 26 years, the number of people whom it has helped has gone up from 300 to 20,000 at its peak, and now down to around 18,000. These changes mean that the features that have contributed to the ILF’s success are now, or very soon will be, available within the mainstream system across the UK. It is also the case that the ILF has always benefitted from the relatively small proportion of the severely disabled people who use the mainstream adult social care system, numbering about 1.3 million. Indeed, that broad care for disability is something that the noble Lord, Lord Kirkwood, referred to as coming from an enlightened Administration in the shape of the much missed Lord Newton. I served in that department as a PPS—although, I have to say in these times, not in a nefarious way at all—in supporting Nicholas Scott as he was taking forward that excellent piece of legislation, the Disability Discrimination Act 1995, which was really a sea change in the way that disabled people were treated and respected in our society.

On 6 March the Government announced the closure of the ILF on 30 June 2015. Funding will transfer to the English local authorities and the devolved Administrations. Local authorities in England will take direct responsibility for meeting the eligible care and support needs of ILF users. The devolved Administrations can decide how they wish to support ILF users in Scotland, Wales and Northern Ireland.

Significant points have been raised and we want to look at them very carefully. In relation to the reference group, which the noble Baroness, Lady Campbell, referred to, the ILF is committed to working in partnership with local authorities to ensure a smooth transition for users. The transitional arrangements now being implemented were developed from an extensive engagement between the ILF and a wide range of stakeholders, including local authorities across the UK, charities and other organisations representing disabled people, and ILF users themselves, 2,000 of whom responded to the consultation. Therefore, we feel that the consultation has been carried out and we do not think that such a group is necessary at this time.

The subject of visits was raised by the noble Lord, Lord McAvoy. Before June 2015 each user will be visited by the ILF, accompanied wherever possible by a local authority social care worker. These visits are designed to review the individual’s current support package to ensure a joint understanding of the outcomes being secured and to address concerns about transition. Once the programme of visits is complete, the ILF will contact local authorities to ensure that they have all the necessary information about every individual user in their area.

A number of noble Lords, particularly the noble Baroness, Lady Wilkins, mentioned the court case. Because of that uncertainty, a programme of visits to each and every one of the 18,000 people who are going to be affected had to be halted for a time as the closure of the fund was quashed. That has now restarted. There is no doubt that the level of anxiety understandably felt by those people who do not have a support plan begins to reduce once a plan is in place. We believe that that trend will continue as we move forward.

In terms of the essential nature of how we interact with the local authorities, a code of practice is now in place between the local authorities and the ILF. It has been drawn up with the Local Government Association. One of the reasons why—in fact, probably the reason why—we are now contemplating removing, in the words of the noble Lord, Lord Low, this anomaly and trying to bring it into the mainstream is that the quality of care provided at a local level by local authorities, on all the evidence I have seen, has risen dramatically over the past 25 years, to a point where that can be now considered. I will come on to the central part of that, which is the Care Bill. But there is that code of practice, which sets out the criteria for those visits to be undertaken with support and, crucially, that it is the duty of the local authority to ensure that the support plan is in consultation with a current member of the Independent Living Fund. If they are not satisfied with that, then it is also the duty of the local authority to signpost them in the direction of where they can receive advocacy and support in order to address their concerns and make sure that they actually get the help that they need, delivered in a seamless way.

I acknowledge the depth of concern shared by many users about how this decision could affect them. Some are concerned that they will not qualify for local authority support or that reductions to their care packages will mean that they cannot secure the independent living outcomes that they now achieve. This was a point raised by several noble Lords. It is right to address some of these issues in more detail. Local authorities already have a statutory duty to fund eligible care needs. The Care Bill will introduce a new national minimum-eligibility threshold for England in order to receive support from the Independent Living Fund. The two are very much part of the package.

The majority of current users, around 15,200, must have local authority funding of at least £340 a week. It is reasonable to assume that this group have support needs that mean that they will qualify for support from their local authority. In fact, that point, which my noble friend Lord Cormack raised, about having the minimum guarantee, I think is contained in that minimum eligibility and also in the code of practice. It is also right that the Government consider the position of all disabled people. The noble Lord, Lord Low, referred to the point about the slightly anomalous position about disabled people deciding about the Independent Living Fund—rather, the position of all disabled people when deciding how best to distribute the available resources—but does not believe that continuing with the current two-tier system is the right approach. It is becoming increasingly difficult to justify the present arrangements.

On the position for those who applied to the ILF before 1993, the noble Lord, Lord McAvoy, referred to group 1 and group 2 cohorts who are treated slightly differently. The position of those in group 1, ILF before 1993, some 2,800, is less straightforward. Some of this group may well have needs that fall below the new minimum threshold and will not therefore qualify for local authority support. Most of them, however, do have some local authority support, with almost 27% getting more than £600 a week. This suggests that many will be eligible for local authority support once the ILF closes. The noble Baroness, Campbell, and others mentioned the UN Convention on the Rights of Persons with Disabilities. We do believe that it is compliant with this and are taking great care and careful note of this. The noble Baroness also questioned why a spokesman for the Department for Work and Pensions was responding to the debate rather than the Minister for Health and Social Services. Of course, for historical reasons, the Minister for Disabled People—we talked about the late Sir Nicholas Scott—has always resided within the Department for Work and Pensions. He has, however, a collective role in co-ordinating all responses across Government for and in the interests of disabled people.

Legislation coming into force from April 2015 aims at promoting greater independence and will increase choice and control for disabled people. The Care Bill represents the most significant reform of social care in England in more than 60 years. Local authorities will be required to take individual well-being into account when making decisions about care and support, including the outcomes we want to achieve. The Bill will give users of the social-care system the right to a personal budget, which so many members stress as being critical and instrumental in giving a sense of independence and dignity to disabled people. Broadly similar legislation has come into force in Scotland, and will come into force in Wales in 2015.

I want to respond to the comments made by the noble Baronesses, Lady Hollins and Lady Wilkins, and others about funding. Social care expenditure has not fallen by 20%—£2.7 billion—since 2010-11; £2.7 billion represents the savings that councils have had to make to meet demand. Spending has been roughly flat in cash terms over the period, and the latest survey shows that councils are expecting a small increase in expenditure over the next year.

The noble Baroness, Lady Wilkins, asked about statutory guidance, as did the noble Baroness, Lady Campbell. The Government’s position on how local authorities manage their finances is clear: they should have the freedom to meet their statutory responsibilities flexibly and responsively in line with local priorities. I hear the point made about a postcode lottery. It is a phrase which rolls off the tongue, but I am sure that the noble Baroness, who knows these areas very well, would acknowledge that there are wide differences in the take-up of the Independent Living Fund between local authorities. For example, wide differences in take-up have always existed between England and Scotland. We believe that through establishing the code of conduct, through having those personal support plans and, most crucially, through instigating the minimum-eligibility criteria that the Care Bill upholds, these dangers will be minimised.

The noble Baroness, Lady Hollins, asked about monitoring and evaluation. We said in the equality analysis which took place following the court decision that we are committed to monitoring the impact of all policies relating to this area. I give a personal undertaking to relay to my colleagues at the Department for Work and Pensions the concerns raised by noble Members of this Committee today to ensure that we have the right monitoring system in place and that those who need this vital help continue to receive it.

Committee adjourned at 6.36 pm.

House of Lords

Monday 31st March 2014 Lords Chamber

Monday, 31 March 2014.

14:30

Prayers—read by the Lord Bishop of Leicester.

Retirement of a Member: Lord Grenfell

Monday 31st March 2014 Lords Chamber

Announcement

14:37

[The Lord Speaker (Baroness D’Souza)]

My Lords, I have to notify the House that the noble Lord, Lord Grenfell, has indicated his wish to retire permanently from the service of the House. His retirement will take effect today. I am sure that the House will wish to join me in recognising the many years of service that the noble Lord has given to this House. Furthermore, the House will want to congratulate the noble Lord on taking this difficult but entirely praiseworthy step. On behalf of all your Lordships, I wish the noble Lord a very happy retirement.

Airports: Heathrow

Monday 31st March 2014 Lords Chamber

Question

14:37

Asked by

[Lord Spicer]

To ask Her Majesty’s Government whether they have made any assessment of the future ability of United Kingdom airlines to operate out of Heathrow Airport.

[The Minister of State, Department for Transport (Baroness Kramer) (LD)]

My Lords, the Government have made no such assessment. The future ability of United Kingdom and other airlines to operate at specific airports is a commercial matter for airlines and airports. The Government publish aviation forecasts for the UK, including air transport movements and passenger numbers, most recently in January 2013. The independent Airports Commission will report in 2015 on any recommended requirements for additional capacity to maintain the UK’s global hub status.

[Lord Spicer (Con)]

Is the Minister aware that it is because of the uncertainties about capacity at Heathrow that British Airways is undecided about whether to keep a big hub there? Would that not have been unthinkable in the 1980s, for instance, when Heathrow was the No. 1 international airport in the world and when I was Minister of Aviation?

[Baroness Kramer]

My Lords, Heathrow is an incredibly successful airport where many people vie for slots. The commission has been clear that there is no crisis of capacity in the south-east now, although it concluded that we will need one additional runway in the south-east by 2030 and, in all likelihood, a second by 2050. In the mean time, the noble Lord will note that the UK has the third-largest aviation network in the world after the USA and China. London serves 360 destinations, in comparison to Paris at around 300 destinations and Frankfurt at 250.

[Lord Bradshaw (LD)]

As regards the information that we have had today about climate change, will the Minister update the House on what progress is being made to improve the ground connections, specifically the rail connections, from Heathrow, which matter whether or not we have a third runway there?

[Baroness Kramer]

My Lords, we expect the commission’s recommendation to be consistent with our plans to cope with climate change, but the noble Lord will of course be aware that the commission, among others, reported into HM Treasury’s national infrastructure plan, which was published on 4 December. That recommended quite a number of enhancements for rail access. As a consequence of that, work will be done to provide rail access at Heathrow from the south. More is being spoken about that today as part of the announcement of how Network Rail will spend £38 billion that has been provided. Indeed, further enhancements to surface access for Gatwick and Stansted are in that national infrastructure plan.

[Lord Clinton-Davis (Lab)]

The Minister is complacent. Does she realise that while we delay, Frankfurt, Schiphol and Paris are all thriving and expanding? Meanwhile, the main sufferers will be British Airways and British aviation. Is it not time for an altered Heathrow to provide the obvious choice for expansion? In that way, British airlines will expand with it.

[Baroness Kramer]

My Lords, as the House will know, the Davies commission is looking precisely at the capacity issue in the south-east and will recommend what it considers to be the best way to respond to it. That report will come in 2015. The Government of the day will then decide how to respond to the report. Given the quality and quantity of the work, it would be wrong to pre-empt that decision.

[Lord Stoddart of Swindon (Ind Lab)]

My Lords, I congratulate the Government on their decision to extend Crossrail to Reading after much representation by the local authority, residents and indeed Members of Parliament. Will the Minister confirm that that will provide after 2019 a direct link to Heathrow, which will serve well not only Reading but the many other places that can be reached from Reading? I declare an interest as I live there.

[Baroness Kramer]

The link from the west is crucially important. More was said again today in the announcement about Network Rail and we are always delighted to hear congratulations.

[Lord Davies of Oldham (Lab)]

We all know that the Government congratulate themselves on having kicked into the long grass the crucial issues of what to do about an additional runway in the south-east. But Sir Howard Davies produced an interim report in 2013, which had some constructive suggestions. I cannot for the life of me understand why the Government are similarly inert about those issues. For instance, one of his recommendations was that we should establish an ombudsman to identify the irritation, difficulties and problems associated with noise at Heathrow. Why on earth do the Government not act on that? After all, we know that the big problem with regard to the location of the additional runway is people’s anxiety about noise.

[Baroness Kramer]

The noble Lord is right that there are many interesting suggestions in the interim report. The Government will respond to that shortly, but they are substantial recommendations that deserve a great deal of consideration before we come to a conclusion. As I said, we will respond shortly, but unfortunately I am not in a position to do that today.

[Baroness Tonge (Ind LD)]

My Lords, will the Minister accept that the present method of measuring the noise of aircraft coming in and out of Heathrow is seriously deficient? In fact, the lowest levels disturb residents far more than anyone can imagine. Will she say what plans the Government have to revise how they measure noise levels from aircraft, following the noble Lord’s question earlier?

[Baroness Kramer]

The issue of noise, as people will understand, is a contentious one that has been addressed in a number of ways in the interim report presented by the Davies commission. Our response to that noise issue will be part of our response to the overall interim report.

[The Lord Bishop of Birmingham]

My Lords, will the Minister take note of the increased capacity of regional airports in this country—for example, the extended runway at Birmingham? Will she encourage airline users and businesses to use these airports not only for the convenience of British travellers but also for the increased capacity and enjoyment of visitors to this country?

[Baroness Kramer]

My Lords, it is indeed true that regional airports play a very important role. That has been widely recognised in the Aviation Policy Framework published by the Government last March. It is also true that Birmingham is expanding its runway; there are other upgrades of various kinds at both Bristol and Southend; and Manchester Airport is playing a very important role with its airport city enterprise zone development project. I recommend those airports strongly to anyone considering travelling.

Armed Forces: Biofuels

Monday 31st March 2014 Lords Chamber

Question

14:46

Asked by

[Lord Soley]

To ask Her Majesty’s Government whether they intend to increase the use of biofuels by the armed forces.

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)]

My Lords, the Ministry of Defence uses biofuels for road transport where EU legislation obliges manufacturers to include a percentage of biofuels in the fuel they produce. The use of biofuels for marine and aviation use is governed by the requirements and approvals of the department’s equipment manufacturers. The Ministry of Defence is encouraging these manufacturers to work towards adopting biofuels in the future.

[Lord Soley (Lab)]

Will the Minister put this on his agenda and take it forward? Is he aware that by 2020 the United States navy will be using ships and aircraft that use some 50% biofuels? These are not from farm produce; they are from algae and other fuels. The US air force is flying F18 high-performance jets on 50% biofuels. The Italians and the Dutch are using it, so will he—particularly on this day, bearing in mind the United Nations report—go back to his department and say, “We ought to be up there with them using biofuels in ships, planes and ground transport”? Will he also take that matter to NATO and, preferably, keep the House informed of his progress?

[Lord Astor of Hever]

My Lords, we are aware that the United States and the other countries mentioned by the noble Lord are experimenting with biofuels in their naval vessels and aircraft. The results of the performance of the fuels are being shared through equipment manufacturers and international forums such as the Air and Space Interoperability Council. The defence equipment and support fuel team regularly engages with manufacturers to understand the most recent research and how this might apply to the MoD’s fuel requirements in the future. Biofuels, however, are not the only answer, and the MoD will use the most appropriate solution available to reduce fossil fuel consumption, whether that is through using alternative technology or equipment, reducing activity levels, using alternative fuels or interoperability with our allies.

[Lord Trefgarne (Con)]

My Lords, is there not more than one respectable view as to the desirability of biofuels, given the extensive agricultural facilities required to produce them?

[Lord Astor of Hever]

My Lords, I am aware of the concerns about biofuels competing with food production but, as I said in my opening response, the MoD uses biofuels for road transport where EU regulations oblige fuel manufacturers to include them, and only for that.

[Lord Rooker (Lab)]

Does the Minister accept that most innovation in this country relating to fuels and materials starts from the motorsport industry? Have the Armed Forces picked up any tips from that thriving industry?

[Lord Astor of Hever]

My Lords, I am delighted that the noble Lord asked that question. I assure him that we are working very closely with the motorsport industry, which—as the noble Lord knows better than most—is expert in lightweighting and energy-efficient use of fuel. All Formula 1 engines have advanced energy recovery systems that reduce their fuel capacity by 40% and reduce their engine size, too, but must deliver the same power output. Race cars recover and store significantly increased energy from braking and from their turbochargers.

[Lord Palmer of Childs Hill (LD)]

My Lords, they are using more biofuels in the United States, particularly in the Sikorsky Blackhawk helicopter and—as the noble Lord, Lord Soley, said—in the navy’s farm-to-fleet project. That has had a significant effect on the change of use from food crops to biofuels. Taking a slightly different line from other questions, will the Minister tell the House that the Army, Navy and Air Force will look closely into the development of biofuels and how it affects the reduction of food production in the UK?

[Lord Astor of Hever]

My Lords, I stand by my response to my noble friend earlier. As I said, this is for use only where UK regulations oblige fuel manufacturers to include them. As that use is both limited and obligatory, the MoD has no plans to conduct any form of appraisal.

[Lord West of Spithead (Lab)]

My Lords, the noble Lord must agree that we have solved some of these fuel problems by having fewer and fewer ships and fewer and fewer aircraft. I looked historically at the 1950s—I needed to for a certain reason—and, on average, every year we commissioned between 15 and 20 warships. How many ships were commissioned in the latest financial year?

[Lord Astor of Hever]

My Lords, the noble Lord is using his imagination to try to tempt me to discuss the number of ships. This Question is about biofuels.

[Lord Elton (Con)]

My Lords, in replying to two supplementary questions, my noble friend relied on the effects of biofuel cultivation on agriculture but surely another major, and possibly longer-term, anxiety is the destruction of forestry, particularly in South America, which is reducing a diminishing resource that is a means of absorbing excess carbon in the atmosphere.

[Lord Astor of Hever]

My Lords, I am well aware of the concerns for both agriculture and forests. As I said earlier, the Ministry of Defence is such a small user of biofuels that I would rather not get into this debate.

[The Countess of Mar (CB)]

My Lords, I understand that there is a second generation sort of biofuel that does not use food and food products but is generated from bacteria, using waste materials. How much of this biofuel is used in Ministry of Defence operations?

[Lord Astor of Hever]

My Lords, I cannot answer that question but I refer to a Question asked by the noble Baroness, Lady Worthington, last year. When the noble Lord, Lord Soley, asked a supplementary question about this, my noble friend replied that these are termed “advanced biofuels”, which I think relates to the question of the noble Countess. They,

“do not have a land-take impact—certainly not in terms of taking land out of agricultural use or requiring a reduction in rainforest. Moreover, they do not have an impact on food production. Consideration is being given to greater incentives for the production of advanced biofuels”.—[Official Report, 27/3/13; col. 1077.]

Film Industry

Monday 31st March 2014 Lords Chamber

Question

14:53

Asked by

[Baroness Eaton]

To ask Her Majesty’s Government what steps they are taking to support and expand the British film industry.

[Lord Gardiner of Kimble (Con)]

My Lords, the Government are committed to encouraging film production through public funding and some of the most generous creative tax reliefs in the world. Skills development and measures to introduce larger audiences to the widest possible range of films are helping to nurture the next generation of film-makers and viewers, so that the UK film and allied industries, which generate nearly 117,000 jobs and contribute £4.6 billion to national GDP, continue to prosper.

[Baroness Eaton (Con)]

Coming from Bradford, I am delighted that film in the UK is thriving and is one of the main drivers for growth in the economy. What are Her Majesty’s Government doing to encourage skills development and training in the film industry?

[Lord Gardiner of Kimble]

My Lords, I should first congratulate Bradford on being recognised as the world’s first UNESCO City of Film. Skills for digital and creative industries are vital, which is why the Government have increased their match funding of the skills development fund and are investing in the National Film and Television School’s digital village. The BFI has launched Creative England, its new talent workshop, and the industry is also engaged with apprenticeships and the BAFTA scholarships.

[Baroness McIntosh of Hudnall (Lab)]

My Lords, is the noble Lord aware that the National Theatre has recently pulled off a considerable coup in tempting Tessa Ross from Film4 to join the National Theatre as chief executive? Jolly good for them, not so good for the film industry—but never mind. What it demonstrates is that there is a high degree of interdependency between the film industry and theatre in particular, with a number of very successful practitioners—directors, actors and screenwriters—coming initially from the theatre. Does he therefore accept that the health of the film industry depends to a significant extent on the health of the theatre?

[Lord Gardiner of Kimble]

My Lords, I think that I would go further and say that the creative industries generally are all part of the scene we have for film and the allied industries: technicians, theatre—I am very pleased with the tax reliefs for regional theatre now, for instance, in the Budget—high-end TV and animation. All of those should be seen as a whole, because the creative industries are an essential part of our national economy.

[Baroness Bonham-Carter of Yarnbury (LD)]

Following on from the noble Baroness’s question, does my noble friend agree that at the heart of the success of the British film industry are public service broadcasting television channels—from which Tessa Ross comes, of course—and that the continuing existence of Channel 4 and the BBC, funded as they are today and with their respected remits and models, is central to the continuing success of our British film industry?

[Lord Gardiner of Kimble]

My Lords, the key feature, and why it has been such a successful sector, is the mix of both commercial and public sector broadcasters. I had a meeting last week with Channel 4. I was very impressed with its encouraging of apprenticeships with 4Talent and, indeed, with the BBC and its apprenticeship schemes. All of this is part of a mix in this sector, all of which is vital for our prosperity.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I declare an interest as a former director of the British Film Institute. Given that the BFI cannot use lottery funds for its own activities, how does the Minister square what he has just said about the British film industry and support that the BFI gives with the recent 10% cut in the BFI’s budget, when other arts bodies are absorbing only a 5% cut?

[Lord Gardiner of Kimble]

My Lords, the reduction that the noble Lord mentioned is actually in line with the average across government. However, in terms of the BFI and what it is doing, I think it is an example of perhaps doing very well with a little less. In addition, the BFI Player, with a further investment, is all part of the advances in innovation. Certainly the initiatives that BFI is undertaking are very interesting and will help enormously to widen audiences.

[Lord Dobbs (Con)]

Is my noble friend aware that no Hollywood awards ceremony proceeds nowadays without accolades being showered on British films such as “Gravity”, “12 Years a Slave”, “Philomena” and, of course, the everlasting “Downton Abbey” and its ever youthful creator? Sadly, he is not in his place today—he is probably off doing something creative. Is my noble friend aware that American audiences greeted with shock the news that the all-action hero of “Homeland” was not American but, indeed, English—Damian Lewis, who is not only British but educated at Eton. At the risk of encouraging my noble friend to appear something of a luvvie, which of course I would not wish to do, can he think of any reason why this whole exercise should not be regarded as a great British success story?

[Lord Gardiner of Kimble]

My Lords, perhaps I should include my noble friend in the list of accolades. I can do no better than refer to the president of Warner Brothers UK, who recently described Britain as in the centre of a “new golden age” of film. It is interesting that Warner Brothers is investing £100 million in creating new studios at Leavesden.

[Lord Foulkes of Cumnock (Lab)]

On this Lord’s day, it is a privilege to follow a reluctant hero in this House of cards—I have read them all, as well. Seriously, has the Minister had discussions with his Scottish counterpart about setting up a new film studio in Scotland, which is long overdue?

[Lord Gardiner of Kimble]

My Lords, I have not had direct discussions, but I understand that Creative England, which is funded by the BFI, is working with creative elements in all parts of the kingdom on that. I can also say that the British Film Commission, also funded by the BFI, is looking at places where international productions can invest. I know of a studio opening in west Wales, for instance, and I will look into what might be happening in Scotland.

[The Earl of Sandwich (CB)]

The Minister mentioned the BFI at some length and online training, but I do not think that he mentioned film schools. Is anything being done to support film schools, because the United States is rather ahead of us in that? I declare an interest: my son was a director of the film school in Ealing Studios.

[Lord Gardiner of Kimble]

As I mentioned, BAFTA is undertaking some scholarships and actors are working with people who want to get into the industry. I will look into the question of film schools. I know that it is now very much less expensive to have a film made in this country than it is in America.

Housing

Monday 31st March 2014 Lords Chamber

Question

15:01

Asked by

[Baroness Browning]

To ask Her Majesty’s Government what measures they are taking to increase the supply of housing.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)]

My Lords, this Government are getting Britain building again. Housing construction is at its highest level since 2008. Affordable homes will soon be delivered at the fastest rate for more than 20 years and our latest Budget measures, which include extending the Help to Buy equity loan scheme, supporting a garden city at Ebbsfleet and providing a £525 million fund to support SME builders to get going on smaller sites, will support more than 200,000 more new homes.

[Baroness Browning (Con)]

As well as Help to Buy, will my noble friend confirm that the Government will continue to promote the right to buy, which has been so successful in helping people in social housing to become homeowners? The shadow housing Minister, Jack Dromey, told last year’s Labour Party conference:

“I was one of those in the 1980s who led the charge against the right to buy. We were half way across the field of battle we looked over our shoulder and there was no”,

one,

“behind us—there were 1.5 million housing tenants who bought their homes”.

Does my noble friend agree with him?

[Baroness Stowell of Beeston]

I certainly welcome the conversion of the shadow housing Minister to supporting the right to buy. I wish only that he would speak to his Labour colleagues who are in government in Wales as they seem to be doing everything they can over in Wales to prevent people exercising their right to buy. The contrast here in England is stark. I can reassure my noble friend that it is very much an important part of our housing strategy. We have increased the discounts available to those who wish to exercise their right and our commitment to replace the additional homes sold under our reinvigorated scheme will mean that even more people will have the same opportunity in future.

[Lord McKenzie of Luton (Lab)]

My Lords, I think that Jack Dromey is the former shadow housing Minister. Last year, the Government built the lowest number of genuine social homes for more than 20 years. We know that the Mayor of London has banned Labour councils from insisting on the building of genuine social homes through Section 106 agreements in his London plan—this against the guidance of the planning inspector. Indeed, we believe that he has just announced that at the dockyards at Deptford they are planning for 3,500 luxury flats—not a single affordable home, unless you are a millionaire, of course. Does the Minister seriously support that approach?

[Baroness Stowell of Beeston]

It is a shame that Jack Dromey is the former shadow housing Minister, because he very much supported our policy—talking about it as a policy of aspiration. On social housing, I say to the noble Lord that more council housing has been built under this Government than in all the 13 years of the previous Labour Government.

[Baroness Grender (LD)]

Does the Minister agree that it is most welcome news in the Budget that we now have a new garden city being built for the first time in a generation? Can she share with us the lessons learnt from the first and failed attempt to build Ebbsfleet when it was commissioned by the noble Lord, Lord Prescott, in 2003, and can she widen that lesson for us and explain how it can be applied to ensure that we do not have to wait for another generation before the next one?

[Baroness Stowell of Beeston]

The key lesson to be learnt from the previous Labour Government is that they set targets and tried to impose new towns and cities but ended up building nothing but resentment, whereas this Government support locally led developments. We will be publishing our garden cities prospectus soon so that locally led proposals and plans can come forward.

[Baroness Greengross (CB)]

My Lords, given the removal of the housing borrowing cap, which I support as a vice-president of the Local Government Association and which is supported by a large number of housing stakeholders, and the Deregulation Bill, which has clauses in it that will increase eligibility for the right to buy, I hope the Minister will agree with me that it is more important than ever that receipts from houses sold under the right to buy are recycled into replacement homes, and that replacement homes include designed homes that are convenient for the ageing population, which we all know about, so that those homes will be freed up for young people, who have a huge need for new homes.

[Baroness Stowell of Beeston]

I can certainly say to the noble Baroness that our policy is clear that the money raised from right-to-buy sales should be used to provide newer affordable houses for rent. As for providing housing that is tailored very much to the older generation, we certainly encourage local authorities in producing their local plans to be clear about the needs of their local population and to make sure that there are provisions in those plans for older people as well.

[Lord Campbell-Savours (Lab)]

Although it is true to say that the right-to-buy policy has been a success in some parts of the United Kingdom, is it not also true that it has been an absolute disaster in London, where people were able to buy their flats for £50,000, £60,000 or £70,000? Those former council flats are now on the market in London at £600,000 and £700,000 and very often the people who bought them have put them back on the market and sub-let them at exorbitant rents of £400 and £500 a week. What has happened to council housing in London is a scandal.

[Baroness Stowell of Beeston]

The most important thing that we need to do for housing right across the board is to increase supply. We are certainly increasing the amount of affordable housing. I might say to the noble Lord that we have built more than 170,000 new affordable homes since 2010, and two of the top five areas of the UK benefiting from this were in Tower Hamlets and Hackney.

Domestic Renewable Heat Incentive Scheme Regulations 2014

Monday 31st March 2014 Lords Chamber

Motion to Approve

15:08

Moved by

[Baroness Verma]

That the draft regulations laid before the House on 11 February be approved.

Relevant document: 23rd Report from the Joint Committee on Statutory Instrument, considered in Grand Committee on 26 March.

Motion agreed.

Enterprise Act 2002 (Protection of Legitimate Interests) (Amendment) Order 2014

Monday 31st March 2014 Lords Chamber

Enterprise and Regulatory Reform Act 2013 (Competition) (Consequential, Transitional and Saving Provisions) Order 2014

Copyright (Regulation of Relevant Licensing Bodies) Regulations 2014

Motions to Approve

15:08

Moved by

[Viscount Younger of Leckie]

That the draft orders and regulations laid before the House on 3 March be approved.

Relevant document: 23rd Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 26 March.

Motions agreed.

Water Bill

Monday 31st March 2014 Lords Chamber

Report (2nd Day)

Relevant documents: 20th, 22nd, 23rd and 24th Reports from the Delegated Powers Committee.

15:09

Amendment 88ZA

Moved by

[Lord Whitty]

88ZA: After Clause 50, insert the following new Clause—
“Onshore oil or gas activities: effect on water environment
In Part 1 of Schedule 5 to the Environmental Permitting (England and Wales) Regulations 2010 (environmental permits) after paragraph 13 there is inserted—“Onshore oil or gas activities: effect on water environment
13A. Without prejudice to the operation of regulation 35(2) and paragraph 5(1)(d) of Schedule 10 and of regulation 35(2) and paragraph 7(j) of Schedule 20, the regulator shall refuse an application for the grant or variation of an environmental permit or for the transfer in whole or in part of an environmental permit if—(a) the regulated facility to which the application for, or transfer of, the environmental permit relates is to be carried on as part of an onshore oil or gas activity; and(b) the regulator is not satisfied that the applicant or the proposed transferee has made or will make adequate financial provision for preventing or mitigating pollution of the water environment, by ensuring all of the following—(i) operation of the regulated facility in accordance with the environmental permit;(ii) compliance with any enforcement notice or suspension notice or prohibition notice or mining waste facility closure notice or landfill closure notice which may be served on the applicant or transferee by the regulator under these regulations; (iii) compliance with any order of the High Court which may be obtained against the applicant or transferee under regulation 42 for the purpose of securing compliance with any of the notices listed in sub-paragraph (ii);(iv) compliance with any order of any court issued under regulation 44 against the applicant or transferee; and(v) recovery by the regulator of its costs upon any exercise of its power against the applicant or transferee under regulation 57;(c) for the purpose of this paragraph “onshore oil or gas activity” means any activity for the purpose of exploration for or extraction of onshore oil and gas;(d) for the purpose of this paragraph “adequate provision by way of financial security” means financial provision which is sufficient in value, secure and available when required.””

[Lord Whitty (Lab)]

My Lords, this subject may be familiar to the cognoscenti because it has been before this House in Committee and was discussed in the Commons. I am bringing the amendment back because it is an issue that the Government will have to face up to at some point, whether in this Bill or elsewhere, and the sooner the better. It concerns the effect on water supply and water quality of fracking for shale gas or oil.

I have been looking at earlier debates on similar amendments, and the Government’s responses here and in another place seem to reflect that they have assumed that this is an anti-fracking amendment. It is not. Indeed, it assumes that there will be significant development of shale gas over the next period, and that such development will eventually and inevitably use significant amounts of water, and may have detrimental effects on the quality of water and ecosystems if not effectively regulated. It makes no judgment on the broader issue of shale gas and fracking and its effect on overall energy strategy. We could have a debate on energy strategy today; if noble Lords want my view, it is that while there will be a significant development of shale gas in the UK and in Europe, it is unlikely to result in the kind of transformation in prices, energy supply and energy mix that we have seen in the United States. In terms of its effect on climate change and the carbon market, it rather depends. If shale gas leads to a faster reduction in the use of coal and oil for generations, then it will be positive. If it slows down the adoption of nuclear and renewable technologies, it will be negative.

Either way, there are concerns about the immediate environmental and resource effects of fracking processes—primarily, and in the context of this Bill, in relation to water. These effects occur in three broad ways. The first is the possible pollution of water systems and aquifers by chemicals that are released in the fracking process, and the release of methane. Secondly, there is the substantial effect on the level of abstractions and supplies of water needed in the fracking process itself. Fracking companies will need huge supplies of water—clean water, rather than direct abstraction—and that will have an effect on the levels of water resources available, sometimes in our most overstretched river catchment areas. That will therefore have an effect on total supplies and indeed on the cost of water. Thirdly, there are the effects of the operation of cleansing the water that is used in the fracking process prior to its re-entry into the water system, and its effect on the robustness and the operation of water treatment plants. On all three fronts, things can go wrong, and it certainly means that there are significant changes in both the water catchment structure and in availability and on the delivery of clean water.

I am not scaremongering. It is perfectly possible to regulate the fracking process to minimise pollution and to avoid drastic damage. It is possible to license the use of water and the supply of water resources so as to avoid any major curtailment of overall supplies. However, it is also true that the effects will not be contained by regulation operation by operation, and that there will be aggregate effects and potentially significant damage to ecosystems and detriment to the water systems over time. The amendment would recognise that and would try to ensure that the fracking operators, as a condition of their licence, made provision for possible future damage to the water supply system and the costs of clean-up. History shows us the necessity for this. Previous generations of different forms of energy sources—coal and nuclear, for example—show that substantial potential damage was done to the environment, in terms of subsidence or whatever, to the landscape and to public health but that liabilities or potential liabilities were not met by the entity actually doing the damage, whether that was the state in the nationalised period or the private owners of coal mines. The cost has in effect been met by taxpayers.

15:15

Likewise, with nuclear in the early stages there was no provision for operators to cover the cost of decommissioning, disposal of nuclear waste or any potential damage and health hazards caused by it. It is true that for the future development of nuclear plants in this country there will be such provision and those liabilities will be covered. This amendment would make sure that we did not repeat those same mistakes in relation to the new source of gas and oil—the shale gas and shale oil produced via fracking. If there is to be a widespread take-up of fracking, it is important that we make such a provision and that we make it mandatory. The liability must rest with the entity that has caused the damage. That is the purport of this amendment. The Government are going to have to face up to this at some point and since we are dealing with water here, which is a major dimension of the issue, I think it is relevant to this Bill. If the Government do not consider that to be the case then they need to tell us when and where they are going to legislate and regulate to meet this point. I repeat: this is not an anti or pro-fracking amendment; it is one to deal with the long-term consequences. I hope the Government will see that. I beg to move.

[Lord Cameron of Dillington (CB)]

My Lords, I strongly support this amendment. Indeed, I strongly support the fracking industry. We need to pursue all possible energy options at a time of high-energy costs and uncertain energy sources. The crisis in Ukraine is perhaps a sharp reminder of Europe’s unwise overreliance on Russian gas. Furthermore, when visiting Brussels to investigate EU energy policy it was made clear to us on Sub-Committee D last year—or perhaps the year before; I forget—that the EU was looking very closely to us, the admired and well respected Brits, to show the proper way for fracking to be done so that others within the EU could copy us. By the proper way I mean taking into account all the necessary environmental safeguards as are inherent in this amendment. So my first point is that Europe is watching us and that what we do could set a precedent for other EU countries, such as Poland.

My second point is that we have to bring the public with us on fracking. In this context it is important to remember that a fracking borehole or well produces 85% of its deliverable gas within the first 12 months after it has been drilled. If we are going to have a sustainable and long-term gas industry from fracking, we will need to have a large number of holes or wells drilled over the coming decades. I made the point at Second Reading that in order to do this the public have to have absolute faith that the companies involved will clear up any mess that they make as opposed to the taxpayer clearing it up or, worse still, the mess being left to the locals to sort out. I am sure that the chances of any mess being made are very limited, so any insurance or bond necessary will not be particularly costly, but for the sake of the fracking industry across Europe it really must be done.

[Lord Shipley (LD)]

My Lords, on the face of it this seems a reasonable amendment and I agree with much of what has been said in the two contributions so far. The issue is actually a very specific one around the financial resilience of companies engaged in fracking. Some of these companies may be small and as a consequence of that it is very important that their financial resilience is clearly demonstrated. We already have onshore drilling in the United Kingdom so the question is whether existing regulations impacting on those operations suffice in the case of the introduction of horizontal fracturing or shale gas.

I seek the Minister’s confirmation that the Department of Energy and Climate Change already requires operators to have the financial resources to meet any liabilities, including prevention of contamination. I think that in Committee we were informed that a fund was to be created to guarantee financial sufficiency and long-term cover in the event that a company ceases trading. We have to be clear what problem this amendment seeks to solve, partly because the UK regulatory system seems to be much stronger than the regulatory system in the United States, although the US environment has been made much more robust in recent years.

I understand that our regulations are already very tough and the use of hazardous chemicals is not permitted. Can the Minister confirm this and that the statement made in Committee that the regulatory framework would be further enhanced would meet any concern that this amendment addresses?

There are three issues around water. First, there is the composition of the fracturing liquid. I understand that it already requires the approval of the Environment Agency. Can the Minister confirm that? Secondly, there are ways in which water can be contaminated. There is ground-water contamination by hydraulic fracturing, not least from poor-quality well casing. Anything that leaks out might contaminate ground-water if it can rise to the point where the ground-water is. Methane might rise into ground-water from lower down as a consequence of hydraulic fracturing. Thirdly, there is wastewater. I understand that even at the high end of shale gas extraction, it would amount to only 3% of the annual wastewater rate because extraction industries and others produce wastewater. Are the existing regulatory requirements around the handling of wastewater sufficient?

The critical element this amendment relates to is the financial resilience of the companies. Almost certainly, a number of companies that undertake shale gas fracking in the foreseeable future might not be in existence in, say, 30 years. What will be done to create a fund through pooling to enable that financial resilience to be demonstrated?

[Baroness Parminter (LD)]

My Lords, ensuring we have the right regulatory framework and the financial means to deal with the potential environmental impacts of fracking are important issues and therefore I most sincerely thank the noble Lord, Lord Whitty, for raising this matter again.

In Committee, the Minister outlined the steps being taken to address the low-probability, but high-risk, scenario of a pollution incident. My noble friend Lord Shipley referred to the Minister’s response, which was that the Government and the industry are looking to put a scheme in place, and I am sure that we all look forward to hearing further news about that in the Minister’s remarks this afternoon.

We need tight regulation of fracking by the Environment Agency, the HSE and local planning authorities, but of all the impacts of fracking, not just the impacts resulting from increased pressure on water supplies or their potential contamination. In Committee, the Minister confirmed that the regulatory framework will be,

“reviewed and refined as appropriate as we move towards the production phase”.—[Official Report, 11/2/14; col. 543.]

We need a holistic view of the environmental impacts of fracking, not just of its impacts on water supplies, important though they are, and I therefore cannot support this amendment. I certainly hope the Minister will give assurances that there will be full parliamentary scrutiny of any proposed changes to the existing regulatory framework for fracking.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)]

My Lords, Amendment 88ZA, which was moved by the noble Lord, Lord Whitty, would require onshore oil and gas operators to provide financial security when applying for an environmental permit so that funds would be available to deal with any water pollution incidents caused by the operator. The amendment relates to both the conventional and so-called unconventional, or alternative, oil and gas sectors. It would address any pollution that an operator might cause to the water environment but not, I stress, any other damage that might be caused by their activities. The same amendment was raised in Committee by the noble Lord, Lord Whitty, and was withdrawn in the light of information that I provided on our plans to address any wider environmental risks by developing a scheme to ensure that the polluter will be liable in the event of a pollution incident and that there will be sufficient funds available to cover the costs.

I reiterate that the proposed amendment would also apply to, and have implications for, our well established UK conventional onshore oil and gas industry, an industry which, over many years, has maintained a good record of environmental responsibility and competence that has enabled it to co-exist with, and provide employment for, many. Our existing regulatory framework and the application of good operational practice have served us well to prevent pollution from onshore oil and gas activities and to tackle any problems that emerge in an appropriate way. These same controls will provide the basis for the regulatory framework for any new developments in the oil and gas sector to ensure that the environment continues to be appropriately protected. I shall come back to that in a moment.

As part of the licensing process, and prior to awarding a licence, the Department of Energy and Climate Change assesses whether a company has sufficient funding for its planned operations. DECC also checks at the drilling and, where relevant, production stage that the company has appropriate insurance. Similar financial competence checks are carried out by the Environment Agency as part of the permitting process. In this way, we ensure that the companies have the necessary resources needed to back their operations.

Our regulatory framework is underpinned by a robust range of enforcement powers, which are available to the Environment Agency. This includes powers under the Environmental Damage (Prevention and Remediation) Regulations 2009, which in the event of serious damage to surface waters or ground-water will enable it to require the polluter to pay to clear up the pollution. Ultimately, if a significant environmental risk becomes apparent, the Environment Agency has the authority to stop the activity. These powers apply to a wide range of activities undertaken by different industries, so I do not think that it would be justified to create any specific provisions for the onshore oil and gas industry.

However, the Government are very aware of the public’s concerns about the capacity of companies exploring for shale gas to address any liabilities that may arise. As I mentioned in Committee, this issue is being looked at as part of a wider review. DECC and the shale gas industry are working together to put in place a robust scheme that would cover environmental liabilities, even if the relevant operator is no longer in business. They are discussing with leading insurers to build expertise and capacity in the insurance market. The aim is to facilitate the development of products appropriate for shale gas and similar operations, which, in turn, could facilitate the development of an industry-wide scheme. As I explained, these discussions will take time, as we need to ensure that we get this right first time.

The amendment proposed by the noble Lord, Lord Whitty, is quite specific, but perhaps I could just talk more broadly for a moment. As I have just mentioned, and noble Lords have mentioned in their speeches, there are understandable concerns about this whole area of exploration and production. The noble Lord, Lord Cameron, referred to the need to bring the public with us—and he is absolutely right. The Government are clear that we must take all appropriate measures to ensure human safety and protection of the environment. The United Kingdom has more than 50 years’ experience of regulating the onshore oil and gas industry, and we have a robust regulatory system in place to ensure that operations are carried out to high standards of safety and environmental protection.

I can assure noble Lords that the Government will allow production of shale gas to proceed only where it can be done without compromising human health or the environment. We are therefore undertaking a very careful assessment of our existing policy and regulatory framework to ensure that it is fit for purpose, as we move towards the production phase. It is not just about fracking—a process used to extract oil and gas from rock—which has been safely employed in the United Kingdom and elsewhere for many years.

Any changes to regulations that we believe are necessary following this consideration would of course be subject to parliamentary scrutiny. Parliament is also using its other mechanisms of scrutiny, including the significant inquiry into the potential impacts of shale gas being conducted by your Lordships’ Committee on Economic Affairs, which I understand is due to report soon and whose conclusions we will of course consider carefully. A couple of weeks ago, on 17 March, my noble friend Lady Verma spoke for the Government in a short debate on shale gas initiated by my noble friend Lord Borwick. Noble Lords may wish to note also that this debate is occurring simultaneously at EU level, as the noble Lord, Lord Cameron, said, and that debate will reach its own conclusions in due course.

15:30

We are reviewing and refining the regulatory framework as we move towards the production phase. We are looking to do that in the most effective way, without diluting environmental standards. The review will look at all environmental liabilities in relation to shale gas and not just those relating to water. These initiatives, taken together, constitute a sensible and pragmatic approach towards ensuring that environmental liabilities are covered in a proportionate way and allow for a better approach to amending legislation.

To answer a question from the noble Lord, Lord Whitty, if operators want to extract water directly from local water sources for operational purposes and that exceeds 20 cubic metres a day, they would need a water abstraction licence from the Environment Agency. A licence would be granted only if the quantities proposed for abstraction can be taken in a way that does not harm the environment or the interests of other water users. During dry spells and droughts the supply available for fracking operations may be restricted.

My noble friend Lord Shipley asked how fracking wastewater would be disposed of. Flow-back fluid can either be treated and reused on site or taken to a permitted wastewater treatment works. Any treated water leaving the wastewater treatment works will have to comply with that works’ environmental permits, which ensure protection of local people and the environment.

The noble Lord also asked whether the Environment Agency has to approve all fracking fluids. All substances used as fracking fluids must be approved for use by the Environment Agency. He asked about the risk of shale gas wells leaking pollution into ground-water. Shale gas wells must be designed, built and operated to standards set in the regulations governed by HSE. Operations are also subject to safety regulation enforced by the HSE and require consent from DECC before drilling or production activities can commence.

I urge the noble Lord to withdraw his amendment in the knowledge that there are effective measures in place already to address the concerns behind his amendment so far as current operations are concerned and that we remain committed to addressing any remaining concerns about longer-term assurance in an appropriate way.

[Lord Whitty]

I thank the Minister for that detailed reply. I thank the noble Lord, Lord Cameron, for his support and the noble Baroness, Lady Parminter, and the noble Lord, Lord Shipley, for their interventions. I accept that it is slightly odd to put this in the Bill. However, water is a big part of the fracking operation and fracking has a significant effect on water. In all that the Minister said, he did not say when he would come forward with the kind of structures that he promised in the previous debate and which are underlined now.

I recognise that one cannot differentiate in relation to conventional oil and gas operations onshore. We have had plenty of those in this country; we operated onshore oil extraction in Dorset for decades. One cannot differentiate in terms of the relative regulations.

I accept, too, that the issue is wider than that of water. However, somewhere we need to see the Government make progress in creating the arrangements that the Minister has now twice referred to—namely, an obligation to ensure financial resilience and possibly the creation of separate funds to ensure that they could meet the effects of clean-up. I am sure that the Minister is right that this requires substantial consultation. I certainly agree that ideally we should consider the effect of fracking holistically on all environmental issues across the board, as the noble Baroness, Lady Parminter, said.

I hope the noble Lord is right that we can move fairly rapidly on this as a large number of relatively small-scale operations could arise in a lot of locations. In view of the damage that could be caused, one has to question the ability of the regulatory authorities to enforce standards on all those operations at all times. The care that the operators will exercise will be proportionate to their financial stake in the operation and their bottom line. Therefore, it is important that they make financial provision to cover that before these operations reach scale. That is what this amendment is about. I accept that it is not entirely appropriate, but I think the Government have accepted that something needs to be done in this regard and I hope that they will introduce an appropriate measure in legislation or regulation as soon as possible.

In the mean time, I beg leave to withdraw the amendment.

Amendment 88ZA withdrawn.

Clause 51: The Flood Reinsurance Scheme

Amendment 88A

Moved by

[Baroness Northover]

88A: Clause 51, page 108, line 2, leave out “relating to flooding” and insert “arising from a flood”

[Baroness Northover (LD)]

My Lords, in moving government Amendment 88A, I wish to speak also to the rest of the government amendments in the group.

This group of amendments includes the government response to the Delegated Powers Committee on the flood insurance clauses. There are also a few minor changes, including some further transitional measures, to improve the Bill.

The first set of these amendments—Amendment 88D and Amendments 90C to 90G—is in response to the Delegated Powers Committee’s recommendations on the flood insurance measures. The Government take these points very seriously and have tabled amendments to take them into account. This includes using the affirmative resolution procedure for all regulations and placing some of the definitions in the Bill. Following the committee’s report on the amendments, we nevertheless take the view that Clauses 58 and 61 should remain affirmative on the first exercise only. The amendments also provide for some of the definitions to be amended by regulations.

We agree with the committee that the definitions are important and we take its point about defining them in the Bill. However, we remain of the view that the definitions of “flood”, “household premises” and “relevant insurer” are best set out in regulations, which are more flexible, should we need to change them over the lifetime of the measures. We hope that, by defining these terms in regulations that will be subject to the affirmative procedure, we have reassured noble Lords of our intention that Parliament is able to scrutinise these definitions fully in due course.

We thank the committee for recommending that the powers to share information on council tax data are subject to the affirmative procedure. However, to meet the commitment to establish Flood Re in 2015, we need to release the information immediately after Royal Assent, and have therefore decided to address the committee’s concerns by placing the powers in the Bill to ensure that Parliament can scrutinise them now. We hope that noble Lords understand the rationale for this, due to the challenging timetable to deliver Flood Re.

Although Amendments 90CA to 90CD provide for rather than mandate the release of council tax data in the Bill, I should make it clear that the Government are committed to doing so, and to do so swiftly following Royal Assent.

Insurers will be required to have in place appropriate but proportionate security measures for the protection of the data disclosed pursuant to this clause. As much of the data to be disclosed at this stage are already in the public domain, it has been agreed that the controls are sufficiently robust for additional criminal sanctions not to be required. However, the amendment also allows for the application of a criminal sanction at a later stage, should the Government need to regulate for the release of additional information. It is right that we have the powers to protect the release of further information in future, but the criminal sanction is not automatic and we will consider whether one is necessary, following consultation.

On Amendment 90A on Flood Re’s reserves, we have previously discussed amendments to the rules surrounding the scheme’s reserves, and will come on to discuss reserves later in this debate. Having consulted further, and to ensure that this power in Clause 53 cannot compromise the sound operation of Flood Re and its orderly management, we are tabling this small change to make clear that the scheme administrator’s consent is sought before making regulations in this area. This consent means that the scheme administrator is able to object to any prudentially unsound proposals, as well as to make representations as to the retention of some or all of the reserve. Consequently, there is no longer a need for a requirement to consult the Prudential Regulation Authority as well. I reassure noble Lords that both the Prudential Regulation Authority and the Financial Conduct Authority will continue to be closely consulted on this and all other regulations made in relation to the Flood Re scheme.

Amendment 88B covers the eligibility threshold and is intended to ensure that the legislation properly reflects the operation of the Flood Re scheme, and the way the insurance industry operates.

Amendment 90T addresses the risk that secondary legislation made at the end of the life of Flood Re could be seen as hybrid. We have every intention of carrying out a full consultation before making that secondary legislation to ensure that any private interests are properly considered.

Amendment 90L is intended to ensure that employment contracts within the scheme are transferrable, where they otherwise might not be. I reassure noble Lords that this amendment is not intended to enable the transfer of reserves required to be retained for prudential regulatory purposes.

In addition, the Government have also tabled a small set of minor and technical amendments to the Bill. We have also corrected an error in Schedule 3 to the Flood and Water Management Act 2010 to ensure that unused bond funds, called in by a SuDS approving body, can be returned to the right person.

Finally, Amendments 91B to 91D provide the Secretary of State with powers to introduce provisions to allow Ofwat to revoke existing water supply licences as part of the transition to the new water supply licensing regime. The power provides flexibility for Ofwat to allow existing licences to continue until new licences are available or until they are revoked on a specified day.

Amendment 91B enables the licence modification powers to work in such circumstances. The order can provide for more detailed arrangements to be set out in a scheme produced by Ofwat, subject to the requirements of the Secretary of State’s order. The order also provides for compensation to be payable to the holders of revoked licences. The measure of compensation may depend on various factors, including, for example, whether the licence holder qualifies to hold a new licence in the reformed water supply market.

The amendments also make transitional provisions for existing sewerage arrangements with incumbents that become licensable arrangements under the new sewerage licence. Compensation is payable if it is no longer possible for some sewerage arrangements to continue because a licence is required. Again, the qualification of the operator for a licence would be a relevant factor. Amendment 91C corrects a small error in paragraph 6 of the schedule. I hope that noble Lords will be happy to support these amendments.

[Earl Cathcart (Con)]

My Lords, this is the first time that I have spoken on this Bill on Report, so I should declare that I live in a band H property on my farm in Norfolk, I have a bore hole and I have spent about 30 years working and underwriting in the insurance industry. I am happy with these government amendments, but will the Minister clarify government Amendment 90L to Clause 70? I am afraid that I did not quite catch the Minister’s assurance about capital, so I am asking her to say it again, please. The current wording is far from ideal, in that it could potentially raise the possibility that Ministers could access Flood Re’s funds when the scheme is wound up, irrespective of their being needed for, for example, meeting regulatory run-off requirements.

I understand that Defra has said that an override to access Flood Re reserves is not the intention of the amendment to Clause 70. However, the concern is that in 20 or 25 years it could easily be interpreted as an opportunity to grab funds from Flood Re. Will the Minister make clear that the amendment is not intended to apply to Flood Re’s reserves or capital? That would be most useful.

15:45

[Lord Whitty]

My Lords, I, too, do not object to these amendments and I congratulate the Minister on getting through them in six minutes flat. Many of them will be substantial improvements to the Bill, particularly the ones which iron out a few things in relation to Ofwat in terms of the changing competitive regime. I very much welcome that. However, the noble Baroness will be aware that, in its second riposte, the Delegated Powers Committee said that it is not entirely satisfied with the provision for only the first instance of definition being by affirmative regulation. The Government will have to have an answer to that. In general, it is sensible for Ministers to swallow hard and accept all the recommendations of the Delegated Powers Committee, otherwise it ends in trouble down the line.

The only other thing I would ask about is Amendment 90T, which relates to hybridity. I do not really want to have a debate on hybridity now, but the Delegated Powers Committee raised the issue, and I am not sure that the Government’s response fully meets the point, because it effectively says that, whether it is hybrid or not, we are going to ignore it. I am not sure that is a satisfactory response, but if the Delegated Powers Committee will buy it, I will not object. Otherwise, we welcome these amendments.

[The Earl of Lytton (CB)]

My Lords, this is the first time that I have spoken at this stage of the Bill and I, too, must declare that I live in a band H property. However, I also have a professional interest in parts of the Bill by virtue of being a chartered surveyor. I certainly welcome the proposals for the affirmative resolution procedures outlined by the noble Baroness and agree that the disclosure of council tax information is necessary. However, I have one query, which relates to Amendment 90CD. Could the noble Baroness confirm that the normal process of disclosure will generally relate to the identity of the property and its council tax band rather than the identity of the chargepayer, the latter being something that is normally held by the billing authority? If I have missed some point about the disclosure, and where the identity of the individual can be discovered, perhaps she would put me out of my misery.

[Baroness Northover]

I hope I can put everybody out of their misery, which probably reflects the fact that I rattled through this in six minutes. First, I will take up the points made by my noble friend Lord Cathcart. We will come to a further discussion of reserves later, in which I am sure he will be interested. I make it clear that Amendment 90L is intended to ensure that employment contracts within the scheme are transferable, where otherwise they might not be. I reassure him that the amendment that he mentioned is not intended to enable the transfer of reserves that are required to be retained for prudential regulatory purposes. I hope that reassures the noble Earl on that particular point. I probably just went too fast on that one.

I am very grateful to the noble Lord, Lord Whitty, for his general support for these amendments. In response to the points he raised, I recognise fully, as a member of the Government, that the best thing to do when the Delegated Powers Committee comes forward with recommendations is to agree. However, he will also be aware that there are times when the affirmative procedure is used in the first instance and not thereafter because it is not anticipated that there will be significant changes later. I am sure that the noble Lord, Lord Whitty, will be very familiar with that pattern.

The noble Lord asked about hybridity. I will just go back to my original comments on that and then come to what I have been handed by way of inspiration. Amendment 90T addresses the risks that secondary legislation made at the end of the life of Flood Re could be seen as hybrid. The noble Lord thought that we had indicated in some way that we were just sweeping that aside—at least, I understood him to indicate that. I repeat that at the end of Flood Re we have every intention of carrying out a full consultation before making secondary legislation to ensure that any private interests are properly considered. I hope that the noble Lord is reassured on that point.

Perhaps I may write to the noble Earl, Lord Lytton, with further details on the point that he raised. I am sure that we can reassure him.

I am just checking to see whether I have covered everything. I trust that I have and am sure that noble Lords will make it very clear if I have not. I hope that, on that basis, they will accept the government amendments that I laid out at such speed.

Amendment 88A agreed.

Amendments 88B to 88D

Moved by

[Baroness Northover]

88B: Clause 51, page 108, line 8, leave out subsections (3) to (5) and insert—
“(3) The Secretary of State may by regulations make provision as to levels of reinsurance premiums payable by relevant insurers under the FR Scheme, and may make different provision for different purposes.”

88C: Clause 51, page 108, line 17, leave out from “different” to end of line 18 and insert “purposes by reference to the value of the household premises insured.”

88D: Clause 51, page 108, line 18, at end insert—
“( ) In this section “flood insurance” means insurance in respect of risks arising from a flood.”

Amendments 88B to 88D agreed.

Amendment 89

Moved by

[The Earl of Lytton]

89: Clause 51, page 108, line 18, at end insert—
“(6A) Regulations under subsection (5) shall provide that every policy which is subject to a levy for the purposes of the Flood Reinsurance Scheme shall be covered by the Flood Reinsurance Scheme.”

[The Earl of Lytton]

My Lords, I do not know whether I can rattle through this in quite such short a time as six minutes but I will do my best. I start by expressing appreciation to the many professionals and industry bodies who have been extremely open and frank with me about their views and insights. I am also very grateful to the Minister and his department for the correspondence and guidance that they have generated.

My starting point is that Flood Re is necessary and desirable, and I hope that nothing I say will be interpreted as damaging that. The objective of Amendment 89 is to enshrine fairness in the primary legislation by requiring that the subsequent regulations brought forward by the Secretary of State will ensure that all properties included in the calculation of the levy are eligible for the scheme. I will come back to that later. The objective of Amendment 90 is to ensure proportionality in the primary legislation by requiring that the regulations limit the possibility of unfair loading against any particular council tax band.

First, I shall set these amendments in the context of the wider issues. In Committee, I expressed grave concerns about the Government’s unwitting exposure of risks in the mortgage lending industry, a sector which, I pointed out, is influenced both by the availability at reasonable cost of perils insurance, including for flooding, and by its own independent assessment of risk. It is dangerous to assume that the potential for value write-downs is simple scaremongering or that lenders will necessarily just fall behind insurers’ lead. The situation is made worse by the express intention to move to individual risk assessment with insufficiently accurate, readily available or acceptably cheap data, either now or proposed, on which such individual risk could reasonably be assessed. It is clear from what the British Property Federation tells me that there is an issue here, and I feel that the Government could do more about it.

Either one has a risk pool and you do not ask too many detailed questions or there is an individual risk assessment with 1,000 variations. In the latter case, we can of course wait to see what happens to the at-risk properties that lie outside Flood Re. I am told that they can expect a significant hike in insurance premiums and I believe that we have started to see that happen. Of course, we do not know what the “at real risk” numbers are because Defra has not carried out an audit. The Environment Agency has different figures depending on whether coastal storm surge, fluvial, surface run-off, sewer surcharge or groundwater rise is involved, as well as indirect vulnerabilities such as property damage following disruption to services and access. Defra seems to select what suits its purposes, and in a sense I do not blame it for that. However, I am fairly unhappy about the whole of this part of the Bill, in particular, its evidence base and its unintended consequences, particularly when confidence in Flood Re is so vital, as I think it is.

I turn to some of the detail behind the amendments. The statement of principles said that it would ensure that home owners and small businesses would be protected. That was the public expectation. The Government claim that Flood Re is designed to cover the same categories of policyholder, but that is not how it appears. Leaving small and medium-sized enterprises apart, the Government need to explain and justify the exclusion of many homes and their rather convoluted way of defining them. It is that which I wish to address in particular.

The Defra note last week on the scope of Flood Re is evidence of the difficulties. The criteria are listed on page 2. Of the five criteria listed, three simply pose additional questions. As regards whether properties are insured in the name of an individual or in trust for an individual, how would one know? Whether properties are used for residential purposes may be a hotly debated matter given the number of people who work from home. The test of occupancy by the policyholder or immediate family also worries me. Under policies that are in scope, we note that contents insurance in the main is included but that stands in stark contrast to the insurance of the building fabric, which is on a different template. A lot of people with composite policies, especially some first-time buyers, might struggle to know the difference between the two. Buildings insurance policies in scope are covered on page 3 and it seems to me that things get into further complexity. The categorisation of owner-occupied homes provokes a raft of subsidiary questions. Who is insured? Who occupies? What are the family connections? For owner-occupied leaseholds you have to know whether the leaseholder is in actual occupation and what the insurance covenants state. These could be in a superior leasehold document or have just come about by subsequent lease variation or custom. The policy must cover three flats or fewer and the freeholder—in particular not being a head lessee I would ask your Lordships to note—must live in one of them. We have questions of numbers of units covered in the policy not being the same as the number of homes in the building and questions of how one might determine that. There is also the identity of persons, their relationships and the actual place of abode. Quite why the classification of homeowner hinges on the residence of the freeholder escapes me. I do not think that it will be seen as a fair test for this purpose. Once the presence of leasehold is established, the criteria create all sorts of further additional interests, but I will leave the noble Lords, Lord Grantchester and Lord Whitty, to expand on that.

When a top-floor maisonette gets split and combined with the roof space as an extra unit to make four, what then? Why should that change the status of all the others? Are leaseholders who share the freehold via a company formed for the purpose to be included? If so, how would one distinguish that from a next-door investment property? I do not accept the justification for the blanket exclusion of mixed residential and commercial blocks, in which I also include the one, two or three self-contained flats above the shop. I also feel that including these is not in any way insurmountable.

I turn now to the exclusion of council tax band H and I properties. I note that the Association of British Insurers’ briefing says that this was a ministerial decision. I simply point out that many people occupy modest London homes in band H while near-identical properties in the regions may be in much lower bands. The disparity has arisen because of the economic imbalance that has grown up over time. But, as the brokers Hiscox put to me, what conceivable difference would it make to the actuarial calculations of Flood Re to include them, especially if the maximum claim that could be made for higher-value properties was capped at some figure? What effects are anticipated from excluding large numbers of inner London homes? Further, since when has the registered address of a business been anything whatever to do with the place where the business is conducted or, for that matter, with the predominant use of the dwelling where it may happen to be registered?

I turn to the exclusion of properties built after 1 January 2009 which none the less, as with the other exclusions, form a component in the levy. In Committee, we debated Planning Policy Statement 25: Development and Flood Risk. That was published in March 2010. I am not clear why the earlier retroactive date was chosen, but I suggest that the process was less than open and transparent. Purchasers of homes in that category would have been unaware that they might have been excluded and will consider themselves, I suspect, unfairly penalised. Based on 2% of the estimate of completions since the end of 2008, there are probably about 30,000 of these properties as a rough estimate, 2% of which are at significant risk. But they should also be at particularly low risk in actuarial terms if local planning authorities, developers and planning inspectors have adhered to the principles of PPS 25. It would be much more appropriate to set a cut-off date of, say, Royal Assent.

16:00

The reason that a reinsurance pool has credibility and cohesion is that those at little risk have the sense of needing protection in case a peril might none the less befall them, but the likely consumer reaction to being statutorily excluded and denied any benefit from the scheme and yet obliged to contribute vicariously to it ought to be a matter for sober reflection.

Defra takes four pages to explain the latest government position on all this, but it is overcomplicated and I do not believe that it will work. Many industry players have also expressed their doubts to me about its deliverability. Furthermore, it needlessly reduces the insurance pool for no ostensible advantage. I am sure noble Lords will all know that the principle is, within reason, the larger the pool the better the stability of the scheme. The test that was suggested to me by Hiscox is that if it is a domestic property in a council tax band and built before a specified date, it should be within the Flood Re scheme. If it is not; it is out. Mixed uses can be apportioned. There is no fuss and no bother. It is easy to verify. It is a radical simplification of the entire process.

I do not believe that there would be any adverse affect on the flood risk pool profile. It would be as fair as it gets. The Government need to think further and actively engage a wider range of professional and financial views. That is all I ask. I beg to move.

[Lord Cameron of Dillington]

My Lords, I support the amendment. I do not have quite as many questions as the noble Earl, Lord Lytton, but I have a similar sense of the injustice and unfairness that are implicit within the Flood Re scheme.

I am not quite sure what the opposite of taking a sledgehammer to crack a nut is, but perhaps it is taking a bucket to stop a flood or maybe it is using the current Flood Re scheme to deal with the domestic flood insurance problems and then excluding more than half of all UK households. I know that there is then the added problem of SMEs, but I totally accept that for the present the scheme is designed to tackle the domestic marketplace.

In my view, the proposed scheme is so hedged about with exemptions that it fails to get to the heart of the domestic flood insurance problem. Even without SMEs, most buildings will not be covered by the scheme. Exclusions include: nearly all leasehold properties; the entire private rented sector; housing association schemes, whether shared equity or let—and are these not the very people whom we are trying to protect?—council houses; homes built after 2009; and properties in council tax band H. Some 60% of all domestic properties are specifically excluded. Flood Re, in this case, is not fit for purpose. It would have been so much more simple, fair, just and equitable to have included all of the above and dealt with the problem of excess demand on funds by either capping individual payouts or adjusting the level of premium at which Flood Re cuts in. It seems unimaginative to me to exclude 60% of all properties as a way of mitigating the risk.

Incidentally, the average household premium is just under £200, so the 2.2% levy amounts to an average of £4.40, not the £10.50 being bandied about. When I met with the ABI, it seemed to have no satisfactory explanation for the difference in these figures, so I have no idea where the £10.50 came from. The reason I mention this is that, if a £10.50 premium is considered acceptable, and the real figure is actually much less, then maybe adjusting the amount of supplementary levy on the premium could also be a way of mitigating risk in the early years of Flood Re. Just to exclude 60% of the properties surely undermines the whole purpose of the scheme.

Turning to the various unjustifiable domestic exclusions, I will deal with them one by one, starting with properties in council tax band H. First, as confirmed by ABI, the inclusion of such properties would not in any way raise the cost of the scheme. If, as suggested by Hiscox, a cap of, say, £160,000 were put on any one payout from the scheme, their inclusion would not increase by one jot the risk of failure of the Flood Re scheme. Noble Lords should bear in mind that those who are being excluded are not paying the £4.40 supplementary levy or even the £10.50 towards the scheme: they will be paying nearer to £50, £60 or £70, because of the value of their house, towards a scheme that specifically excludes them. They will not all be rich; many of them will be elderly, cash poor and vulnerable.

I of course understand the politics at work here; as I said, this exclusion is an entirely political decision. If they cannot be included in the scheme, however—which, I agree, seems unlikely at this stage—I would strongly support the National Flood Forum’s proposal that they should be helped with any mitigation measures possible, either through locally targeted schemes or from the Flood Re pot once it has been built up, as in Amendment 90ZA, put forward by my noble friend Lord Krebs and the noble Baroness, Lady Parminter. They should not be totally abandoned when they are contributing so much towards the scheme itself.

Turning to post-2009 properties, apart from people in this House and some people involved in the insurance industry, I have yet to find a single person in real life who knows anything about this 2009 cut-off and the effect it may have on their insurance in 2015. Included within that group of innocents are two people who actually work in the insurance industry. I know that some of your Lordships are saying, “Look, we have to make an example here. We must stop developers building on the flood-plains and the only way to do it is to make these properties uninsurable against flood risk”. To me, that misses the point. For a start, society—that is you, me and the local planning authority—gave permission for these houses to be built. Currently, the Government are actually helping these people to buy these houses through their Help to Buy scheme. The Environment Agency only comments on 6.6% of all applications; perhaps it should have some responsibility. My point is that, if we do not want houses built, we have to stop them at source and not just take it out on the poor, unfortunate souls who—probably totally unknowingly—end up living in these properties either as owners or, worse still, as tenants, who of course are going to be doubly excluded.

Furthermore, to have a blanket exclusion on all post-2009 properties also misses the point. We are not just talking here about houses on the designated flood-plain; we are talking about all houses that represent an insurance risk. We are talking about houses that probably started flooding since 2009 for a variety of reasons. There are more and more examples now of houses flooding because of rising ground-water, even on hillsides. There are many examples of houses flooding from surface water, sometimes because of activities upstream—possibly subsequent to 2009—over which the householder had no control; for example, another development that increases the speed of run-off. There are also houses where the weather pattern has changed and, after two floods, the cost of insurance becomes unbearable. Therefore, just to have a blanket exclusion of all properties built after 2009 seems completely unnecessary and grossly unfair. It is well known that there are several examples, most notably in Hull, where there are properties side by side, one of which will be included and the other, because of this rule, will not be—you can almost guarantee that neither of the owners knew their future fate when they chose which one to buy.

Of course, the biggest exclusion is the leasehold and rented sector. I will leave my sense of injustice about those properties until we get to Amendment 89B from the noble Lord, Lord Whitty.

All in all, I realise that it is probably too late to upset the apple cart of this version of Flood Re at this stage. However, many in the insurance industry are pretty unhappy about it, largely because they know that, when the blatant injustices become obvious, they and not the politicians will get the blame. I hope that the scheme works for those lucky 40% who find themselves included, but it would have been much more imaginative to have made the scheme much more inclusive, if not all-inclusive, and to have mitigated the risk in other ways. I hope that when it comes to the various regulations bringing this scheme into effect, some thought will be given to those who have inadvertently found themselves on the wrong side of the legislator’s pen.

[Lord Crickhowell (Con)]

My Lords, we all owe a great debt of gratitude to the noble Earl for moving this amendment and to the noble Lord who just spoke for spelling out in great detail some of the shortcomings that can be identified. I think it is 37 years since I was a director of a firm of Lloyd’s insurance brokers, on the board of a large Lloyd’s underwriting agency and losing money at Lloyd’s. I do not think I must declare an interest for that, though, like others, I must declare one as living in a band H property.

I have been very uncomfortable about this scheme, based not so much on the residue of knowledge long forgotten as on the political outlay that I see arising when the whole scheme does not produce the results that most people expect. I told my noble friend Lord de Mauley on Thursday morning, when we happened to meet, that I had just received an e-mail from the chief executive of Hiscox. My noble friend asked me to send a copy of that to him—although he was copied into it, apparently he had not seen it. I said I would come back to this issue because the Hiscox e-mail raised a number of very significant issues that must be addressed. I do not have to go through them all in detail because we had very good summaries from both the noble Earl and the noble Lord, Lord Cameron.

Hiscox points out that the scheme, though clearly desirable in principle, will not solve the problem of unaffordable flood insurance that it was created to address. Nor does it take into account the changing nature of flood. Hiscox points out that of the 885,000 homes in high-risk areas more than 350,000—3.8% of the total housing stock—will be excluded. While some of those will be commercially owned properties able to buy commercial insurance, a proportion will be private buy-to-let properties. What is more, Hiscox says it is likely that this underestimates the scale of the problem. The noble Earl pointed out the uncertainties about the numbers. Hiscox indicates that 80% of its claims came from homes that it did not consider to be at flood risk. It is not just homes sitting in obvious flood plains, of the sort with which I had to deal when chairman of the National Rivers Authority. No one is more indignant about some of the planning decisions that have been taken there than I am.

The whole thing has been arrived at by negotiation between the Government and the Association of British Insurers. No doubt we will be told that this is the best deal that can be done at present. I am not sure we should be satisfied with that. Clearly quite a number of active insurers do not believe it is the best possible scheme and, for the reasons well elaborated by the noble Lord, Lord Cameron, it does not appear fair.

16:15

The noble Lord drew attention to the contribution that the average UK home owner is likely to pay—approximately £3.30 to £4.40 per week on the average home insurance premiums—but band H and I properties will pay 15 to 20 times the average, and they are not going to get covered at all. Together with new-build homes, they will pay 8% of the £180 million to fund the scheme even though they are to be actively excluded from the protection that the scheme offers. So one asks how those faults can be remedied; Hiscox actually indicates how. Again, some of the answers were provided by the noble Lord, Lord Cameron. Flood Re could be expanded to cover an additional 10 million homes in Hiscox’s view. This would increase the levy to Flood Re by an estimated £100 million. The progressive nature of Flood Re would mean that the better-off would still pay more. In addition, opposing a cap of £160,000 on the amount insurers can recoup from Flood Re would ensure that the most valuable properties did not impose excessive costs on the scheme.

Therefore, we are entitled to say that more needs to be done. I come back to the point that really prompts my concern. It is not that we should not have a scheme like this, or that perhaps negotiations do not have to continue, but that when the floods do arise there will be fury—not just anger—among those who thought that they were covered and find that they are not, and those who have contributed to a scheme for which they receive no benefit, and which does not apparently even then cover all those who clearly should be covered. Therefore I am very concerned about this.

Because we are dealing with an ongoing negotiation, my noble friend might say that this is the best deal we have been able to get at present. However, it should not be left there. If it is simply a negotiation, we should have an understanding and a clear statement from the Government because, as the noble Lord, Lord Cameron, pointed out, they have laid out some of the basic conditions, not the insurers—the Government have laid down some of the most startling exclusions. But this is not a matter that holds here. Every effort surely must be made to improve a flawed scheme that will cause anger to be felt not just by the insurance industry but by the Government of the day.

These things often happen quicker that we can imagine. Just because we have had one very bad winter with a lot of floods, does not mean it will not happen again quite quickly. It was always my experience that when we had a major drought, it was immediately followed by a flood when I had responsibility for dealing with it. Whenever I was told that there was a one in 100-year risk, the flood happened the following year and probably twice in the next two or three years, so this may happen quite quickly. In that case it may be my noble friend Lord De Mauley who receives the flak and the present Government, or it may be the successor Government in the very near future. Therefore, I hope we can receive some reassurance that this is not the end of the story, and that every effort will be made to improve on the negotiated scheme that we have before us.

[Lord Campbell-Savours (Lab)]

My Lords, as in Committee, I need to declare an interest in that I have a leasehold interest, with my wife, in a band G home on the Thames built on the flood plain. My flat is not threatened by flooding, has never been flooded and can never flood because it is on the second floor, and the whole of the south of England would have to be flooded before we were. Nevertheless, I have to report that a car park area that serves our block of flats was recently subjected to some flooding, and it is with that in mind that I feel that I should restrict my comments today and limit what I have to say, and I will not be voting on the issue.

All I want to do today, without commenting on the issue in the light of what has happened, is to read a letter which has been sent to my noble friend Lord Whitty, the noble Earl, Lord Lytton, the noble Baroness, Lady Bakewell of Hardington Mandeville, Mr Owen Paterson MP and Ms Anne McIntosh MP, who I understand is the chairman of the Select Committee in the House of Commons. I simply want to read the letter, which the Minister has seen, because I think that it should be on the record so that all those in the industry outside can read what it says.

The letter is from a Mrs Beverley Morris of Topcliffe Mill, Topcliffe, Thirsk in North Yorkshire, and she has given me permission to read it. Part of it states:

“If I may give a brief summary of our current situation to further expand upon our current predicament.

This building, known as Topcliffe Mill (Mews), and built as a water powered corn mill circa 1800, was subject to a ‘once in 100 hundred year’ flood on 26th September 2012. Apartments 1, 2 and 3 on the ground floor were flooded along with 2 communal areas. Three houses in the same location behind the Mill were also flooded”.

Here we are talking about a leasehold property.

“Much of the North East was flooded during this period and Topcliffe Mill was ‘sandwiched’ between the swollen River Swale to the front of the building and the saturation of the fields to the rear.

Topcliffe Mill building insurance policy is purchased by a small management company, Town & County Properties (Wharfedale) Ltd and the premium (pre flood) was just shy of £5,000 for the year 2012, divided between the 12 homes. Post flood and following the claim, the renewal premium was and continues this year at £23,750 divided between the 12 homes, an increase of almost 500% per home. My husband and I are now paying £2,000 per year for a Band C, 4th floor”—

fourth-floor—

“domestic flat that we have made our home for the past 10 years. As we are not in a position to pay this amount up front and on demand, arrangements have been made to pay by instalment, which in itself incurs extra charges.

The ABI are offering assurances that ‘there is no systematic problem with freeholders being able to obtain insurance for their leasehold properties’. Our management company, have indeed secured building insurance, as I understand they are legally required to do, but at what price? The insurance companies, who know this, have our management company and us over a barrel it seems.

T & C Properties Ltd had their agent, J M Glendinning of Guisley in Leeds thoroughly search the insurance market for a better deal and it was to no avail. As owners, we took on the challenge of checking out the markets ourselves and if required we can supply documentary evidence of refusals, although many refused point bank on the telephone to even consider it. Our management company and their agents are also prepared to lend their testament to the situation we find ourselves in. I am at a loss to see how this scenario fits with the ABI’s explanation either now or in the future if leaseholders are excluded.

Referring again to the Food and Rural Affairs Committee meeting 11th March 2014, Ms McIntosh discussed with Aiden Kerr the issue of SME exclusion from Flood Re. He gave his explanation stating that Flood Re ‘is limited to households’. As we are not an SME but a collection of households, it begs the question, does being a leasehold define us as not a household?

During the session 11 February 2014 you drew attention to the services of the Financial Ombudsman Service. We, however, have no recourse to them to make any complaint into the risk assessment that led to our mighty high renewal premium and nor will we in the future, because the policy is not in the name of the domestic leaseholder. Would the management company complain on our behalf? Doubtful, since they are not financially affected, transferring all the associated charges directly on to the leaseholder …

The notion that one might sell up and move on, being unable to meet the management fees is something of a forlorn hope. Everyone is aware of how property values have fallen and the North East of England is not experiencing the same improvement to values as the south. Add to this a history of flood— albeit the first in 100 years. The financial security of our household stands to be jeopardised, in terms of our ability to meet mortgage payments due to over stretched resources and/or the ability to secure reasonable flood insurance.

The opportunity to afford us the same level of assistance being offered to freeholders is likely to slip by if we are not included in the Flood Re scheme. Given that the decision to have a cap in place in the medium term has been taken, I feel it only fair and just that leaseholder homes are included”.

As I said, my position has changed since the last time I debated these matters, but that testimony is from someone who is directly affected, and a five-times premium increase in the north of England on a band C flat on the fourth floor of a block of flats is something that Ministers should seriously think about. Indeed, I would have thought that Parliament would have addressed that problem.

[Baroness Parminter]

My Lords, the aim of Flood Re is to support people at the highest risk of flooding who would struggle to find affordable insurance on the open market. The way in which it is funded, as the noble Earl, Lord Lytton, has reminded us, is via a levy to provide a funding pool to use for the purposes of the scheme. Many contributors are likely to be at a low or no risk of flooding, but this approach spreads the risks across a large population to make it more affordable.

The question that we are trying to address here is whether it is fair to include specifically band H council-tax and post-2009-built homes—I am not going to address leaseholders because, as other noble Lords have mentioned, we are going to come back to this with an amendment from the noble Lords, Lord Whitty and Lord Grantchester. There will be a small number of asset-rich but income-poor in band H houses. In Committee in this House, the Minister confirmed that 0.5% of such households are in the five lowest-income deciles, or 45 properties in flood risk areas.

A letter to the Committee in the other place from the Parliamentary Under-Secretary Dan Rogerson on 10 December 2013 confirmed that the cost to add band H houses to the scheme would be between about £1.4 million to £5.4 million, funded by an increase of up to 3% in the levy paid by all householders. Given that small number of asset-rich but income-poor, and the high cost to add these to the scheme, I do not support their inclusion in Flood Re—indeed, it would be a regressive measure—but I would certainly hope that lead local flood authorities will target some of their funding to address the impacts on vulnerable elderly people in their areas. Targeted mitigation of the impacts of this exclusion would be a far better approach and, as the noble Lord, Lord Campbell-Savours, said, is supported by the National Flood Forum.

Houses built post-2009 were excluded by the previous Administration from the statement of principles, which preceded Flood Re—the reason being that, with strong planning policies in place, such homes should have been properly assessed for flood risk. Equally, the date as set was important to avoid incentivising development in areas of flood risk. I accept that that is not perfect, but the exclusion of post-2009 from the band H properties was widely consulted on by the Government last year in advance of drawing up these proposals and was broadly supported. Hundreds of thousands of homes will benefit from Flood Re and, frankly, we need to get on with it. I am satisfied that this approach is fair and targeted at those most in need, and with regret I therefore will not be supporting the amendment.

16:29

[Lord Moynihan (Con)]

My Lords, I declare an interest as an owner of a band H property. Many noble Lords have spoken on this amendment at this stage. The noble Lord, Lord Campbell-Savours, and I spoke to a similar one in Committee, and I am pleased that the House has returned to it. I have one question for the Minister that is a matter of principle. While the rationale for the exclusions from band H properties is principally that some band H owners have higher incomes than others—that is not a proven principle but it nevertheless continues to be argued by the Government—does the Minister accept the view that the Flood Re scheme should follow the principle that those who contribute to this government scheme are afforded its protection?

[Lord Whitty]

My Lords, we are grateful to the noble Earl for tabling this amendment, and particularly for the way in which he outlined the dilemmas of this proposition. I think we all have a problem here. I hope that I do not need to make it clear that we on this side strongly support the basic concept of Flood Re and the reassurance that it will give to a lot of people who are currently worried about their future cover.

We have to recognise that the Government are not entirely on a free position on this; indeed, I congratulated the Government—that is quite rare for me—not long ago on reaching an agreement with the ABI, which I know is an incredibly difficult negotiator. Therefore, I do not think that any of us want to unnecessarily unravel the arithmetic that lies behind the Flood Re proposition as it now is. However, the wide-ranging nature of the noble Earl’s amendment means that we would be unravelling it quite substantially.

On the other hand, as noble Lords have made clear, this is not entirely a matter for the insurance industry. The structure of the project is an agreement between insurance companies but it has to be backed by Parliament and it therefore has a statutory base. Parliament has to be concerned about fairness, equity and proportionality. We therefore have to query whether the exclusion of certain properties, and such a large number of them in aggregate, is fair and equitable.

To some extent, I go along the same lines as the noble Baroness, Lady Parminter: there are different arguments relating to the different categories. Some exclusions were in the previous statement of principle and are therefore in a changed position as a direct result of the demarcation of Flood Re. Small businesses were covered by the previous arrangements, as were tenants in leasehold premises—although there have been some concessions of late, which I will come on to in the next amendment—and band H properties. The exclusion of post-2009 properties is not a new position; it was the position under the old scheme.

I shall comment on my view on each of those. First, I accept that small businesses have a different way of meeting their insurance requirements. I also accept, on the other hand, that many small businesses, boarding houses, shops and small premises were seriously affected by those floods and, under their understanding of the previous settlement, would probably expect to be covered by the replacement scheme. It is therefore quite important that we bear in mind the position of small businesses. The insurance industry claims that there is not a market failure in this area, and the Government seem to have accepted that. Maybe we ought to put businesses in a different channel because they are not dealt with in the same way as residential properties under Flood Re. The Government should not lose sight of the fact that many small businesses are under serious risk and do not feel well protected by the current situation. I hope, therefore, that the Government will be able to come back to this.

The noble Earl, Lord Lytton, the noble Lords, Lord Cameron and Lord Moynihan, and others referred to band H properties. It is a slightly odd move by the Government to exclude band H—an unusually populist, progressive move, to avoid cross-subsidy from the poor to the rich. It may be a welcome indication of things to come. However, it still leaves a number of people in difficulty. I think that the Government may have to look again at band H, but it does not make a lot of difference to the arithmetic. The number of people who are asset-rich but income-poor is relatively small and, therefore, it could not make a priority social case for re-including band H.

That leaves me with the subject matter of a subsequent group. Almost the whole of the tenanted sector and the private rented sector, even with the Government’s new concessions, are excluded from this. They all regard themselves as residencies, they all have domestic insurance in one form or another and they are all lived in by households and families. I think it is unfortunate that they are excluded. I would give my priority to that and I will come back with a further amendment. As it stands I cannot fully support the broad sweep of the noble Earl’s amendments. Nevertheless I thank him for the debate and the wide range of issues which, one way or another, the Government will have to explain to various sectors of the public.

[Lord De Mauley]

My Lords, I thank the noble Earl, Lord Lytton, for his Amendments 89 and 90. He raises issues which I know are of concern to people and I thank all noble Lords who have spoken on all sides of the argument.

Amendment 89 to Clause 51 would require that all properties included in the calculation of the levy are eligible for the scheme. It is important to remember that while many homes in the United Kingdom are at some risk of flooding, Flood Re is designed to address an affordability issue for the 1% to 2% at the highest risk of flooding. The levy will provide Flood Re with a funding pool which will be combined with the premium income from those policies which are to be ceded to Flood Re. This will be used for the purposes of the Flood Re scheme, including the purchase of reinsurance and payment of claims. The purpose of having a pool, as is the case for much of our taxation, is that costs are shared by many so that those most in need can benefit. If everybody who paid the Flood Re levy stood to gain, there would be fundamental implications for the required amount of the levy. Alternatively, if the levy was limited to flood-prone households, the pool would not be large enough to have a significant impact on prices and therefore on the affordability of flood insurance.

The insurance industry has been clear that low-risk and no-risk householders have historically subsidised flood insurance for those at a higher risk of flooding and that the move to risk-reflective pricing will over time remove this cross-subsidy from the market. The levy simply replicates and formalises this existing cross-subsidy. Indeed, the ABI has assured us that the levy can be introduced without having an impact on bills in general for householders at a low risk and no risk of flooding, for those in band H or for those with properties built after 1 January 2009—that is, those outside the pool.

If I understand the noble Earl’s intention correctly, I think he is particularly concerned to ensure that those properties which are not eligible for the scheme—such as band H properties, properties built after 1 January 2009 and certain leaseholders on commercial policies—either stand to benefit from Flood Re or do not pay the levy. While I understand that cross-subsidising something from which you will receive no benefit might be perceived as unfair, I have explained why there always have to be some net contributors to make a pooling system work, and this includes the overwhelming majority of households at low risk or no risk of flooding. We discussed the rationale for the scope of Flood Re at length in Committee, and I explained that we think that we have got the balance right. The Government’s approach was widely supported in the response to the 2013 consultation. This approach means that those who are most in need of support will receive it to enable a smooth transition to the free market.

The noble Earl commented on the complexity of the scope of Flood Re. The proposed criteria reflect the current situation for purchasing a domestic insurance policy. We are not seeking to change the circumstances under which insurance is purchased through Flood Re. We must remember that Flood Re is designed to help those people at the highest flood risk, which we estimate could be around 500,000 households. I have heard some very fanciful numbers being bandied around, and they all miss this point. I am not saying that the Government are not still listening to the debate. We will monitor the market, as will the ABI, and we will publish our findings. Should the evidence point to specific issues with insurance for particular sectors, we will discuss with the insurance industry what might be possible.

[Lord Campbell-Savours]

The Minister referred to fanciful figures. The figures I produced on behalf of the lady in Thirsk were real figures showing a five-times increase. She and the 11 other people in flats in the same block are not covered. How can the Minister give an assurance that it will have very little impact on these sorts of people?

[Lord De Mauley]

My Lords, I was not for a moment suggesting that the lady to whom the noble Lord referred was one of those bandying around that sort of figure—by no means. It is difficult for me to speak about a very specific instance but, if I can, I will come back to that later. I was referring to estimates of the number of households involved. I hope the noble Lord understands that.

Several noble Lords referred to band H properties. In designing Flood Re, we have been very clear that we want to target the benefits where they are most needed while not increasing the costs for those not at flood risk. On that basis, we believe that it would not be justified for band H and equivalent properties to be included. The progressive nature of Flood Re received wide support in the public consultation.

Let us be clear that the exclusion of band H properties was set out explicitly as part of the June 2013 memorandum of understanding. This document reflects the needs of both parties and was agreed by the Government and the ABI on behalf of its members. In designing the scheme, the Government and the industry needed to ensure that the pool was viable and affordable. Including band H properties would increase the costs of Flood Re overall, which could result in a reduction in the benefits to households in lower council tax bands or an increase in the levy for all households. We stand by the decision to target support to those in lower council tax bands, as reflected in the memorandum of understanding.

Responding to the points raised about affordability for those in this council tax band, our analysis suggests that relative to other bands, a move to risk-reflective pricing would have limited impact on the affordability of a combined insurance policy for band H households. The noble Lord, Lord Whitty, referred to concerns that those households, which might be asset-rich but income-poor, would be at risk though this approach. We looked closely at this. According to the 2011 living costs and food survey published by the Office for National Statistics, 85% of those who live in band H properties and hold a combined insurance policy are in the top 30% of earners with 48% in the top 10%. More significantly, perhaps, only 0.5% of such households are in the five lowest income deciles, which translates to roughly 45 properties in flood risk areas. I think my noble friend Lady Parminter mentioned that.

The noble Earl, Lord Lytton, the noble Lord, Lord Whitty, and others referred to small businesses. As I said in Committee, we gave careful thought to the scope of the Flood Re scheme and consulted on the proposed figures on the domestic insurance market, which received broad support. The consultation responses did not provide evidence of widespread problems for small businesses with secure and affordable cover, although anecdotal examples of problems in some specific geographical areas were put forward. A government survey of more than 9,000 small businesses in England found that less than 1% of businesses had experienced difficulty getting property insurance in the past year due to the risk of flooding, and that no businesses had been refused insurance cover due to the risk of flooding.

16:45

As my noble friend Lord Cathcart set out so eloquently in Committee, in relation to his own business, business insurance policies tend to be bespoke and are priced to take account of their specific risks. On this basis, we have concluded that the insurance market for small businesses does not appear to have the same systemic issues as the domestic insurance market. Therefore, we remain of the view that overall there is insufficient evidence to justify government intervention in the provision of insurance cover for small businesses. The insurance industry has also recently confirmed that it does not expect there to be widespread issues with small and medium-sized enterprises’ access to the insurance market, and that there is plenty of capacity to continue to provide insurance on a competitive basis. But I agree with the noble Lord, Lord Whitty, and I assure noble Lords that we will not lose sight of small businesses.

The noble Earl, Lord Lytton, and the noble Lord, Lord Cameron, among others, referred to properties built after 1 January 2009. That cut-off date recognises that new housing developments should be located to avoid flood risk or, when development in a flood risk area is necessary, it should be designed to be safe, appropriately resilient to flooding and not increase flood risk elsewhere, in line with the national planning policies in place. The date therefore reflects the fact that homes built since then should already be insurable at affordable prices.

As I am sure noble Lords are aware—the noble Lord, Lord Whitty, explained this—when the statement of principle agreement between government and the insurance industry was signed in 2008, it was agreed that there should be a cut-off date, and it was set at 1 January 2009. We are maintaining that under Flood Re, and we consulted widely on it. I must be absolutely clear that there has been no change in policy. The noble Lord, Lord Cameron, in particular, spoke about planning and development in this context. Tens of thousands of planning applications are made every year, including minor applications such as for extensions. The Environment Agency is a statutory consultee to local planning authorities for several types of planning application related to statutory duties on flood risk, protection of land and water quality, waste regulation and fisheries.

The Environment Agency has published standing advice for developers and planning authorities as a tool to help local planning authorities establish the level of environmental risk involved in planning applications. Its role in examining planning applications is only part of the planning process. Right from the start, local plans should ensure that new development is steered to areas at least risk of flooding, wherever possible. Local planning authorities undertake strategic flood risk assessments to develop their understanding of flood risk in their respective areas.

The noble Lord, Lord Cameron, suggested there might be an exclusion of a large number of homes from Flood Re. As I said earlier, only 1% to 2% of properties need to be covered by Flood Re. The Government have been clear on the number of properties built after 2009, and band H properties that would potentially be eligible for Flood Re if the risk-reflective premium for Flood Re met the relevant criteria. It is very difficult to identify the number of leaseholders who are covered by a commercial policy who would potentially be at a high enough level of flood risk otherwise to be eligible for Flood Re, but, based on the best available data, it would be in the low thousands at the very most. The suggestion that tens of millions of homes would be excluded is not right. If the number is supposed to refer to those policies that are out of scope because they are treated as commercial by the industry, I would also disagree that such properties are excluded. They are not covered by Flood Re because they form part of a separate commercial insurance portfolio. These policies will not contribute to the levy so, while they are out of scope, it is not because government or the industry has decided wilfully to exclude them but because they are not part of the market that Flood Re is designed to address.

My noble friend Lord Crickhowell put forward his suggestion that Flood Re does not take into account the changing nature of flood. One of the benefits of Flood Re is that it is flexible. Eligibility is based on the insurer’s assessment of risk to a property, which will be reflected in the premium for the flood risk part of the policy. As long as the insurance industry continues to keep pace with changing risk, that will be reflected in the policies eligible for Flood Re.

My noble friend Lord Crickhowell also referred to a suggestion about introducing a cap on claims. That is an interesting suggestion, but it was considered and discounted during the design phase. Flood Re must be as simple as possible to operate if it is to be up and running next year. This type of cap on insurance claims would create an extra level of administrative burden that would add to the complexity of the design of Flood Re. We also have concerns about the impact a cap would have on the ability of customers to protect themselves from the effects of flooding.

The noble Lord, Lord Campbell-Savours, referred to a specific example. I am very sorry to hear about the incident that he referred to. When prices are put up we normally advise that people should shop around, because that nearly always means a better deal. I appreciate that that is difficult for the leasehold sector. We have asked for evidence and I thank the noble Lord for bringing this example to my attention. It might be helpful if we were to have a specific discussion about it, because it may be that we can point people in the right direction. I certainly will ask the ABI, too, to follow up. For these reasons I am going to ask the noble Earl to accept that his Amendment 89 would not be appropriate.

I turn briefly to Amendment 90 to Clause 53. This requires the levy to be set in such a way as to reflect the council tax band of the property concerned. The amount of the levy collected from insurers will be determined according to the insurer’s share of the market. If I have understood the amendment correctly, in order to calculate the levy according to council tax band, Flood Re would need access to detailed information from each insurer on the number of households in each council tax band they currently insure.

Flood Re is designed to be as simple to operate as possible. At present this information would be administratively burdensome to collect and would place impracticalities in the way of Flood Re’s successful operation. It would be costly to force insurers to apportion the levy for each household by council tax band and there would be no way to enforce that. For the reasons I have set out, this would not be workable in practice, so I hope that the noble Earl will be persuaded to withdraw his amendments.

[The Earl of Lytton]

My Lords, I thank the Minister for that comprehensive reply. I thank all noble Lords from around the House who have spoken. To the noble Baroness, Lady Parminter, the noble Lord, Lord Whitty, and the Minister, I say straightaway that I have no intention of putting them through the indignity of walking through the opposite Lobby to the one that I may go through. However, the area has been opened up for discussion, as I hoped it would be.

I start from the last point that the Minister made: he wants Flood Re to be as simple as possible. One of the points I was trying to get across is that the way in which the note from Defra sets it out was anything but as simple as possible. Indeed, the question arose as to exactly how one would paint the particular ins and outs by reference to that document. There it is: we have to make the bread with the dough that we have.

I think the Minister misunderstood me slightly, particularly in connection with business band H and post-2000 properties. That was not the main thrust of what I was trying to get across. The main thrust was picked up by the noble Lord, Lord Crickhowell, in the sense that it is that significant proportion of moderate-risk households—if I may term them that—that lie outside flood risk and therefore will be faced with individual risk assessment. However one wishes to divine the numbers in that regard, my take on it is that the number of those who lie just outside Flood Re but face an identifiably material risk is significantly greater than the number in Flood Re who will be protected. Therefore, on that basis, the safety net for the few might be seen as being at the expense of the security that once prevailed for a lot of people in the larger pool under the old statement of principles. I still think that that is an issue.

The Council of Mortgage Lenders refers consistently to its fears about affordability. The noble Lord, Lord Campbell-Savours, referred to a particular example. As he knows, I have a copy of the same letter. If you are on a limited income and having to juggle your finances and your insurance premiums go through the roof, your total repayments will rise to a critical level.

However, it would be wrong for me to go on at length. I will consider carefully what the Minister and all noble Lords have said. I am not sure that I am satisfied. Without wishing to use the somewhat threatening tones of the Terminator, I should say that I may well be back on this issue at subsequent stages of the Bill. However, in the mean time, I beg leave to withdraw the amendment.

Amendment 89 withdrawn.

Amendment 89A

Moved by

[Lord Grantchester]

89A: Clause 51, page 108, line 19, at end insert—
“( ) Prior to making any regulations under subsection (5), the Secretary of State shall require the Committee on Climate Change to provide current and projected estimates of the number of properties that would be eligible for—
(a) inclusion in the Flood Reinsurance Scheme;(b) the value of levy required under section 53; and(c) the likelihood of an additional levy or contributions being needed from time to time.( ) The Secretary of State shall use the advice of the Committee on Climate Change when prescribing a target number under section 58(1).”

[Lord Grantchester (Lab)]

My Lords, as we have seen in recent months, flooding has devastating effects on people’s lives and livelihoods across all spectrums of society. Although Flood Re is a commendable scheme designed to help many who are most vulnerable to flooding, we on this side of the House think that considerable gaps exist which must be addressed.

One of our main concerns is how the scheme will operate within the 25-year span and adapt to weather conditions resulting from climate change. I am sure that noble Lords have seen today’s headlines concerning the IPCC report on climate change, which said that climate change will significantly impact on our weather conditions, especially as regards flooding. The report states:

“Increasing magnitudes of warming increase the likelihood of severe, pervasive, and irreversible impacts”.

We have the opportunity to respond to the threats posed by climate change, not only to ensure that we protect those who are most vulnerable to flooding but to assess how the level of flooding, and the implications of that, will change over time. As my noble friend Lord Whitty stated in Committee, Flood Re cannot be established on a totally static basis. It needs to be adaptable to a dynamic process called weather. The numbers at high risk are likely to increase, and the number of high-risk properties could treble to even more than 1 million. Climate change is a reality although some may have doubts concerning its cause. Nevertheless, it has affected, and will continue to affect, the risk of flooding, and its effects, in the future.

This amendment seeks to ensure that the Secretary of State consults the Committee on Climate Change, and uses its advice, when prescribing a target number of affected properties under Clause 58(1). The Committee on Climate Change’s adaptation sub-committee, which is chaired by my noble friend Lord Krebs, is the key adviser to the Government on the number of properties likely to be at risk of flooding over the timeframes envisaged by the scheme. The Secretary of State should take credible and independent benchmarked advice from the Committee on Climate Change and provide accurate and clear targets when reporting to Parliament. At present, the number of policies eligible for Flood Re is based on the cost of the flood risk component of any policy, which is set by the insurers and will differ based on each insurer’s assessment.

The Government therefore doubt how beneficial the committee’s advice would be, especially on a financial basis. However, it is important to realise that the principle and purpose behind Flood Re is to help to provide affordable insurance for households in flood risk areas which might otherwise find it difficult. This is bound to change over time. It would be nonsensical to say that no advantage could be gained from a sub-committee of the Committee on Climate Change giving its observations on the changes that this scheme may have to face over time as a result of further climate change.

A lot of elements are considered when setting targets under Clause 58(1) but, at the same time, a huge element cannot be fulfilled by the insurance industry alone and one needs the input of appropriate advisers, notably the Committee on Climate Change. I trust that the whole House can see the value of this amendment. I beg to move.

17:00

[Lord Krebs (CB)]

My Lords, I thank the noble Lord, Lord Grantchester, for suggesting that my committee acquires an additional job. I do not wish to speak at length about it but simply say that, were we to be asked to carry out the role he outlined, it would fit well with our current statutory duties. We already collect and analyse data on the number of properties at flood risk and the time trends. If we were to carry out this role there would be a couple of provisos. We would need access to the data held by the Government, Flood Re and the wider insurance industry. There might also be some modest resource implications for the work carried out by the committee. With those provisos I certainly think that the committee could very well carry out the job, as outlined by the noble Lord, Lord Grantchester.

[The Earl of Lytton]

My Lords, I shall make a short contribution on this amendment. Noble Lords will remember that at Second Reading I made the point that there was no equivalent to a Cambridge Econometrics study into the numbers that lie behind this. For that reason alone, there is some merit in this amendment to look at the hard science so that we get away from what has been described to me, by somebody who will remain nameless, as voodoo numbers that have been floating around. The absence of the degree of expertise that is regularly produced by the committee of the noble Lord, Lord Krebs, has needlessly increased doubts and concerns that might otherwise not have been there. Therefore, this is quite a good idea, although I am less clear whether I shall follow the noble Lord if he decides to divide the House on this issue.

[Earl Cathcart]

My Lords, when a similar amendment was debated in Committee, I took it to be only a probing amendment. Now it has been tabled again today, I am bemused, or perhaps confused, about what the Committee on Climate Change can add to the work already being done. The insurance industry, together with the Government and their agencies, has already assessed the number of properties in known flood-risk areas, particularly the number of properties that might struggle to afford flood insurance in the open market. They have also assessed the level of premiums required by council tax band, and the contribution needed from every householder—£10.50—to ensure that Flood Re has sufficient funds net of reinsurance costs from year 1.

I have no doubt that Flood Re will continually assess and reassess its assumptions, but in any event a five-year review is built into the scheme to assess whether its assumptions still hold true. This five-year review will allow Flood Re, with the agreement of the Government, to make adjustments to the levies and contributions accordingly, and I am quite sure that different areas of flood risk will be added to the pot.

I cannot understand why the noble Lord, Lord Grantchester, is moving this amendment, which will require the Committee on Climate Change to duplicate the work already done by Flood Re and by the Government and their agencies. Where will the Committee on Climate Change get its information from? The noble Lord, Lord Krebs, says that the committee does some work in this area, but it would need access to data from Flood Re, the insurance industry and the Government and their agencies, such as the Environment Agency. I do not believe that getting the Committee on Climate Change involved will add anything but will be double-handling, expensive and unnecessary.

[Lord De Mauley]

My Lords, I am grateful to the noble Lord, Lord Grantchester, for his amendment, which would give a formal advisory role to the Committee on Climate Change. I am also grateful to the noble Lord, Lord Krebs, for his offer of help. I absolutely agree with them on the importance of having impartial advice on the latest science, and we of course look to the committee to inform the debate on climate change.

It might be appropriate at this stage to say that I welcome the latest report from the Intergovernmental Panel on Climate Change, which is a valuable addition to the international understanding of climate change impacts and which underlines the need to adapt to changing global weather patterns. Adapting sooner will reduce the future costs of doing so. I should emphasise that, although the IPCC report did not focus on individual countries, it did identify three key risks from climate change for Europe, of which flooding was one and water security another. These findings align well with the United Kingdom’s own Climate Change Risk Assessment, published in 2012, which identified that the biggest challenges that the United Kingdom faces will be flooding and water shortage.

As I explained in Committee, I am not clear what the noble Lord, Lord Grantchester, thinks could be gained by requiring the Committee on Climate Change to assess the data provided by insurers, which will be primarily on the pricing of risk, based on the industry’s own sophisticated catastrophe modelling. The numbers of policies eligible for Flood Re will be based solely on the cost of the flood risk component of any policy, which is set by the insurers based on their assessment of the risk. This assessment will change over time and it would not be possible for the committee to provide any estimates without detailed knowledge of industry pricing models. Similarly, the value of the levy and the likelihood of any additional contribution by insurers is based on a number of financial parameters, such as the cost of reinsurance and the amount of levy collected, which will change year on year.

Given their extensive knowledge of the flood risk profile down to the local level, the Environment Agency and its equivalents in the devolved Administrations are the key advisers to government on flood risk and changing levels of risk over time. In England, the Environment Agency leads a dedicated climate-ready support service, conducts the long-term assessment of future investment needs and provides the national assessment of flood risk and flood mapping, which takes account of all types of risk.

If I understand the intention of the amendment correctly, the nub of the concern seems to be that the modelling used to assess the size of the Flood Re pool and the numbers supported needs to be robust and take into account changing risk. Flood Re’s finances also need to be resilient to the inherent variability of annual flood claims and to factor in changing risk over time. The core of this is making sure that Flood Re holds enough capital to be able to cover claims up to the limit of its liabilities. Under European Solvency II legislation, which governs the insurance sector and will be in force from 1 January 2016, all insurance firms will be required to hold enough capital to cover a one-in-200-year level of claims. Therefore, Flood Re will be required under EU law to hold capital reserves at a level equivalent to its liability.

To assess what level of capital is needed, insurers have detailed catastrophe models. The modelling to assess such events must be kept up to date and will reflect any changes in levels of insured risk. This will include changes as a result of climate change. As an authorised reinsurer operating under the requirements of Solvency II, Flood Re will be bound by these same requirements.

[Lord Hunt of Chesterton (Lab)]

When the Minister refers to one in 200 years, that assumes that the next 200 years will not be the same as the previous 200. Things are changing very rapidly. Is this estimate really based on the rapid changes of climate that we are seeing? That is the purpose of referring the matter to the Committee on Climate Change. The committee is much more aware of the dynamical changes than the industry, which is essentially using past, rather static data.

[Lord De Mauley]

My Lords, I agree with the objective that the noble Lord refers to. Floor Re will need to take account of climate change as part of its regulatory obligations in ensuring that it remains solvent over time. We would expect Flood Re to seek the best available advice on climate change and seeking external verification of its assumptions will form part of Flood Re’s operations.

It seems that one of the other concerns underlying this amendment is whether Flood Re is based on the best available evidence, including on climate change. I assure noble Lords that the data and actuarial assumptions underlying the scheme have been independently assessed by Professor Stephen Diacon. In addition, extensive modelling, using a model that was quality-assured by the Government Actuary’s Department, has been carried out by the Government using these data. Flood Re’s modelling will be updated on an ongoing basis.

I again put on the record that Flood Re has been designed to be flexible and will be able to adapt to changing levels of risk over the 25-year lifespan of the scheme. Climate change projections were considered, alongside other risk factors, during the design of the policy, and the effects of climate change will continue to be considered during future levy-setting discussions. The insurance industry, with its expertise in risk assessment and forecasting, is at the forefront of assessing the impacts of climate change, because assessing risk accurately is an essential tenet of its business.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I noticed that the Minister spoke of adaptation but he has not spoken about mitigation. Quite honestly, if you concern yourself only with adaptation, you simply will not be able to keep up with the changes. Are the Government thinking about mitigation in these circumstances as well?

[Lord De Mauley]

Of course, my Lords. If the noble Baroness will forgive me, I have to deal with the amendment before me, which goes primarily to the issue of adaptation. Of course we are working on mitigation as much as we can. The noble Baroness will have seen quite a lot of publicity over the weekend on that very matter. She indicates that she has not but she will believe me if I show her that there was such publicity from the Department of Energy and Climate Change.

The Association of British Insurers and a number of leading insurers have signed up to the ClimateWise principles for insurers. The six principles include a commitment to publish an annual statement of action taken and to:

“Support Government action, including regulation, that will enhance the resilience and reduce the environmental impact of infrastructure and communities”.

While, for the reasons I have set out, I feel strongly that the amendment is unnecessary, I state categorically that this in no way reflects a lack of commitment from the Government on the vital matter of flood risk and climate change. During this Parliament we will be spending record amounts on managing flood risk and our new funding approach is set to attract more contributions from local partners than ever before. We have also made an unprecedented six-year commitment to record levels of capital investment in improving defences up until 2021.

17:15

Noble Lords have often cited the projected increases in flood risk that were outlined in the climate change risk assessment. Although these projections must and will of course be heeded, it is important to remember that this study was indicative in nature and, crucially, did not take into account any new defences that would be built over that period. It modelled the impact of climate change based on the flood defences at the time. We are also getting better at forecasting and warning people when flooding is anticipated. The Flood Forecasting Centre combines the knowledge and experience of the Met Office and the Environment Agency to deliver longer lead times for flood alerts and more accurate, targeted information to responders. This provides people in areas at risk of flooding with more time to protect themselves and their homes from the effects of flooding. Managing flood risk is a joint effort. We are already taking steps to make this easier; for instance, by supporting a number of projects across the country which are looking at what action communities can take and by making it easier for farmers to manage watercourses to reduce the risk of flooding.

As I expect your Lordships know, businesses and homeowners affected by flooding this winter will be eligible for grants of up to £5,000 per house and per business under the repair and renew grant to help people build in better resilience to flooding. The Government are committed to ensuring that our country is resilient to the impacts of climate change and that flood risk is managed effectively. For the reasons I have set out, I am confident that these amendments are not needed and I hope that the noble Lord will agree to withdraw his amendment.

[Lord Grantchester]

My Lords, it surely would be beneficial for the Secretary of State to take the advice of the Committee on Climate Change. The noble Lord, Lord Krebs, accepts the task. Target numbers should not solely be based on figures from the insurance industry and should recognise the changes in climate as a fundamental element of the change in the nature of Flood Re over the next 25 years.

Let us be clear. In relation to an earlier amendment, the noble Lord, Lord Crickhowell, quoted Hiscox which said that, of 885,000 homes in high-risk areas, around 350,000 of them will be excluded, which is around 4% of the housing stock. A more telling statistic is that this is 40% of the high-risk properties. I understand the picture is complicated by the fact that much flooding occurs outside high-risk areas. The nature and scope of flooding are changing rapidly. I am told that 80% of its claims for recent floods came from homes that Hiscox did not consider to be at risk of flood. If this is the position today, how can we hope to keep abreast of the situation over the next 25 years of this scheme without recognised, independent expertise as could be provided by the Committee on Climate Change?

I hope that the noble Earl, Lord Lytton, will reflect on the nature of change and the size of the risk of flooding over the next 25 years and will join me in the Contents Lobby. I am expecting the work of the noble Lord, Lord Krebs, to be a prophet for the future as well as an assessment of the insurance industry, which I hope will persuade the noble Earl, Lord Cathcart, that science should also have a role. Flooding and climate change are matters of huge impact to more and more people. I wish to test the opinion of the House.

17:17

Division 1

Ayes: 175

---

Labour: 152
Crossbench: 12
Independent: 3
Green Party: 1
Plaid Cymru: 1

Noes: 223

---

Conservative: 125
Liberal Democrat: 61
Crossbench: 31
Ulster Unionist Party: 1
Independent: 1

17:29

Amendment 89B

Moved by

[Lord Whitty]

89B: After Clause 51, insert the following new Clause—
“Flood Reinsurance Scheme: report on the inclusion of leaseholders
(1) The Secretary of State must prepare and publish a report on the basis of the inclusion and exclusion of leasehold and tenanted properties in the FR Scheme.
(2) The report shall include a breakdown of—
(a) the total number of leasehold and tenanted properties which are in the risk areas covered by the FR Scheme;(b) the number of leasehold and tenanted properties where the land is controlled by large multisite commercial operators;(c) the number of leasehold and tenanted properties which are owned by smaller landlord operators; and(d) the cost of including in the FR Scheme properties in paragraph (a) and each of paragraphs (b) and (c).(3) The Secretary of State must lay a copy before Parliament within 6 months of this Act coming into force.”

[Lord Whitty]

My Lords, I will try not to repeat too much of what was covered in the earlier amendment of the noble Earl, Lord Lytton, but there is obviously some overlap.

Of all the exclusions from Flood Re, that of leasehold and tenanted residential properties was, certainly out there, the most unexpected and, on the face of it, the least logical and most inequitable. As the argument about it has gone on, it has also become the most complex and confusing. Leasehold and tenanted buildings in a flood-prone area are faced with exactly the same risks as the freehold properties next door. That is where we start from. The families and individuals who live in these properties face exactly the same problems. These are residential properties; generally, no business is conducted from them. They are people’s homes. Yet the Flood Re project, which was the product of bilateral negotiations between the Government and ABI without any direct engagement with landlords, leaseholders or tenants, now appears to regard these properties and that risk as being different in kind to that of the freehold buildings in the same street. The rationale for that is that letting a property—whether long or short-term—is regarded as a business. The risk must be the same and the families will not be very different, yet they are treated entirely differently.

Since the original proposition for Flood Re, its terms have been, shall we say, “elaborated”—that is, amended in some respects or, to put it more bluntly, confused. For example, the ABI made it clear—this is a clarification, in a sense, but it confuses the issue—that contents insurance paid for by tenants and leaseholders would be part of the scheme and included in Flood Re, but obviously not the landlord’s buildings insurance paid for by the landlord. That makes the arithmetic a bit more complicated. Clearly, the £10.50 levy on other households—they presumably pay the full buildings and contents insurance—does not apply to that group. That leaves a lot of grey areas. For example, one of the most serious problems for leaseholders and tenants will often be that the flood damage has caused depredation to the fittings and furniture, some of which—in the case of fittings, most of which—will be covered by the buildings insurance of the landlord. Of course, landlords have contents insurance so it is not necessarily the same position as that apparent distinction creates. The effect is that the whole situation is more blurred and complicated.

The Government have also complicated the system. Just recently, they apparently conceded that properties of three or fewer leases are in the scheme, provided that the freeholder lives on the premises. Anything more than three, or where the freeholder happens to live down the road, is outside the scheme. There is also a rumour, though it does not seem to be substantiated, that the ABI and Government were also looking at the possibility of distinguishing between small landowners or single-property landlords and large, commercial operations. Where does that all leave us?

Let us take a typical street in a low-lying riverside area of a market town. For the purposes of making us all at home and in deference to the Minister’s patience in dealing with all the complications of the Bill, let us call it De Mauley Street. In De Mauley Street, No. 2 is a family house with three generations living there from two to 80. No. 4 looks and is very similar but is divided into four flats, one of which is occupied by the landlord at least occasionally. No. 6 is a house divided into four leasehold flats that have jointly bought the freehold and administer it as a leaseholder-owned company. No. 8 is, let us say, owned by a school teacher resident in London who bought the premises for her retirement and is letting it out as four student flats. No. 10 is a four-flat block owned by a commercial leasing company with four leaseholders. I am tempted to add a No. 12 that is a mixed property, but that would complicate it too far.

Under the original proposition, No. 2—the family home—is covered but nobody else. Under the ABI concession on contents insurance, No. 2 is covered and all the rest are, but for leaseholder-paid contents insurance only; everything else is not covered. Under the Government three-leases concession, Nos. 2 and 4 are clearly covered, provided you can prove that the landlord actually lives at No. 4, but only the tenant-owned contents in No. 8 is covered. As I understand it, No. 6 would also be covered because the leaseholders jointly own the freehold and therefore one of them lives on the premises. In Nos. 8 and 10, only the tenants’ contents insurance will be covered. We are already in a very confused position.

If there were a cut-off defined by size of landlord, nos. 2, 4, 6 and 8 would be covered but not No. 10. If there happened to be a social landlord in the same street—there would probably not be in De Mauley Street—nobody would be covered because social landlords are not. Incidentally, I am not sure because we have not touched on it what the position is on mixed blocks. With the right to buy, some of the social landlord’s property may well be owned by private leaseholders, who presumably ought to be covered and may well assume that they are—but are not. We have a bit of a pig’s ear of a situation here. None of it is very logical. The properties are pretty much identical, the risk is the same and they thought they were all included under the pre-existing arrangement of the statement of principles.

The long-term implications of this are particularly severe. Particularly with small landlords and their tenants, if they cannot get insurance then they cannot get a mortgage or raise money for improvements. Hence the buildings deteriorate. The only way they could raise money would be to raise rents or the service charge, so tenants and leaseholders suffer directly. The area starts going downhill because the buildings appear more dilapidated and more obviously at risk. The tenant and leaseholder experience suffers, the landlords suffer and the number of new landlords prepared to invest and buy property diminishes in those areas. This is not a situation that the Government find easy to defend, but I think even the insurance industry is beginning to find some difficulty in defending it.

Having said that, as I said earlier in the previous debate, we recognise that the actuarial calculations for Flood Re are delicate and depend on various assumptions. I do not intend to unravel those calculations at this point by this amendment, but it is important that Parliament understands the position so this is a relatively modest amendment. It does not require Flood Re, the Government or the ABI to do anything directly. However, because the scheme has to have statutory backing and because to give that statutory backing Parliament needs to be convinced that it is logical, equitable and proportionate, Parliament needs to understand the consequences of including or excluding different combinations of property.

The amendment therefore seeks to find that out. It does not seek to delay the process—well, not by much. However, it proposes that before we finalise the statutory instrument on this—and it will need a final statutory instrument—the Government report back to Parliament on: the number of leasehold and tenanted properties included; the number excluded; the number where the landlord is in business in a large way; the number where a landlord is in business only in a very small way—probably with a single property; and the cost that would arise from including each of those categories in the Flood Re proposition. I am leaving the dividing line between large and small largely up to the Government, but we need to have a clear one.

The information that that report would show to Parliament would mean that we, and interested parties, could have a meaningful discussion before the consultation started—or within the consultation—on the statutory instrument, which I am assuming, because this is supposed to start in 2015, would have to be within a very few months. Without that information, we in Parliament are in danger of giving the go-ahead to what appears to every rational observer to be a seriously inequitable, complicated and illogical scheme, which we are about to back by legislation. I do not need to tell Ministers that that situation is probably judicially reviewable.

This amendment therefore asks the Government to give us the facts before we finally go down the road. In a way, it is not delaying this legislation going through, but it would allow us to face up to the facts before the final statutory instrument is carried. At the moment, frankly, we do not have those facts. The Minister referred to fanciful figures. A number of very reputable insurance companies and others have bandied about a number of different figures. I do not know the total number that fall into each of these categories nor, I suspect, does the Minister or the ABI. However, we need to know—at least approximately—and we need to know the cost consequences for them, for the scheme and for those in the rest of society who are subsidising this scheme what the effect would be. Therefore, we do need that information. This amendment would allow the Government, without holding everything up, to get that information and to report back to Parliament. In my view it is pretty obvious that Parliament needs to know. I beg to move.

[Lord Cameron of Dillington]

My Lords, this is a very mild amendment to which I certainly would have added my name if I had become aware of it in time. There is no doubt that the exclusion of the leasehold and rental sector is the worst lacuna of the current Flood Re scheme. I understand the original political thought process—that professional landlords should not be helped to overcome their flood insurance problems by those who live in band A properties, for example. Of course, that political thought process is a fairly simplistic and stereotypical understanding of the average landlord. This is an important fact: 78% of all landlords own a single dwelling for rent.

As noble Lords know, there are many professions where a dwelling goes with the job. In my part of the world, farm work is the most common example. Many farm workers and tenant farmers buy a house to retire to, and, of course, they let it while they are still working, largely to help with the mortgage. It is perfectly sensible retirement planning and the Government should encourage it. Furthermore, perhaps it is a typical English aspiration, but many people currently living and working in cities have a dream of buying a house in the country and retiring there—similar to the farm workers who I have just mentioned—and they will let it in order to help pay the mortgage on it.

This Bill does not recognise these dreams of ordinary—well, the noble Lord, Lord Whitty, mentioned schoolteachers, but it could have been anyone really: secretaries, nurses, anybody. It does not, to borrow a phrase from Yeats, tread softly on their dreams. They are excluded from this scheme. Surely these are the people for whom this scheme should be designed—people whose mortgage companies will insist on full insurance, including flood insurance. But what about those who cannot afford a house, in the country or elsewhere, and buy a flat? I cannot think of a more appropriate person to benefit from this scheme. However, along with 60% of the other households, they will almost certainly be excluded from this scheme while at the same time contributing to it.

I will not give the rest of the speech on leaseholders and flat owners because that has already been very well covered by the noble Lord, Lord Whitty. However, it seems strange to exclude householders whose only error has been to choose to live in a flat rather than a full-blown house. It seems unjust to me. A much more sensible cut-off point for the application of Flood Re would have been owners of, say, two, three or four let properties. However, all that apart, this amendment will at least ensure that we have a full understanding of the sort of owners, leaseholders and tenants whose property is being excluded and what they could have contributed to the scheme if they had been included. As I say, I think that this is a very mild amendment, merely touching on a problem that is a major shortcoming in the Bill. I hope that the Minister will look kindly on it.

17:45

[Earl Cathcart]

My Lords, I congratulate the noble Lord, Lord Whitty, on his use of De Mauley Street. I think it was clear what he was saying. It seems to me that if you have a property to let, as landlord you should buy the insurance. It might not just be the bog standard property and contents insurance that you buy: you will probably also buy owners’ liability insurance, public liability insurance and any other commercial insurance that you might buy as a landlord. That is one reason why they are excluded from Flood Re, because we are not talking like for like. The owner occupier in No. 2 De Mauley Street, for instance, will buy their own bog standard property and contents insurance. As a landlord you buy other things as well, which makes it a commercial risk.

I too read somewhere that to qualify for Flood Re, you had to live in the property. Therefore, I come to the amendment spoken to by the noble Lord, Lord Cameron, regarding which he said that 78% have one property, which they let. If the occupier has to buy the insurance, why does not the landlord get the occupier to buy the property and contents insurance, which would qualify it for Flood Re? If the landlord then wanted to buy his public liability or owners’ liability insurance, he could buy it as a separate policy. That might be one way in which a number of these cases can get into Flood Re.

[Lord Cameron of Dillington]

I understand what the noble Lord is saying but the problem is that the tenant does not have an insurable interest. He cannot insure the property. No insurance company would accept his insurance of a property in which he is only a tenant.

[The Earl of Lytton]

My Lords, I too would have put my name to the amendment had I known about it in time. I apologise to the House and to the noble Lord, Lord Whitty, for not being in my place when he introduced it, but I understand a great deal about the background to it from previous discussions with him. Whatever we do with the cut-off point between what is in Flood Re and what is outside it, it is important that it is reliable, consistent, transparent and fair. The outcome must not be capricious or so asymmetric that people lose trust in it, because I am a believer that credibility is at the centre of Flood Re’s success.

One thing in particular stands in stark contrast with that. The commonhold units’ owners do not themselves own the fabric of the building: it is owned by the commonhold association. I asked myself, if there is a difference in personality, in legal entity, why is it that long leaseholders of the conventional sort in a similar building—with the freehold being the common parts and the fabric of the building owned by someone else—should not benefit? Why is there a blanket inclusion of commonhold but a blanket exclusion of leasehold? I find that difficult to understand, particularly because, under the Leasehold Reform, Housing and Urban Development Act, the intention was to try to get leasehold nearer to freehold, to remove the segregation between the freehold interest and the leasehold interest which for years has dogged the sector and allowed all sorts of abuses to occur and produced all sorts of disadvantage in funding, growth and reward for that investment.

It seems to me that the convenience of insurers is being put ahead of the public interest. There probably has to be a cut-off point somewhere in the system. It is not for me to speculate on what the actuarial approach would be to that, but it seems that where it is being placed at the moment defies objective analysis on the points of consistency and transparency that I mentioned. I am very inclined to support the amendment.

[Lord De Mauley]

My Lords, I am grateful for the opportunity provided by the noble Lord, Lord Whitty, to discuss the eligibility of leasehold and tenanted properties for Flood Re. In Committee, I said that we would take more time to look at the issue for lease- holders with the ABI and that we would provide further information on the scope of Flood Re.

We have developed with the ABI a briefing note that sets out the scope of Flood Re and covers proposed new subsection (1) in the noble Lord’s Amendment 89B. In summary, the note, which is available online, confirms that domestic contents policies will be available to all under Flood Re, regardless of whether properties are leasehold or freehold, rented or owner-occupied, except those properties in band H and those built from 1 January 2009.

Leasehold houses will also be in scope of Flood Re, provided that the leaseholder lives in the property and purchases the buildings insurance in his or her own name. Flats will be eligible, provided that there are not more than three flats in the building and that the freeholder, or one of those with a share of the freehold, lives in the building and takes out the cover. Setting the eligibility to a maximum of three flats reflects the general limit that the insurance market is willing to cover under a domestic or personal lines policy. There is already a competitive market for insurance for properties with four or more units, which we expect to continue. As I have already said, we and the ABI will monitor the market to ensure that that remains the case. We believe that a significant proportion of the leasehold sector will be in scope of Flood Re, but I should emphasise here that we expect most properties will not need to be in Flood Re and will find better prices through normal routes.

The noble Lord, Lord Whitty, suggests that that is all very complicated and does not go far enough. We have looked carefully at that with the ABI. Flood Re should be available only to those who need it. Indeed, in an earlier debate the noble Lord to some extent agreed with that. The ABI has assured us that the same systemic issues relating to availability and affordability do not exist for larger-scale leaseholders and commercial managing agents as in the domestic home insurance market.

The insurance industry has recently written to assure the Government that it does not expect there to be widespread issues over access to the insurance market for those parts of the leasehold sector which will be out of scope of Flood Re, which I am sure that noble Lords will agree is very welcome reassurance. The industry is clear that there is plenty of capacity to continue to provide insurance on a competitive basis.

I turn to the tenanted sector. As we discussed at some length in Committee, landlord insurance is out of scope for Flood Re for buildings cover. Landlord insurance is classified by the insurance industry as commercial. However, again, we have been assured by the industry that the majority of landlords will be able to find a more competitive rate outside Flood Re.

I emphasise that the proposed scope was not developed on the basis of cost: it is the nature of the policy which is key. The Government are clear that it would not be appropriate for landlords, who gain commercially from renting properties, to benefit from a subsidy on other households.

[Lord Campbell-Savours]

The Minister referred to the fact that the ABI has given assurances that that insurance will be available at competitive rates. Were they oral or written assurances? If they were written, is it possible for those assurances in writing to be put into the public domain so that interested parties can examine the assurances that the ABI has given to the Government?

[Lord De Mauley]

That is a very good point, my Lords, and I will see what I can do.

The Government collect certain information and data as part of the English housing survey. However, the granularity of data on the different parts of the sector sought under the amendment is not currently available. Data are collected from owner-occupied homes on whether the home is owned leasehold or freehold, but not from homes that are let in the private rented sector or from the social rented sector. In the past, those partial data have been used to estimate the total number of leasehold domestic properties in England across all tenures, although I understand that the methodology used is currently under review.

The 2011 census provides some information about whether people live in a flat or a house and whether they own it or rent it, but did not collect data on the number of leasehold domestic properties. There are also no data sets that would distinguish between smaller landlords and large multisite commercial operators, as far as we are aware.

The insurance industry could provide information which would help with a general estimate of the cost of including additional properties to Flood Re. However, the value of that would be limited without the numbers in each of the categories specified in the amendment and how many of those are at sufficient flood risk to be ceded to Flood Re. We have looked at a range of potential address-level data sets to try to map their records to flood risk, but again the data are unsuitable.

The conclusion has to be that what is specified in the amendment is unachievable to any degree of accuracy. It would also be only a snapshot in time and would quickly become out of date. The Government and the ABI have committed to monitoring the market—including for both domestic and business premises.

The noble Lord, Lord Whitty, suggested that there had been no direct engagement with the property sector. We consulted publicly on our proposals and received representations from the property sector. Indeed, I met representatives of the leasehold sector and asked them to come forward with evidence that the same problems exist in the commercial insurance market. I must say that evidence received to date is very limited, but that offer remains.

I therefore argue that reporting as set out under the amendment is not needed, as the market monitoring already planned will provide data on how the market is operating. I assure noble Lords that we will keep this matter under careful review. As I said, the Government also plan to publish the findings and make them available to Parliament.

The noble Lord, Lord Cameron, asked why we cannot treat landlords of just one or two properties differently from the more large-scale landlords. We have not heard evidence of widespread problems for smaller landlords in securing affordable insurance and there is therefore no apparent need to extend the scope of Flood Re to include them. Furthermore, it would not be practical to ask insurers to try to distinguish between different types of landlord. With the exception of policies purchased in a block or those purchased under a business name, many insurers would find it difficult to tell whether landlords have a large or a small property portfolio. This is not just about pricing policies: it would also make it more difficult for insurers to work out the market share when paying their share of the levy.

Turning back to the point made by the noble Lord, Lord Campbell-Savours, I understand that it was made in a letter to the Secretary of State, and I can provide a copy of that to noble Lords who have participated in this debate. That might be helpful.

For the reasons that I have set out, I hope that the noble Lord will be prepared to withdraw his amendment.

18:00

[Lord Whitty]

My Lords, I recognise some of the things that the Minister is saying, but the fact is that that is not the perception out there. I do not mean the perception of somebody who has read only a few articles in their local paper or the national press; I mean the perception of the representatives of small landlords. They do not think that is the position. They do not think it is easy for them to get insurance for properties within the risk area. The representatives of the Council of Mortgage Lenders are extremely worried about being asked by owners of leasehold and tenanted properties to advance mortgages against properties that it is difficult to insure. It is not even the perception of the managing agents, who by and large have the larger properties, who also think that they are in some difficulty. As it happens, I met all three groups first thing this morning. They remain unconvinced about what is essentially the Government’s line.

If you look at this from the point of view of the leaseholders and the tenants—let us leave aside short-term tenants for the moment, although I echo the point raised by the noble Lord, Lord Cameron of Dillington, whose support I am very grateful for on this, that most tenanted properties are actually owned by a landlord who has a single property—they have a difficulty in raising insurance in the first place, and certainly for property within a flood risk area they will find even greater difficulties now.

Probably the most acute difficulty, though, is for those who are in long leases and are leaseholders because of the nature of the freehold relationship to their property, but who for all other intents and purposes regard themselves as home owners. They have a long mortgage on the leasehold property, they conduct all their affairs, including their insurance, on their own part of that property, and they do not regard themselves as being any different in status, vulnerability or risk from the people next door who are freehold owner-occupiers.

There are many people in that situation in many parts of the country, including some that are subject to serious flood risk. For them, the message is going out, “The next-door neighbour is covered but you are not, because you own”—as the noble Lord, Lord Cameron of Dillington, said—“a flat and not a house”. They may be on a very long lease, but, nevertheless, they are differentiated in this respect.

As I say, this amendment does not seek to rectify, turn over or redefine the boundaries; it simply asks that Parliament should know what the situation is before it finally signs off this scheme. It may be that everything the Minister has said is upheld in the feedback, but we have had representations from both landlords and leaseholders of property who, whether they have a property with 12 flats or three flats, have the same problem and do not believe that they are going to be covered. They think that the Government and the insurance industry are letting them down because they are not covered.

At least Parliament should know what the situation is. That is all my amendment asks. If the Government are not prepared at least to accept that they will formally report back on this to Parliament before the next stage, or before an SI is produced, for the sake of all those people out there who think that they are being treated inequitably, illogically, unfairly and non-transparently, I have to ask the opinion of the House on this amendment.

18:04

Division 2

Ayes: 190

---

Labour: 152
Crossbench: 26
Independent: 4
Democratic Unionist Party: 1
Green Party: 1
Plaid Cymru: 1

Noes: 209

---

Conservative: 122
Liberal Democrat: 61
Crossbench: 18
Independent: 3
Labour: 1
Ulster Unionist Party: 1

18:15

Clause 53: Scheme funding

Amendment 90 not moved.

Amendment 90ZA

Moved by

[Baroness Parminter]

90ZA: Clause 53, page 108, line 43, at end insert “and this is to include guidance about the application of surplus funds during the period of operation of the scheme to support uptake of resilience measures by householders”

[Baroness Parminter (LD)]

My Lords, the aim of Flood Re is to provide affordable insurance for flooding and to transition to risk-reflective pricing. If a surplus of funds were built up, that could help to manage flood risk down by encouraging householders to adapt to the impacts of climate change and flooding.

Funding for Flood Re will be via a levy, set as part of the five-yearly review by government. The Bill makes clear what would happen if there was a deficit—namely, a further levy on the insurance companies—but it does not make clear what would happen if a significant surplus built up. In Committee I outlined the potential, on the basis of the Government’s own figures, that at the end of year 1 it could have at least £100 million in reserves. In the early years, the aim would be to build this figure up to meet potential claims. The maximum reserves that Flood Re should need in any one year, after paying for reinsurance and administration, is an amount equal to the reinsurance policy threshold. This is due to be £250 million. If there is a sizeable flood during the lifetime of Flood Re it will need to pay the first £250 million, with the rest paid for by a claim on the reinsurance policy. It will then need to build up the reserve again the following year.

Ministers and insurers may well want to build up a slightly higher reserve in order to protect against a possible deficit if there are two bad years in a row, so there may be no surplus, as my noble friend Lord Cathcart rightly pointed out in Committee. Over the lifetime of the scheme, though, there may be a build-up of reserves if there are fewer claims than anticipated. Given that the ABI is now saying that the number of households it expects to be underwritten by Flood Re is 350,000 rather than the original figure of 500,000, which was the basis of the Government’s impact assessment, that is certainly possible. The ABI made it quite clear to me that its intention was for any surplus to be returned to ABI members. We need to ensure that Flood Re does not inadvertently lead to insurers profiteering from excess levy income being returned to them. It may not be passed back to customers automatically but could lead to a reduction in the future levy on bills. It would be better for the levy to be reduced in advance if a reasonable reserve has already been built up or, better still, for the excess to be spent on managing down the flood risk. I am envisaging paying not for flood defences but for things like grants to low-income households for home flood protection measures. I would not want to pin down in detail in this legislation what levels of surplus of reserves Flood Re should be able to build up or what will happen in those circumstances but a marker needs to be put down that, if significant reserves are secured, such reserves may be used to incentivise Flood Re policyholders to fund household resilience measures.

This amendment, which I am glad to say has the support of the noble Lord, Lord Krebs, allows this issue to be explored by the Government and Flood Re administrators during their five-yearly review of the scheme. It gives flexibility but encourages managing down flood risk if, and only if, significant surpluses are built up. I beg to move.

[Lord Krebs]

My Lords, as the noble Baroness, Lady Parminter, has said, this amendment is concerned with the possible surplus or cash reserves that Flood Re might build up. We have to recognise that although Flood Re is being designed as an integral part of the insurance industry it will be a public body spending public money and will operate on a not-for-profit basis. The noble Baroness, Lady Parminter, has indicated and the Government’s own figures suggest that there might be reserves of more than £100 million after one year. If that surplus exceeds the amount that is required to cover claims in any one year—again, the noble Baroness indicated a figure of £250 million—it would seem perfectly reasonable for that money to be used to manage down Flood Re’s own exposure to future claims and it could do so in a highly cost-effective way. This is about value for money. One estimate is that £4,000 spent on a property could prevent a number of claims on Flood Re averaging £45,000 a time, so the return on investment is going to be enormous.

The adaptation sub-committee which I chair has estimated that there are 190,000 properties in England where fitting flood-protection measures would be cost-effective, but progress in fitting them at household level has been very slow. In fact, the rate of uptake would need to increase by a factor of 20 to fit all such measures within the lifetime of Flood Re. This amendment recognises the potential to do more to protect high-risk households and the opportunity that the surplus reserves might represent. Investing in resilience now would leave high-risk households better able to afford flood insurance once Flood Re has withdrawn and, rather than adding to the cost of the levy, investing in this way promises to help minimise the costs of Flood Re over the lifetime of the policy.

[Lord Campbell-Savours]

The noble Lord referred to 140,000 properties. How would they be prioritised? How would they be selected to be subject to the benefit of this measure?

[Lord Krebs]

The figure I mentioned was in fact 190,000 properties. I do not have the detail of how they would be prioritised, but over the lifetime of Flood Re it is hoped that all 190,000 could be fitted with household protection measures that would increase their resilience against future flood risk.

As I was saying, investing the surplus from Flood Re would help to minimise its costs over the lifetime of the policy. To achieve that, Flood Re will have to invest in flood protection to reduce future claims. As this amendment indicates, guidance is needed on whether and how surpluses might be used and under what circumstances investment in household resilience should be pursued. So it is not prescriptive; it is just saying that guidance should be included. I think that perhaps answers the noble Lord’s question.

[Lord Campbell-Savours]

My Lords, I am taken a bit by surprise by this amendment. I had not intended to speak at all but as the noble Lord was developing his arguments I began to realise what the value of this could be. I have a letter here from Keswick Flood Action Group which I referred to in Committee. It makes recommendations on the question of the reinstatement of homes and resilience. I want to read on to the record what it says because most of my contributions on this Bill up to now, certainly in Committee, have drawn on information that has been brought to me by people who have been flooded, because very often they know more than anyone else. Lynne Jones, chair of Keswick Flood Action Group, says that the Government should,

“pass legislation so that insurance companies are required to reinstate homes in a flood resilient/resistant way. Insurance companies, quite rightly, will not pay for ‘betterment’ but these days they have to reinstate with insulation to regulatory standards, even if no insulation was present before, because they are required to do so by law. So why can’t flood measures be treated in the same way?”.

She goes on to make a very simple proposition which, when I think of the flooded properties that I surveyed when I was an MP, seems to me quite logical:

“For example dropping the electrics down from the first floor so raised sockets rather than rewiring from ground up; replacing wood floors with solid waterproof concrete etc”.

Then she goes on to suggest that the Government,

“provide people with independent advice on property reinstatement, maybe via Local Authorities’ Buildings Regulations Officers”.

If there is a surplus, why not consider spending some of it in this sort of area? She goes on to say:

“What people need is knowledgeable counsel from somebody who isn’t going to profit from the works. Flood victims are the target for every rogue trader under the sun post-flood and not everyone knows what products are available/would most suit their needs. Such decisions come at a time when they are exhausted, stressed and suffering financial hardship, they are truly at their most vulnerable”.

As I said, when I was an MP and also afterwards I visited homes where people had been flooded and we know there is tremendous distress. If there are these surpluses, perhaps we should ask whether they can be deployed as part of the process of advising people so that the rogue traders do not go in and do the work and rip people off. That is a far more professional approach. The simple idea of feeding electric wiring upstairs as against downstairs seems absolutely elementary. I wonder how many properties have been done up with grants from government and bills paid by insurance companies over recent years where those very simple, remedial steps to dealing with problems in particular homes have not been taken.

In many ways I think this is a very interesting amendment. I had not really thought of the surpluses. We do not want to waste money but surely it can be used in such a way as to promote the policy of developing actions for resilience.

[Earl Cathcart]

My Lords, I am afraid I cannot support this amendment. To me it shows a misunderstanding of the role of insurance more generally and of Flood Re in particular, which must build up its funds from premiums to cover current and future losses smoothly. The scheme already has five-yearly reviews so that all assumptions can be reworked and contributions adjusted, either upwards or downwards. Diverting funds into the totally separate adventure of pre-emptive risk mitigation is not a function of insurance and nor should it be for Flood Re. The analogy is asking car insurers to invest in better road signs or road infrastructure. It might help mitigate the risks but it is not the role of the underwriting industry; it is the role of government, national or local.

14:29

[Lord Shipley]

My Lords, I shall put a contrary view to that just put by the noble Earl, Lord Cathcart. There are two important issues in this amendment. The first is whose money is being paid out through the Flood Re system, and therefore what happens to it if there is a surplus, and the second is what safeguards can be put in place to ensure that households at high risk undertake prevention works and do not just assume that if there is a flood in their property others will pick up the cost that can be paid for through Flood Re insurance.

We debated this in Committee. I have concluded that if there is a surplus, it is not just the Treasury’s money nor just the insurers’ money; it is the public’s money because the public have paid the levy. In that sense, it becomes primarily the Treasury’s money because it funds public spending. However, if the public are contributing through a household levy, they have a right to expect that those potentially in receipt of other people’s money do work to their own property. The question then is whether this scheme, particularly if it is in surplus, should help towards that objective.

I think we are going to find that this is not just a time-limited scheme. I recognise there are regular, five-year reviews. It is a time-limited scheme. At the end of it, what will happen if there is a surplus left in the scheme? I would like to think that in that timescale, we would have secured major improvements to flood protection of individual properties in high-risk areas. For that reason, asking the Government to include guidance about the application of surplus funds during the operation of the scheme to support the uptake of resilience measures by householders is perfectly reasonable.

[Lord Whitty]

My Lords, I have some slight difficulties with this amendment. I understand the concept and, in a sense, I want the outcome. The role of the insurance companies’ relationship with householders—whoever they may be, in the light of the previous debate—in improving the resilience of their properties is an important dimension of this scheme. Some of it is deliverable through the normal relationship between insurance companies and their premium payers, in the sense that a condition of the insurance or of the level of excess on the insurance can be that they put in such-and-such a resilience measure or that they meet certain standards in the property. The insurance companies can in some circumstances go further than this and make a grant towards them. The problem with the amendment is that it feels too open-ended.

To answer the question about whose money it is, the money is contributed by the rest of us. It is the £10.50, or whatever it turns out to be, that the rest of the population puts into looking after high-risk properties. There is therefore a need for due diligence that that money does not go to diffuse purposes. If this amendment would lead to significant sums of money in surplus years being used in a different way, then issues of accountability arise. A more tightly worded amendment would probably meet with my approval, but people reading this could think that, if you have a surplus of £500 million after 10 years, you should be spending it directly on grants to householders in risk-prone areas to improve individual or communal flood defences. I do not think that is what is meant, but the wording could be susceptible to that meaning. I therefore support the general concept, but I do not think this amendment achieves it in a way that is easily defensible to home owners who are contributing to the financing of this scheme.

[Lord De Mauley]

My Lords, I thank my noble friend Lady Parminter for her amendment, which deals with a very important subject. I thank all other noble Lords who spoke to it.

Actions taken by government, communities, individuals and businesses to reduce levels of flood risk are indeed the best and most cost-effective way to secure affordable insurance and value for money from Flood Re in the long term. In addition to the substantial levels of investment in flood defences that I referred to in an earlier debate today, we are also taking action to ensure that households are supported to improve their property-level resilience. For example, grants of up to £5,000 are available for households and businesses that have flooded this winter, and applications open tomorrow. In addition, there are community projects in which we are investing more than £4 million over two years in order to learn about the most effective strategies to drive community resilience to flooding. Nevertheless, I recognise my noble friend’s intention to see Flood Re’s role reflected in the Bill.

Reserves that build up during the lifetime of Flood Re will primarily be used to pay flood claims in the bad years. Flood events are by their nature unpredictable, so while it may be possible that Flood Re would have a number of good years in which it built up reserves, it is equally possible that a run of bad years with heavy flooding could wipe out any reserves built up within Flood Re. As such, it is not easy to identify surplus funds, and any decision about Flood Re’s reserves will need to involve judgment about the level of cover needed for the unpredictable risks it bears.

Added to this, as an authorised re-insurer, Flood Re will be required by the Prudential Regulation Authority to hold certain minimum levels of capital. Any commitment by Flood Re to spend a certain portion of reserves in a certain way—for example, on betterment or resilience—would necessarily increase the amount of capital it is required to hold on an ongoing basis, having an impact on the cost of the scheme and ultimately the levy.

It may well be that, in due course, the Flood Re administrator decides that investments of the sort my noble friend would like to see present the best way of Flood Re fulfilling its obligations to manage the transition and act in the public interest. However, these are choices that are difficult to make before the scheme is established or has any sort of track record. Nothing in the Bill precludes this.

Alternatively, in due course, Flood Re may decide, in consultation with government, that the best use of any surplus is to reduce the level of the levy, thereby helping to deliver affordability for all policyholders, not just those in Flood Re. We would not, at this stage, wish to see Flood Re’s hands tied in legislation that could have an unpredictable and undesirable effect.

We have always been clear that there should be a gradual transition to more risk-reflective prices. We expect the transition plan to set out how Flood Re intends to support households to adapt to the withdrawal of support from Flood Re over time. We will not designate Flood Re unless we are satisfied with the industry’s proposals for the scheme, including the transition plan.

It is important for Flood Re to retain flexibility in the way it discharges its public interest duty and plans for transition in order to ensure that it is in a position to balance these requirements against its core financial obligations. However, my noble friend’s amendment draws attention to the need to offer more clarity about what might happen in the event that a surplus is accumulated, particularly in relation to managing the transition.

I should say that I have considerable sympathy for the points made by the noble Lord, Lord Campbell-Savours. I have first-hand experience of where exactly the type of sensible resilience measures he has suggested cost no more than putting things back exactly as they were before the flood so the insurance claim could cover them. He also referred to advice, which is clearly an important part of that. A number of sources of independent advice are available today. The National Flood Forum can direct flood victims to appropriate measures. Furthermore, we are continuing to discuss with the industry whether any of the reserves could be used to fund surveys.

As I have said, I am very grateful to my noble friend and the noble Lord, Lord Krebs, for bringing this to my attention. I would like to take the opportunity to discuss their proposals with them further before Third Reading. Although I cannot of course guarantee that I shall be able to bring something back, I may be able to clarify the Government’s position further. I hope that I can persuade my noble friend to withdraw her amendment.

[Baroness Parminter]

I thank the noble Lord, Lord Krebs, the noble Lord, Lord Campbell-Savours, and my noble friend Lord Shipley, for their support for this amendment. My noble friend Lord Cathcart suggested that I may have misunderstood the insurance industry. We all have our dirty secrets, and many noble Lords may think of me as a squeaky-clean campaigner, but I have to say that I have been employed in the City by Lloyd’s of London, so I do know a thing or two about insurance.

I accept the point made by the noble Lord, Lord Whitty, that the wording of the amendment may not be as clear as we would all hope to achieve to ensure that any surplus funds are used to manage down flood risk and help people to transition to a better place at the end of this temporary scheme. I hoped that it would be seen to be not prescriptive and unhelpful and I am very grateful again for the comments of my noble friend the Minister and for his kind offer of discussions with myself and the noble Lord, Lord Krebs, which we are both delighted to accept. We will return to this matter at Third Reading. On that basis, I beg leave to withdraw the amendment.

Amendment 90ZA withdrawn.

Amendment 90A

Moved by

[Baroness Northover]

90A: Clause 53, page 109, leave out line 10 and insert “obtain the consent of the FR Scheme administrator, which is not to be unreasonably withheld.”

Amendment 90A agreed.

Clause 54: Scheme administration

Amendment 90B

Moved by

[Baroness Northover]

90B: Clause 54, page 109, line 26, at end insert—
“( ) Regulations under subsection (1) may require the FR Scheme administrator to provide the following information to relevant insurers who have issued insurance policies that are reinsured under the FR Scheme, so that those insurers may supply the information to holders of those policies—
(a) information about how to find out about the levels of flood risk to which an area in which household premises are situated is subject and how any flood risk may be managed;(b) information about the FR Scheme, including information about the effect of section 51(2)(b) (transition to risk-reflective pricing of flood insurance for household premises).”

[Baroness Northover]

My Lords, in Committee, the noble Lord, Lord Krebs, tabled an amendment which sought to require the Flood Re scheme administrator to increase awareness among the beneficiaries of Flood Re about their local flood risk. We are very grateful to the noble Lord, Lord Krebs, for highlighting this important matter. In Committee, we explained that we agreed with the intention behind the noble Lord’s amendment and agreed to consider this further and return to it on Report. We think it is important that policyholders whose buildings, contents or combined insurance policies are ceded to Flood Re know about their flood risk so they can take simple measures such as signing up to free flood warnings as well as investigating longer-term options for managing their flood risk.

To plan for the future, these households also need to understand the likely impact of the transitional nature of the Flood Re scheme, which is subsidising their premiums. I am therefore today bringing forward Amendment 90B, which would allow the Secretary of State to require Flood Re, through regulations, to provide information for relevant insurers to pass on to their policyholders who will benefit from Flood Re. The information would cover the Flood Re scheme, flood risk and actions that householders can take to reduce the risk and impact of flooding. Our expectation is that standardised information will be sent to the customer by the relevant insurer that is ceding the policy to Flood Re. This makes sense because it maintains the relationship between insurers and their customers. Flood Re will need to work with the flood risk management authorities in the UK to ensure the information about flood risk is accurate and appropriate.

As a consequence of this amendment we are also making three other minor amendments, Amendments 90H, 90J and 90K, which affect Clause 69 and give the Secretary of State powers to make regulations defining “flood” and “flood risk” in the context of Flood Re and not just in the context of the flood insurance obligation, as was the case previously. I beg to move.

18:45

[Lord Grantchester]

My Lords, I rise to speak to Amendment 90CE, which is grouped with these amendments. I was slightly confused as to whether the Government were putting their name to our amendment, because I noticed that we have a little “g” in front of our Amendment 90CE. But I will take that as a misprint and that I must still convince the Government of the merit of the case.

The amendment would put in place regulations that would add clarity to set the date of commencement for Flood Re. It would also create a database of properties at risk of flooding and indicate whether the property is covered by the flood scheme. The amendment will insist that the database must be set up before Flood Re starts, as that would be logically helpful.

I begin by welcoming the Government’s helpful concession, particularly in Amendment 90B, which sets out regulations to allow insurers to provide information to policyholders in the scheme. We are glad that the Government have listened and acted on our concerns expressed in Committee with the introduction of their amendment, but we still feel that it does not go far enough. Delivering information to those already in the scheme—that is, policyholders—is helpful as far as it goes. Although it is important that insurance companies are well equipped and able to deliver information to policyholders in relation to the flood scheme and how they can protect their properties adequately, we believe that the database proposed by our amendment would be a lot more useful, primarily for potential homeowners but also for mortgage lenders. It has become much more difficult of late for people to get mortgages and it is even more difficult to get a mortgage if the mortgage lender is at all concerned about damage from flooding. As such, information should be provided to homebuyers at the start of their journey of finding a home rather than further along the process, after they have agreed with the vendor on a purchase or when they are at the stage of consulting mortgage companies after engaging solicitors. The database must be accessible to everyone and allow them to check whether a property for sale or rent is covered by the scheme and highlight its risk to flooding. This would prevent the all too recognisable reality experienced by people in the recent flooding whereby home owners were blindsided by their properties flooding and then found themselves caught when their insurance companies reassessed their policy terms. The database would also avoid the scenario whereby a home owner may believe that they are covered by Flood Re when in reality they are not.

It is a very straightforward amendment, which brings the whole subject of the database and properties into the public domain. It would add transparency and clarity to the scheme. At present, with the complicated nature of the scheme, especially in terms of eligibility, we should do all that we can to assist those potentially affected by the scheme by making them all the more aware of where they stand with regard to flood insurance on the property that they are inquiring about, not just once they become policyholders. We have already heard today of the complexities behind the scheme as regards leaseholders, as well as the exclusions for small businesses and other aspects.

[Baroness Northover]

My Lords, I thank the noble Lord, Lord Grantchester, for tabling Amendment 90CE, which proposes a publicly searchable database of flood risk. I am desolate that I must disappoint him as we cannot accept the amendment even though it does have a little “g” in front of it. Nevertheless, we agree with the intention behind the amendment that households that are ceded to Flood Re should be made aware of their flood risk. Knowing about flood risk is essential to helping affected households to manage their flood risk effectively, both in the short and long term. That is why we have recently published a note entitled Homebuyers and Their Flood Risk, in which we have explained the information currently available to prospective homebuyers.

It is a well established principle of the conveyancing process that the onus is on the buyer of a property to conduct their own searches and investigations into the potential risks to that property. In England, the Environment Agency provides a freely accessible resource of flood risk information for any area. Anyone may use this service to identify whether their post code is at risk of flooding from rivers, the sea or surface water. Similar resources are available to households in other parts of the UK. Should a household wish to identify flood risks specific to their property, commissioning a flood risk survey from a suitably experienced professional would identify the ways in which water can enter a property and what measures could be taken to prevent or limit possible damage. We believe that requiring Flood Re to help insurers guide their customers to information about flood risk and how to manage it will add significantly to public awareness of flood risk. That is why I moved Amendment 90B and I thank the noble Lord, Lord Grantchester, for his welcome of it. I hope therefore that noble Lords are willing to accept the government amendments in this group and that the noble Lord will be content not to move his amendment.

Amendment 90B agreed.

Amendments 90BA and 90C

Moved by

[Baroness Northover]

90BA: Clause 54, page 110, line 23, leave out paragraph (a)

90C: Clause 54, page 111, line 1, after “section” insert “—
“flood insurance” has the meaning given in section 51;”

Amendments 90BA and 90C agreed.

Clause 56: Disclosure of information: preparatory purposes

Amendments 90CA to 90CD

Moved by

[Baroness Northover]

90CA: Clause 56, page 111, line 14, leave out subsection (1) and insert—
“(1) The Commissioners for Her Majesty’s Revenue and Customs may disclose relevant HMRC council tax information to any person who requires that information for either of the following descriptions of purposes—
(a) purposes connected with such scheme as may be established and designated in accordance with section 51 (in any case arising before any scheme is so designated);(b) purposes connected with the FR Scheme (in any case arising after the designation of a scheme in accordance with section 51).(1A) A person to whom information is disclosed under subsection (1)(a) or (b)—
(a) may use the information only for the purposes mentioned in subsection (1)(a) or (b), as the case may be;(b) may not further disclose the information except with the consent of the Commissioners.”

90CB: Clause 56, page 111, line 19, at end insert—
““relevant HMRC council tax information” means HMRC council tax information relating to premises which are household premises and consisting of any of the following—
(a) the address (including the postcode) of the premises;(b) the council tax valuation band in which the premises fall;(c) information about when the premises were constructed;(d) the National Land and Property Gazetteer unique property reference number for the premises;(e) the unique address reference number allocated to the premises by the Valuation Office of Her Majesty’s Revenue and Customs.”

90CD: Clause 56, page 111, line 20, leave out subsection (3) and insert—
“(3) The Secretary of State may by regulations amend the definition of “relevant HMRC council tax information” in subsection (2).
(4) If the Secretary of State by regulations under subsection (3) amends the definition of “relevant HMRC council tax information” to add further descriptions of information, those regulations may include the provision described in subsection (5).
(5) The regulations may provide that if a person discloses, in contravention of subsection (1A)(b), information which is relevant HMRC council tax information by virtue of the regulations and which relates to a person whose identity—
(a) is specified in the disclosure, or(b) can be deduced from it,section 19 of the Commissioners for Revenue and Customs Act 2005 (wrongful disclosure) applies in relation to that disclosure as it applies in relation to a disclosure, in contravention of section 20(9) of that Act, of revenue and customs information relating to a person whose identity is specified in the disclosure or can be deduced from it.(6) The Secretary of State must consult the Commissioners for Her Majesty’s Revenue and Customs before making regulations under subsection (3).”

Amendments 90CA to 90CD agreed.

Amendment 90CE not moved.

Clause 57: Flood insurance obligations

Amendment 90D

Moved by

[Baroness Northover]

90D: Clause 57, page 111, line 37, leave out “relating to the effects of flooding” and insert “arising from a flood”

Amendment 90D agreed.

Amendment 90DA

Moved by

[Lord Whitty]

90DA: After Clause 63, insert the following new Clause—
“Appeals on removal from the Flood Reinsurance Scheme
(1) The Secretary of State shall by order establish a right of appeal for a household which has been removed from the Flood Reinsurance Scheme.
(2) The Financial Conduct Authority shall be responsible for the hearing and administration of appeals under subsection (1).
(3) An order under subsection (1)—
(a) shall be made by statutory instrument; and(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.(4) An order under subsection (1) must be made before the Flood Reinsurance Scheme has been implemented.”

[Lord Whitty]

My Lords, Amendment 90DA is relatively straightforward. Clause 63 provides for reviews and appeals against premises being deemed not eligible to be entered in the register of those covered by Flood Re. As it is written, Clause 63 indicates that when the register is drawn up there is a list of which households are either in or out, according to the risk assessment at the time.

This is a 25-year scheme and things will change over 25 years. My amendment is designed to add to the provisions of Clause 63 and appeal against the removal from that list at a later stage. It is really a tidying-up. However, removal from the list could arise for a number of different reasons. It could be because the insurance sector had decided that the risk had changed; but that could be because the Committee on Climate Change—the noble Lord, Lord Krebs, is no longer in his place—had advised of a change and that there was less risk in that particular area. It could be that the Environment Agency’s map had changed. It could be that the aggregated data from the insurance companies showed that that type of property was at less of a risk than it was assumed to be at the beginning of the scheme, bearing in mind that we are potentially 25 years on. It could be that resilience had been provided on some other basis—for instance, a flood defence scheme may have been built down the road—or that the catchment management in that area had significantly improved and diverted the flood away from that property to somewhere else. In an urban area, it could be that there had been major investment in the drainage system, which meant that the property was significantly less susceptible to surface flooding. There are all sorts of reasons why, objectively, the flood risk might diminish. Regrettably, in the light of the macro information from the Committee on Climate Change, it is more likely that a property will be drawn into the list than drawn out of it; but there will be such exclusions.

There could also be exclusions that are more esoteric to the insurance industry, in the sense that if insurance companies were insisting, as a condition of continued insurance, that that resilience measure should be introduced at the expense of the householder, one way or another, and the householders were not prepared to provide for that level of resilience expenditure, then either the offer, or renewal, of insurance would be taken away or the excess would be put at a level which the premium payer was not prepared to pay.

There are all sorts of reasons why a property might end up being removed from that list. If that is the case, there has to be the equivalent appeal against that in a situation where one is excluded from the list from the word go. As I read it, Clause 63 provides only for exclusion from the register in the first place; it does not provide for removal from the register. My amendment seeks to correct that gap. I beg to move.

[Baroness Northover]

My Lords, I thank the noble Lord, Lord Whitty, for this amendment. As we have previously discussed, a rigorous regulatory and dispute resolution regime for the insurance industry already exists, to ensure that insurers treat their customers fairly. Flood Re will not change the direct relationship between the insurer and the householder. Where households do not feel that a complaint has been treated fairly, they can contact the Financial Ombudsman Service, which offers a free dispute resolution service for people who wish to complain about how their insurance company has treated them. While the Financial Ombudsman Service is equipped to deal with individual complaints, the Financial Conduct Authority has a statutory objective to protect the wider interests of consumers and ensure that firms are giving a fair deal to their customers.

We need to remember that Flood Re is a voluntary scheme: insurers are not obliged to use it. We therefore maintain that there is no need for a specific appeal mechanism for Flood Re per se. Flood Re is not based on a register of properties; it is a voluntary scheme and so there are no grounds for an appeal mechanism.

However, the noble Lord is emphasising concern about who might be excluded from Flood Re over time. As was said in the other place, the memorandum of understanding agreed between the Association of British Insurers and the Government last year talked about genuinely uninsurable properties. As my honourable friend the Parliamentary Under-Secretary of State for Water, Forestry, Rural Affairs and Resource Management said, there will be no such thing as a genuinely uninsurable property at the start of Flood Re. However, there might be a case that over time, if householders choose to take no action to tackle their flood risk, Flood Re might seek to find a mechanism whereby they no longer benefit from the public subsidy. We have reflected further on that issue, working closely with the ABI. I can reassure noble Lords that our focus is on supporting households to become more resilient, not on excluding them from the Flood Re scheme.

As householders with policies ceded to Flood Re will be benefiting from subsidised insurance, important signals to them about flood risk—for example, the price of insurance and the levels of excess charged—will be lost. We have therefore agreed with the industry that Flood Re will provide information to insurers to pass to householders about flood risk, Flood Re itself and how to reduce the likelihood and impact of flooding. An amendment to that effect has been tabled.

We are continuing to explore with industry how people could be incentivised, perhaps, for example, by Flood Re paying for a survey after a property has flooded a number of times. My noble friend mentioned that. This would depend on Flood Re having sufficient reserves. Another incentive could be to increase the excess after repeated flooding.

There are a number of practical considerations to work through. However, there is a clear commitment between the Government and the insurance industry to putting in place an incentive-based approach rather than an exclusionary approach. I hope that noble Lords will also agree that the approach we have outlined strikes a fair and appropriate balance between supporting householders at high flood risk and the affordability of the scheme as a whole, and that the amendment will therefore be withdrawn, bearing in mind what I said at the beginning about the direct relationship between the insurance company and the householder and the means of redress that they can avail themselves of.

19:00

[Lord Whitty]

My Lords, I thank the noble Baroness for that reply but I am not sure that it entirely meets the point. As a former chair of Consumer Focus, I am very familiar with the steps that people can take to obtain redress from financial services agencies, including the insurance industry. I am perhaps slightly less sanguine about the effectiveness of it but that is a different matter. However, the fact is that the Bill provides for a register and, in Clause 63, provides for people to appeal against a body being excluded from that register in the first place. Unless I am completely misunderstanding the issue and what the noble Baroness said, I took it she accepted that there was a possibility of someone being excluded in one of the situations that I described—namely, when the insurance company’s request that the householder introduced some resilience measures at their own expense as a condition of continuing to have that insurance could lead to their exclusion from the list. All I am saying is that if there is an appeals process at the beginning, why is there not one all the way through? I may have misunderstood something that the noble Baroness said and the purpose of Clause 63.

[Baroness Northover]

Perhaps I can clarify at least one point in relation to Clause 63 and the register. Clause 63 relates to the flood insurance obligation. It is not relevant to Flood Re. However, I am happy to write to the noble Lord to clarify this area.

[Lord Whitty]

That would be useful for all concerned, so I will shut up. I am very grateful for the Minister’s offer to write to me. I beg leave to withdraw the amendment.

Amendment 90DA withdrawn.

Clause 69: Interpretation

Amendments 90E to 90K

Moved by

[Lord De Mauley]

90E: Clause 69, page 120, line 30, at end insert—
“(A1) In this Part “insurer” means—
(a) a person who—(i) is authorised for the purposes of the Financial Services and Markets Act 2000 (see section 31 of that Act), and(ii) has permission to carry on the activities specified in Article 10 of the Financial Services and Markets (Regulated Activities) Order 2001 (S.I. 2001/544), or(b) a member of the Society (within the meaning of the Lloyd’s Act 1982).“(A2) The Secretary of State may by regulations amend the definition of “insurer” in subsection (A1).”

90F: Clause 69, page 120, line 31, after “define” insert ““relevant insurer””

90G: Clause 69, page 120, leave out lines 32 and 33

90H: Clause 69, page 120, line 38, at end insert—
““flood”;”

90J: Clause 69, page 120, line 39, leave out ““flood insurance”” and insert—
““flood risk””

90K: Clause 69, page 121, line 7, after “subsection” insert “(3) or”

Amendments 90E to 90K agreed.

Clause 70: Period of operation

Amendment 90L

Moved by

[Lord De Mauley]

90L: Clause 70, page 121, line 33, leave out “(including” and insert “(whether or not otherwise capable of being transferred, and including”

Amendment 90L agreed.

Clause 71: Regulations and orders

Amendments 90M to 90T

Moved by

[Lord De Mauley]

90M: Clause 71, page 122, line 7, at end insert—
“(1A) Subsection (1) does not apply in relation to an order under section 70(3) if the only provision made by the order is provision for, or in connection with, the transfer of property, rights and liabilities.”

90N: Clause 71, page 122, line 16, at end insert—
“(za) regulations under section 51 (the Flood Reinsurance Scheme),(zb) regulations under section 52 (Scheme administrator),”

90P: Clause 71, page 122, line 17, leave out “53(1)” and insert “53”

90PA: Clause 71, page 122, line 17, at end insert—
“( ) regulations under section 56,”

90Q: Clause 71, page 122, line 17, at end insert—
“(aa) regulations under section 54 (Scheme administration),(ab) regulations under section 57 (flood insurance obligations),(ac) the first regulations to be made under section 58 (target number),(ad) regulations under section 59 or 60 (information),(ae) the first regulations to be made under section 61 (register of premises subject to greater flood risk),”

90R: Clause 71, page 122, line 19, at end insert—
“(ba) regulations under section 65 (compliance reports),”

90S: Clause 71, page 122, line 21, leave out “or” and insert—
“(da) regulations under section 69 (interpretation), or”

90T: Clause 71, page 122, line 24, at end insert—
“( ) If a draft of an instrument containing an order under section 70(3) would, apart from this subsection, be treated for the purposes of the Standing Orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not a hybrid instrument.”

Amendments 90M to 90T agreed.

Amendment 91

Moved by

[Earl Cathcart]

91: After Clause 73, insert the following new Clause—
“Internal drainage boards: apportionment of drainage expenses
(1) The Land Drainage Act 1991 is amended as follows.
(2) In section 37(5) (apportionment of drainage expenses), at end insert—
“(f) in the case of—the Secretary of State may by order define an equivalent measure for valuing the land”.”(i) any land to which none of the paragraphs (a) to (d) applies and it is not possible to calculate a value under paragraph (e)(ii) as the relevant rating lists no longer exist or cannot be located, or(ii) land to which one of paragraphs (a) to (c) does apply but for which the relevant rating lists no longer exist or cannot be located,the Secretary of State may by order define an equivalent measure for valuing the land”.”

[Earl Cathcart]

My Lords, my noble friend Lord Howard moved this amendment in Committee. Unfortunately, he cannot be here today and has asked me to move it again on his behalf.

As a farmer, I pay land drainage rates and, in a past life, I was a member of a Norfolk internal drainage board. Internal drainage boards get their funding from two sources: from farmers and agricultural landowners, for draining agricultural land—this is the land drainage rate; and from local authorities, for draining developed areas—this is the special levy. IDBs work out the special levy that they charge local authorities based on the value per hectare of the developed land. This is clearly set out in the Land Drainage Act 1991. This amendment does not change this calculation, which is clear, fair and transparent. IDBs need to know the value per hectare of developed land to calculate the special levy. However, the Land Drainage Act 1991 says that IDBs must work out the value per hectare of developed land from lists of rateable values of property compiled in 1990—25 years ago. Using these old lists of rateable values to work out the value per hectare of developed land is neither fair nor transparent as the IDB needs to have the lists. In many cases, the lists no longer exist. In addition, they are out of date and do not include anything built after 1990. As the lists are out of date, the variation of values in them may be wrong as relative property values between areas have changed since1990.

The only way to solve this problem is to change the Land Drainage Act through this amendment to give the Defra Secretary of State the power to set out another way of working out the value per hectare of developed land, so that IDBs do not have to use the old rateable value lists, if they have them.

The amendment is not prescriptive. We do not want to repeat the mistakes of the past by setting the way of working out the value per hectare of developed land in primary legislation. The amendment would rectify that mistake by taking the prescription out of the Land Drainage Act and instead giving discretion to Defra to set a method that is appropriate now, and to change it in the future if circumstances change. This is important as IDBs do vital work not just in protecting people, their homes and businesses and some of our best farm land, but also play a key role in keeping our power stations, ports, roads and railways working.

In addition to their usual maintenance costs, IDBs now face heavy bills to repair and rebuild defences, drainage ditches and pumping stations after the ravages of this winter, with its record rainfall and the biggest tidal surge in 60 years. Unless IDBs have a fair way of valuing developed land, they cannot set a fair special levy on local authorities, so they cannot raise the funds they need to do their vital work. This amendment will ensure that IDBs can get the funds to do their vital work, while also sorting out past mistakes by replacing prescriptive and out-of-date legislation with a simple discretionary power.

After my noble friend Lord Howard brought forward this amendment in Committee, my noble friend Lord De Mauley wrote to all 120-odd IDBs to ask whether this was a concern for them. When I met my noble friend Lord De Mauley and his officials last week, he said he could not conclude that it was an overwhelming concern as he had had only six responses from the IDBs. I do not know the timescale between the letter being sent out and our meeting, but I do not think it was that long. I do not know what the latest position is with regard to responses from the IDBs, but I do know that the Association of Drainage Authorities has written supporting the amendment. The CLA and the NFU have also written supporting the amendment.

The letter from the NFU adds another point that I have not raised yet. It states:

“The NFU … considers that there is a need for this change both for existing IDBs but also to enable the creation of new IDBs in areas where they don’t currently exist, we would therefore urge support of this amendment”.

It goes on:

“Such an amendment is especially important for areas where the Environment Agency is considering to withdraw from maintaining significant drainage assets. It is our view that in areas such as on the Pevensey Levels in East Sussex or within the Alt Crossens catchment in West Lancashire, to name but two, there is a strong need for IDBs to be established in order that existing water level management activity may continue and that the cost of that activity is shared equitably between the beneficiaries”.

I hope my noble friend will accept this amendment. Being more realistic, I hope that he does not reject it today, but rather agrees to take it away and look at it between now and Third Reading. If he then agrees that there is a hole that needs plugging, he can either accept the amendment or come back with his own. I beg to move.

[Lord Grantchester]

My Lords, during our debates in Committee, the amendment of the noble Lord, Lord Howard of Rising, and the noble Earl, Lord Cathcart, seemed purely a matter of practicality. The noble Earl should be congratulated on finding this shortfall in the relevant documents. The Minister wished to reserve the Government’s position pending further evidence. I merely rise to ask the Minister whether the position could be addressed by secondary legislation. That would allow Parliament to keep a watch on the situation and assess when and if it develops.

[Lord Cameron of Dillington]

My Lords, I apologise that I did not manage to get in before the Labour Front Bench. Before the excellent exposition by the noble Earl, Lord Cathcart, I had no detailed knowledge of the technical benefits brought about by this amendment. However, I do know about the vital importance of the role of IDBs in the land drainage sector, both as a former chairman of the CLA water committee, who was once the keynote speaker at an Association of Drainage Authorities lunch—a memorable occasion—and as a farming resident in Somerset.

The 2010 Act, not entirely wisely in my view, gave new land drainage responsibilities to county councils and district councils, taking away from the previously comprehensive responsibility of the Environment Agency and IDBs. This has caused a degree of chaos, certainly in Somerset, with no one really taking full responsibility for their duties or even, to begin with, knowing what those duties entailed. That is by the by. My key point is that the one solid rock in all this has been the IDBs. Their local and comprehensive technical and engineering expertise is absolutely vital and we would be lost without them. Anything that helps them to perform their duties better must be in all our best interests. I strongly support this amendment, which would seem to further that end.

[Baroness Northover]

My Lords, I thank my noble friend for raising this issue again and other noble Lords for contributing their expertise. As we previously explained in Committee, the Government value and support the important work that internal drainage boards, IDBs, undertake to manage water levels, reduce flood risk and protect critical infrastructure. We want to ensure that they can carry out their work without unnecessary hindrance. Defra has also developed a close and constructive working relationship with the Association of Drainage Authorities, ADA. Defra officials meet with ADA on a regular basis, including through a technical advisory group, which meets quarterly, to discuss a wide range of issues relating to IDBs. It is helpful that my noble friends have raised this issue with us, as ADA had not highlighted this previously as a potentially significant or widespread problem.

We have since sought information on this issue from ADA, as my noble friend indicated, and are in continuing discussion with them. ADA has written to all 120 IDB clerks to gather their views on this issue. Responses have been received within the past month and I can update the numbers. From a small number of IDBs, five say that they have access to rating lists, while six have said that they foresee a possible need for an amendment such as this. We do not therefore yet have the evidence to demonstrate that the unavailability of rating lists poses a widespread practical problem for IDBs.

19:15

We are therefore not satisfied that there is a definite need for legislative change to address this particular concern. We are also not satisfied that the power that my noble friend has proposed necessarily offers the right approach to addressing this concern, should legislation be required. The power would require the Secretary of State to define an equivalent measure for valuing land. However, if it turns out that the original rating lists are no longer available in some parts of the country, it may prove challenging or impracticable to design a completely equivalent system.

This might mean that we would have to consider a wider revaluation of the urban land. This would have the effect of increasing special levies on unitary and district authorities and could, of course, in turn increase council tax for ratepayers in IDB areas. Given the potential impact of this power on taxation, we would need to consult across government, and wider consultation with the public would also be required. Therefore, as can be seen, there are a number of potentially serious unintended consequences of implementing such a power. We therefore need to give these a great deal of careful thought and fully understand their impact.

We appreciate that this is intended to be only an enabling power. However, this power is more than just a technical amendment and Parliament would rightly expect to see considerable detail explaining how the Government intended to use such a delegated power before agreeing to its inclusion in the Bill. I heard what the noble Lord, Lord Grantchester, said. I also remember how the noble Lord, Lord Whitty, took me to task for not following everything that the Delegated Powers Committee wished to do. Of course, the Delegated Powers Committee might be very interested in this particular arrangement.

In view of our concerns, and the current lack of definitive evidence of the need for legislative change, we cannot justify to Parliament the inclusion of such a delegated power in the Bill at this time. Nevertheless, we much appreciate the points that my noble friend and others have made. We realise that we need to investigate this issue thoroughly. As I mentioned earlier, we have been working with ADA as a priority to understand the extent of any problem, and we understand that it will provide more information when it receives it from IDBs. We also wish to explore with ADA whether the issue could be resolved through non-legislative options first before considering the need for legislative change.

We welcome further and more expansive information on the practicalities of this issue for IDBs. If it becomes clear that there is no non-legislative way of resolving the issue, we will deal with the matter at the earliest opportunity. I hope that reassures noble Lords. Given the taxation implications of valuing the land in another way or revaluing the land for IDB funding purposes, it is possible that we could use the annual finance Bill to make any legislative changes in future.

I therefore urge my noble friend to withdraw his amendment. Following our continuing investigations with ADA, we would be happy to write to him and to my noble friend Lord Howard of Rising, who tabled an amendment in Committee, and notify them of the outcome and any course of action to be taken.

[Earl Cathcart]

My Lords, I thank the Minister for picking up the baton on this. From what she said, I can see this is not an easy one to take forward, but there seems to be a concern with some of the IDBs and I thank her for continuing to talk to ADA to see what the best course of action is. With that, I beg leave to withdraw the amendment.

Amendment 91 withdrawn.

Amendment 91A

Moved by

[Lord De Mauley]

91A: After Clause 74, insert the following new Clause—
“Sustainable drainage systems: non-performance bonds
In Schedule 3 to the Flood and Water Management Act 2010 (sustainable drainage), in paragraph 12 (non-performance bonds), in sub-paragraph (4)(c)—(a) after “sums received” there is inserted “from a person”;(b) for “the developer” there is substituted “that person”.”

Amendment 91A agreed.

Schedule 11: Orders under section 77: further provision

Amendments 91B to 91D

Moved by

[Lord De Mauley]

91B: Schedule 11, page 225, line 6, at end insert—
“Changes in water supply licensing1A (1) A section 77 order may make provision in connection with the introduction of new water supply licences.
(2) A section 77 order may in particular—
(a) make provision for old water supply licences to continue in effect, subject to provision made by a qualifying scheme;(b) make provision about the granting of a new water supply licence on application made by the holder of an old water supply licence.(3) A qualifying scheme is a scheme that—
(a) is made by the Water Services Regulation Authority, and(b) contains such provision as is described in sub-paragraph (4).(4) The provision mentioned in sub-paragraph (3)(b) is—
(a) provision for the revocation of all old water supply licences—(i) on the first day on which it would be possible for a new water supply licence to come into effect, or(ii) in accordance with arrangements in the scheme and before a day specified in or determined under the scheme,(b) provision for compensation to be paid by the Water Services Regulation Authority in connection with the revocation under the scheme of an old water supply licence,(c) provision, in a case where the scheme allows a holder’s old water supply licence and new water supply licence to have effect at the same time, for preventing the holder supplying water to premises in reliance on the old water supply licence where—(i) the premises supplied are the premises of a person who was not a customer of the holder immediately before the grant of the new licence, and(ii) the premises could be supplied with water in reliance on the new water supply licence,(d) provision for compensation to be paid by the Water Services Regulation Authority in connection with the restriction imposed on an old water supply licence under paragraph (c),(e) provision about the determination of—(i) claims for compensation payable under the scheme, and(ii) appeals from the determination of such claims, and(f) provision satisfying such other requirements as may be specified in a section 77 order, including requirements about the persons who may claim compensation, the measure of compensation and matters by reference to which compensation may be reduced.(5) Requirements imposed under sub-paragraph (4)(f) may allow the scheme to make provision by virtue of which the compensation payable in a particular case may be nil.
(6) A qualifying scheme may include provision about—
(a) the making of claims for compensation;(b) the matters to be proved by a claimant.(7) Sub-paragraphs (4) to (6) are not exhaustive of what may be included in a qualifying scheme.
(8) A section 77 order may make provision for a relevant person specified in the order, or appointed by the Secretary of State, to determine—
(a) claims for compensation payable under a qualifying scheme;(b) appeals from the determinations of such claims.(9) In sub-paragraph (8) “relevant person” means—
(a) the Water Services Regulation Authority, except in relation to appeals from the determination of claims for compensation,(b) the Competition and Markets Authority, or(c) any other public authority (within the meaning of section 6 of the Human Rights Act 1998). (10) A section 77 order may provide for functions of the Competition and Markets Authority (“the CMA”) relating to compensation payable under a qualifying scheme to be carried out on behalf of the CMA by a group constituted for the purpose by the chair of the CMA under Schedule 4 to the Enterprise and Regulatory Reform Act 2013.
Modification of conditions of old water supply licences1B (1) Where a section 77 order makes provision for old water supply licences to continue in effect, that provision may include provision for applying new sections 17I to 17R to old water supply licences, with such modifications as appear to the Secretary of State to be appropriate.
(2) Provision under sub-paragraph (1) may include provision for treating a reference to a new water supply licence as including a reference to an old water supply licence.
(3) Provision under sub-paragraph (1) may include provision for treating—
(a) a reference to a standard condition of a new water supply licence as including a reference to a standard condition of an old water supply licence, if the two conditions are in, or as nearly as may be are in, the same terms;(b) a reference to a standard condition of a new water supply licence giving the holder a new retail authorisation as including a reference to a standard condition of an old water supply licence giving the holder a retail authorisation, if the two conditions are in, or as nearly as may be are in, the same terms;(c) a reference to a standard condition of a new water supply licence giving the holder a new restricted retail authorisation as including a reference to a standard condition of an old water supply licence giving the holder a retail authorisation, if the two conditions are in, or as nearly as may be are in, the same terms;(d) a reference to a standard condition of a new water supply licence giving the holder a new wholesale authorisation as including a reference to a standard condition of an old water supply licence giving the holder a supplementary authorisation, if the two conditions are in, or as nearly as may be are in, the same terms.(e) a reference to a standard condition of a new water supply licence giving the holder a new supplementary authorisation as including a reference to a standard condition of an old water supply licence giving the holder a supplementary authorisation, if the two conditions are in, or as nearly as may be are in, the same terms.Changes in water supply licensing: Wales1C (1) A section 77 order may make provision in connection with the extension of new retail authorisations and new wholesale authorisations to the use of supply systems of water undertakers whose areas are wholly or mainly in Wales, where that extension takes place after the introduction of new water supply licences.
(2) A section 77 order may in particular include provision for or in relation to the payment by the Water Services Regulation Authority of compensation to any person holding a new water supply licence who—
(a) following the coming into force of any provision of this Act, is unable to carry on activities that had previously been authorised by a new restricted retail authorisation, or a new restricted retail authorisation and a new supplementary authorisation, given by the licence as a result of—(i) a new retail authorisation or a new wholesale authorisation or both having been required in respect of them, and(ii) the person’s licence not having been varied to add a new retail authorisation or a new wholesale authorisation or both, because the person did not apply to vary the licence, or did not apply to add the appropriate authorisation or authorisations, or because the person’s application to vary the licence was refused or granted only as to one authorisation, and(b) has suffered loss or damage as a result of not having a licence that enables the person to carry on all those activities.Introduction of sewerage licensing1D (1) A section 77 order may make provision in connection with the introduction of sewerage licences.
(2) A section 77 order may in particular include provision for or in relation to the payment by the Water Services Regulation Authority of compensation to any person who—
(a) before 31 March 2014 was carrying on any activities in relation to the sewerage system of a sewerage undertaker,(b) following the coming into force of any provision of this Act—(i) is unable to continue to carry on those activities as a result of their having been prohibited,(ii) is unable to continue to carry on those activities as a result of a sewerage licence having been required in respect of them, and the person’s not having applied for, or the person’s having been refused, a sewerage licence, or(iii) is unable to continue to carry on those activities in the same manner as a result of the person’s having been granted a sewerage licence the effect of which is to restrict the carrying on of the activities, and(c) has suffered loss or damage as a result of—(i) those activities having been prohibited,(ii) a sewerage licence not having been granted, or(iii) those activities having been restricted.”

91C: Schedule 11, page 227, line 11, leave out “for a relevant period”

91D: Schedule 11, page 227, line 43, at end insert—
““sewerage licence” means a sewerage licence granted under section 17BA of the Water Industry Act 1991.”

Amendments 91B to 91D agreed.

Clause 80: Commencement

Amendments 91E to 94

Moved by

[Lord De Mauley]

91E: Clause 80, page 125, line 6, after “56” insert “, so far as relating to the power to disclose information under section 56(1)(a)”

92: Clause 80, page 125, line 18, after “water” insert “or sewerage”

93: Clause 80, page 125, line 24, at end insert—
“( ) section (Report on water abstraction reform);”

93A: Clause 80, page 125, line 29, at end insert—
“( ) section (Sustainable drainage systems: non-performance bonds);”

94: Clause 80, page 125, line 36, at end insert—
“( ) The power of the Secretary of State or the Welsh Ministers to make an order under subsection (3) is to be exercisable by statutory instrument.”

Amendments 91E to 94 agreed.

Schedule 12: Commencement orders: appropriate authority

Amendments 95 to 97

Moved by

[Lord De Mauley]

95: Schedule 12, page 232, line 23, leave out “paragraph 3” and insert “this Schedule”

96: Schedule 12, page 232, line 25, leave out “(as amended by section 2 of this Act)”

97: Schedule 12, page 232, line 29, leave out “(as inserted by section 4 of this Act)”

Amendments 95 to 97 agreed.

Health: Deaf People

Monday 31st March 2014 Lords Chamber

Question for Short Debate

19:20

Asked by

[Lord Ponsonby of Shulbrede]

To ask Her Majesty’s Government what measures they intend to take to improve the health of deaf people.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, I open by thanking the Minister and noble Lords who are going to take part in this important debate. It is about deaf people, by which I mean people who are born or become profoundly deaf before the age of five. They usually prefer to communicate in British Sign Language and see themselves as part of the deaf community. By this definition, there are an estimated 70,000 deaf people in the United Kingdom.

I am speaking to a deaf health study called Sick of It, launched last week, on 25 March, which is the largest and most extensive study of the health of deaf people in the world so far. Most of the study was funded by the Big Lottery Fund and carried out by the charity SignHealth in partnership with the University of Bristol. I am particularly indebted to Dr Andrew Alexander, SignHealth’s medical director, who provided me with the briefing for this debate.

Before now, there has never been any research on this scale into the health of deaf people in this country. Although there have been a few small studies looking at access to health—all found it poor—no Government have ever specifically addressed the health of deaf people as I have defined them here. The closest initiative was Mental Health and Deafness—Towards Equity and Access. Although this started as a consultation on mental health, it included a lot on the wider barriers faced by deaf people. The report was supported by funding which was received by each primary care trust to help it implement the recommendations of the report.

Deaf health rarely features on any agenda, with the notable exception of that of the House of Lords. Even within health and equality programmes, attention is normally focused on groups with a higher profile. It does not help that being deaf is a hidden disability and that there is so little awareness of the barriers that deaf people face. This is usually the case on the health front line as well. Most staff will think that speaking louder or writing things down will solve the problem. When surveyed, a very high percentage of doctors wrongly thought that they had communicated well with their deaf patients.

I turn to the report’s methodology and findings. There were three stages to the report: first, an online survey was conducted by Ipsos MORI; secondly, personal health assessments were made of 298 deaf people, including looking at their blood pressure and BMI and taking blood tests, et cetera; thirdly, there were in-depth interviews of deaf people. The findings were as follows. First, underdiagnosis and undertreatment of potentially serious conditions was more common for deaf people. Secondly, high blood pressure was almost twice as common in deaf people as in the rest of the population. Thirdly, deaf people have generally healthier lifestyles than the rest of the population in terms of smoking and alcohol but are more likely to be overweight. Fourthly, there is underdiagnosis: deaf people are twice as likely as hearing people to have high blood pressure that has not been diagnosed and may also be more likely to have undiagnosed diabetes, high cholesterol and cardiovascular disease. Moving on to poorer treatment, the report also found that when deaf people have been diagnosed, they are more likely to be on inadequate treatment for those conditions. It has been estimated that if the deaf community had the same health profile as the general population, the NHS would save about £30 million per year.

I will now talk about access and communication. A large number of deaf people reported not seeing their GP because they were put off by the prospect of poor communication. A large proportion booked appointments by going to the practice in person—some 45%—whereas very few hearing people book appointments in this way. Only 15% of deaf people said that their GP was good at listening to them, compared to 51% of the general population. At most, 30% could use BSL in a consultation even though, in total, 94% would prefer to sign. More than half had to use an English-based form of communication—for example, lip reading or writing notes—but only 5% would prefer to communicate in that way. This disparity between how deaf people have to communicate and how they would like to communicate is an indictment of the health service, and an explanation for the poorer health outcomes of deaf people. Only 25% of deaf people have confidence in their doctor, compared to 67% of the general population.

There is also a wider issue about access to information. Because health information is not widely available in an accessible format, a lot of the deaf people studied were unsure about their health and unsure what their prescriptions were for or how to take their medicine. While many hearing patients would find out more information from friends, family or the internet, these options were less available to deaf patients. As a result, few of the deaf people interviewed through the in-depth process appeared actively engaged with their own personal health management.

What are the prescriptions for change? I should just say that change from the point of view of the deaf community is about equal rather than special treatment. The first prescription is that systems within the health service need to be accessible. From booking an appointment to getting test results, there should be a communication agreement for each deaf patient, which is then coded and recorded in their patient record. Secondly, deaf patients should be able to book appointments online and be able to use texts to communicate with services. Thirdly, deaf patients should be able to communicate during consultations in their preferred language. Health services must expect and plan for deaf patients. Clinicians should remember that interpreters are not just for deaf people but help the doctor to understand and diagnose properly. Fourthly, providers must make sure that staff know how to book an interpreter and ensure that interpreters are suitably qualified. Fifthly, health information needs to be made accessible in other formats, including BSL and subtitles. Currently, only 10 out of a total of 900 NHS Choices videos are available in BSL. The proposed information standard on accessibility should be supported with a funded programme.

I move on to some questions, which I have given notice of to the Minister. First, are there any plans to ensure that NHS Choices increases the number of videos available in BSL? Secondly, what would the Minister recommend to a deaf person who wants to see a doctor but is told no interpreter is available or that it is too expensive? It was brought to my attention earlier today by Dr Clare Redstone, a GP, that it is very common to experience problems in booking interpreters. Thirdly, what steps will the Government take to encourage the NHS Executive and Public Health England to promote the health of deaf people? Fourthly, when can we expect the NHS computer system to be able to tell us how many deaf people there are and which services they are accessing? Fifthly, will implementation of the proposed information standard be supported with a funded programme which can help to educate and support health services?

My sixth question is one that I sent the Minister earlier regarding whether psychological therapies providing BSL should be the responsibility of specialised commissioners. I understand that the Minister has since decided that psychological therapies for deaf people should not be on the list of prescribed services. Therefore, in the updated situation, my question is: how can we ensure that psychological services nationwide are available for deaf people? I understand that there is a very patchy covering at the moment. Lastly, what does the Minister think would be the best way to raise deaf awareness among staff working in the health service?

I look forward to the Minister’s response. I understand that she is working on a cross-governmental strategy on hearing loss and that the report on this is ongoing. My debate today is about a very specific cohort within that deaf community, and I hope that she will be able to address the questions that I have raised.

19:30

[Lord Borwick (Con)]

My Lords, I am grateful to the noble Lord, Lord Ponsonby, for bringing this matter to debate following the SignHealth report.

I must, first, declare an interest. For about the past 25 years, I have been a trustee of the Ewing Foundation for deaf children, a charity that has, for the past 60 years, helped to improve the teaching of children who use their residual hearing and lip reading to communicate by speech.

The change in the prospects and outcomes for deaf children due to the introduction of cochlear implants, digital hearing aids and newborn hearing screening is one of the most exciting stories in disability. Noble Lords may have seen the publicity in the papers on Friday, or even the YouTube film, of the joy of a deaf girl of 40 hearing for the first time when her cochlear implants were turned on. For the first time, she can hear music, the laughter of babies and the songs of birds. This revolution has come from cochlear implants, which will radically reduce the disabling effects of profound deafness in children and adults.

The Sick of It report is important and interesting, but I am afraid that it gives away its self-selected background. A statistic on the page about communication issues claims that 80% of deaf people want to communicate using British Sign Language. The noble Lord suggested that that figure was 93%, but I think it is the definition of “deaf” that accounts for the difference. That statistic is a conundrum to me, in that the vast majority of deaf people, using a more ordinary definition of the word, are elderly people who do not use British Sign Language. Indeed, the CRIDE report said that 79% of deaf children use only spoken English. It may be that the definition of deaf depends on who is hearing it.

A strong part of good communication is literacy. Unfortunately, communicating through sign language while learning to read and write in English is like talking in English and reading and writing in Chinese. I am filled with admiration for all the children who can do it. Noble Lords may have strong opinions about whether tweeting and texting can really be described as literature but they are fundamental to the lives of many teenagers nowadays. There is some great technology coming forward. The Apple digital assistant, Siri, and many other programs can transcribe your questions, and a doctor’s replies can be sent from an iPad to a simultaneous remote caption service. All these new technologies need literacy.

The theme of the report is that good communication is fundamental to good health, and that makes sense, but it is true not only of deaf patients; communication with all patients can be made better.

Another feature of the report is isolation, and deafness is very isolating. Research has shown that in old age the combination of cognitive decline and hearing loss can be fatal. Hearing loss seems to speed up dementia, so perhaps hearing loss in older patients should be treated more aggressively when it is first diagnosed, and deaf awareness training given to more health professionals.

Time after time, surveys suggest that there is a correlation between good health and good education, so the most powerful advantage to the health of deaf people is to make sure that they get a great education. Profoundly deaf children now, thanks to cochlear implants, can be educated primarily in mainstream schools, with hearing friends and ordinary prospects for the future.

But cochlear implants are expensive, although not so much in their implantation, which, like everything electronic, is improving technically and reducing in price. The real cost comes in training the baby or the child who needs to get the most out of their implant. However, this is so much cheaper than a lifetime of interpreters. I must compliment all parties for getting on with the cochlear implant programme and not stinting on this project. Ten thousand people have had cochlear implants so far. That is a marvellous achievement and it is changing society. There are now only a very small number of children below the age of five who use sign language, and BSL may be regarded in the future as being used by fewer and fewer deaf people. Who knows what will happen? Many other skills have been superseded by technology. We will have to do our best to support those who continue to use sign language but they will gradually become a tiny minority of deaf people.

Some 40% of deaf children have disabilities in addition to hearing loss. Deafness and autism or deaf and blind with a learning disability are combinations that are becoming more common, partly as a function of doctors saving extremely premature babies who in past years would have died. These babies can now survive at 22 weeks’ gestation, but with multiple problems. Some parents are better than others at caring for a child with challenging behaviour who may never live independently but, sadly, some children are effectively abandoned by their parents to the state—a sad future for a child following heroic efforts to save an extremely short pregnancy.

I have two questions for the Minister. The first concerns the reducing number, and increasing age profile, of qualified teachers of the deaf. The report stresses the importance of good health education for deaf people. Deaf children and young people need to be equipped with information and strategies to access health services independently as adults. To achieve that, we will need more teachers of the deaf. How can we get them?

The noble Baroness was asked a very similar question in a debate last October by my noble friend Lady Brinton, and she replied with information about the national scholarship fund. How many teachers have applied for, and how many have been granted, help from this fund to train as teachers of the deaf? It appears that this fund is not working well enough to solve the problem, so what else can be done to encourage more teachers to work in this specialist area?

Secondly, can we increase the amount of communication in our health service that is duplicated both verbally and by text? It is far cheaper to have a text system of booking appointments than an interpreter, and that expenditure will benefit not only deaf patients but all patients who can read and write in English.

19:38

[Lord Addington (LD)]

My Lords, having seen the title of the SignHealth report, I was surprised by nothing that I read in it. If you think about it, when you are dealing with a medical situation, being able to tell somebody what the matter is has to be a huge advantage. Man as an animal is supposed to be a compulsive communicator. One major thing that we do is to talk to each other and if something gets in the way of being able to communicate properly, we will have problems. The question is: how do we deal with that? We will never get it absolutely right.

I have to declare an interest. I am chairman of a company called Microlink, which supports disabled people through its innovations, usually involving computing. This has led me to take a closer look at this area. Indeed, one of our case studies concerned being an online interpreter. Most of us are online. It is a much better use of an interpreter’s time to be able to use British Sign Language online than it is for him or her to have to follow a person around.

In addition, if we are supposed to be enhancing the dignity of a person, we want to give them as much independence as possible. A translator is an expensive, difficult piece of kit you may not want in the room when you are talking to your doctor about, for example, sexual health or reproduction, particularly if they are there all the time. Having something online, as described here, seems a perfectly sensible way forward but to use it both parties must know that it is possible and how to access it. Making sure that that information is discerned throughout the system for the client base and the provider is essential to getting the best out of it. That must be looked at and people must know it is available. If it can be done comparatively easily, which seems to be the case, everyone must know. That would enhance the dignity of the patient and make the job of the doctor easier. We can go into the night speaking about that.

As the noble Lord, Lord Borwick, has mentioned, lots of technologies are language-based. If you are literate, you would have another means of communication. As someone who is dyslexic, I have a little story about one of these bits of technology. Through the aforementioned interest, I saw a wonderful piece of kit which addresses literacy and gives a person some personal space. The UbiDuo comes from the States, although I do not think that we would have given it that name. Basically, you use two keyboards and two screens that are roughly the size of small computers, and you get instant translation of your communication to someone else. They can read it and communicate back. I was shown this at a conference where everyone else was oohing and ahing about it. I discovered that I was the only person who could not use it because I am dyslexic, which shows that everything has its limitations. However, if you are informed and know what is going on, you can overcome that and get through to the other person. A line of communication can be established. There are many different types and uses of language. If we can establish the fact that they are available and known about, these problems will be cut.

Most of what we are talking about will cut across government departments. How would anything being talked about here not be covered in one’s health employment profile? I bumped into Mike Penning, the Disability Minister, who said that he is going to try to work across departments. It is nice to know that disability has been slightly pushed up and now has a Minister of State. There will be the same problems in health, employment and education. Everything relates and cross-references. How we deal with that is very important.

When someone leaves a medical establishment, hospital or doctor’s surgery, how will they interpret the lifestyle support that they will receive? I know Mike Penning reasonably well and he is a tenacious individual but I do not know how much he and Ministers in other departments can make sure that this support is followed through. If deaf people are overweight and want healthier lifestyles, it is true that they have more trouble accessing, for example, exercise and outdoor activity. What are we doing to make sure that they can or that they do not have to jump over hurdles? We should be able to take our solution from one place to another.

We have just heard a very positive description of what might happen with cochlear implants. That will never deal with all the problems but it might deal with quite a lot of them. However, as the noble Lord said, most people’s hearing problems are probably late onset. As with most disabilities, they build up. The deaf community has vociferous factions within it which will tell you that true deafness is something else, that it is what they have and not what someone else has, and that their approach and nothing else is the proper one. They are like all other communities I have ever met in that regard. However, unless you can get an approach which covers a variety of ways of dealing with the communication problem, addresses all those areas and accepts that they are all equally valid, you will always create more holes, cracks and barriers than you should otherwise have.

Finally, I have a story about the aforementioned UbiDuo. When Esther McVey was the Minister for Disabled People, she was at a conference and decided to have a chat with the deaf man who was doing a demonstration. After a long conversation with aides possibly tugging at her elbow to get her out of the room, we went along and said, “This is wonderful. Isn’t it a great piece of kit?”. A woman from the next stall said, “I wonder if she would have been quite so keen if it wasn’t such a tall, good-looking man on the other side”. If my honourable friend had not noticed that, the woman on the next stall certainly had. Allowing someone to interact on a basic human level is what we are after. This is merely an application that can be used in the healthcare that we are looking at. Unless we approach it like that, we will miss far more opportunities to enhance people’s lives overall than we should.

19:46

[Baroness Howe of Idlicote (CB)]

My Lords, I congratulate the noble Lord, Lord Ponsonby, on securing this debate on much needed improvements for the health needs of deaf people. Although deaf people have the advantage, unlike the blind, of being able to see, the fact that deafness is not a visible disability, as the noble Lord, Lord Ponsonby, has said, means that other people are not necessarily aware that you are deaf. Therefore, less immediate attention is given in trying to help with any problems that the person will be facing. Perhaps that lack of awareness of deafness also helps to explain why so few Members of your Lordships’ House are taking part in this important dinner-break debate.

As someone who has had hearing problems since my children were born, and as I have now reached the limit of what hearing aids can do to help me understand what people are saying, I have some, although obviously not a complete, understanding of the problems and frustrations that deaf patients face. Most definitely I have sympathy with the concerns so graphically illustrated in the pamphlet How the Health Service is Failing Deaf People. It clearly makes sense for doctors’ surgeries or hospitals to have the kind of BSL support or other technical arrangements to hand that the authors of this pamphlet are advocating should be routine but clearly are not. Although I suspect that not everyone who is deaf will mind having someone close to them speak to the doctor, the individual’s wishes should be paramount.

Surely, it must be of concern to us all that so many deaf people have a considerably poorer health record than the average citizen. I was glad to see from a Healthwatch briefing sent to me over the weekend that a few areas of the country are beginning to realise the extent of the problems that deaf or hard-of-hearing patients face. In 2013, Kirklees Healthwatch followed up numerous concerns identified in its survey of the area. I hope that at least some of these—for example, deaf awareness training being developed and rolled out for provider staff, including handling phone calls, personal visitors and booking of BSL interpreters—are beginning to happen. Healthwatch also reports the beginnings of awareness and action in areas such as York, Wakefield, Staffordshire and Stockport. As well as the important reasons in the pamphlets for the relevant help proposed, there are other reasons why a greater priority needs to be given to those who are deaf or in the process of going deaf. Ageing, by itself, inevitably brings hearing loss. As people are living considerably longer these days, they will have hearing problems for a longer period of their lives. As well as that, the way that today's young expose their ears to incredibly loud media sounds will inevitably mean that when age kicks in, their hearing loss is bound to be considerably worse, last longer and probably start at an earlier age.

Interestingly, in your Lordships’ House, despite all the modern hearing loops that are fitted in the Committee Rooms, which others may also have found quite difficult to communicate with, I find that the very best hearing loops available are those that we can switch into in the Chamber in itself—where we are at the moment. This has a great deal to do with the considerable improvements that have recently been completed here, but I suspect that it is also helped by the way that the microphones all hang down from the ceiling and speakers are located in the seats of every Bench for people to listen through.

As in so many other ways, because so many noble Lords themselves are going through the stages of ageing, including hearing loss, apart from each one of us checking that appropriate equipment and help are available in our own doctors’ surgeries—which I certainly hope every one of us here today will do—debates such as this that seek government backing can also help to raise awareness of the necessary action to be taken.

With that in mind, I look forward to what the Minister can tell us about what the Government will do to reassure the noble Lord, Lord Ponsonby, about his six questions and the others that we have added. These considerable changes must take place in doctors’ surgeries and hospitals to meet the wide range of needs described so graphically in the pamphlet, How the Health Service Is Failing Deaf People. To continue with such failure would surely be a disgrace.

19:52

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am very grateful to my noble friend Lord Ponsonby for his initiative and his excellent speech. I declare my interest as chair of an NHS foundation trust, a consultant and trainer with Cumberlege Connections and president of GS1.

Parliamentary debates about the quality of public services to deaf people are all too infrequent. Therefore, like the noble Baroness, Lady Howe, I welcome the opportunity to put that right tonight. As noble Lords have said, it is particularly opportune because of the publication on 25 March of this excellent report by the deaf health charity SignHealth. I was very privileged to speak at the conference held on 25 March to launch the report.

As my noble friend said, the report makes very sobering reading. He went through some of the details, but the headline results of issues in relation to deaf people in the health service—underdiagnosis, poorer treatment, poorer communication and lack of accessible health information—are a salutary wake-up call to us all. As the noble Baroness, Lady Howe, said, this has been reinforced by some interesting work by local Healthwatches, which we were sent over the weekend. The noble Baroness referred to Kirklees Healthwatch, but I also notice work in York, Wakefield, Staffordshire, Enfield, Islington and Stockport. All of those local Healthwatches are doing good work in their areas. I hope that the Government will listen to what Healthwatch is saying and act on some of its recommendations and proposals.

My noble friend referred to a number of recommendations made by SignHealth to try to turn the situation around, such as communications agreements for each deaf person coming into contact with the health service. It is surely a sensible recommendation that they should be able to book appointments online using SMS text to communicate with services. Also, health information needs to be more accessible in other formats, including British Sign Language and subtitles. Importantly, there is the recommendation on psychological therapies, which ought to be available to deaf people in British Sign Language nationwide. It has been reported to us that Ministers have turned that recommendation down. I would be grateful if the Minister could update the House on that. If Ministers have turned it down, does she think that that is consistent with the Equality Act duty?

I want to ask the Minister about this more generally. She knows that individual National Health Service bodies and the department’s arm’s-length bodies have public sector equality duties under Section 149 of the Equality Act 2010. This duty requires public authorities to have due regard to eliminate discrimination between those with and without a protected characteristic and to advance equality of opportunity between those with and without a protected characteristic. My understanding is that that means removing or minimising disadvantages suffered by people in protected groups and considering steps to meet the needs of protected groups where they are different from those of other people. Public authorities are also under a duty to make reasonable adjustments for disabled people to make sure that a disabled person can use a service as close as reasonably possible to the standard usually offered to non-disabled people. From the SignHealth work, it is pretty apparent that for many deaf people that duty is not being effectively applied. Again, what action are the Government taking to monitor the implementation of the Act’s duty and what action will they take if it is clear that public authorities are failing in that duty?

We have had some debate about the necessity of interpreting services. I have been contacted by a general practitioner who is particularly concerned about this issue. She tells me that there is currently confusion in the NHS about the funding for interpreters since the reorganisation and replacement of primary care trusts by clinical commissioning groups. My understanding is that in many parts of the country primary care trusts funded interpreting services but, since they were abolished, there seem to be two problems. One is that clinical commissioning groups have not always been prepared to continue to fund those services. Secondly, there has been the issue of how GPs might obtain funding from NHS England, which is the body that they are now in contract with, for interpreting services within their own surgeries. I understand that, while at first some GPs were successful, there are indications that funding is now being withdrawn. That means that GPs will have to pay for interpreting services out of their practice expenses. Again, I would be interested in what the Minister has to say about that.

The noble Lord, Lord Borwick, made an interesting speech and I certainly take his point about literacy and the achievement of the cochlear implant programme. However, I was delighted with the official recognition of British Sign Language some years ago. I recall the bad old days when some deaf children were forbidden to use sign language at school. We have all moved on from that and, for those deaf people who use sign language, it is important that interpreters are available in the NHS. I also share his concern—he raised the point that we debated in October—about whether enough people are coming forward to train as teachers of deaf children. That is a very important point.

I very much take the point raised by the noble Lord, Lord Addington, about online interpretation. He was really saying that that solution was capable of a much wider interpretation than simply talking about deaf people themselves. We must surely be on the edge of a revolution in communications and the use of IT in the health service. This could clearly bring great advantages for many people who find communications difficult at the moment, but I do not think it takes away the responsibility of people in the health service to improve the way they do things now. It is very clear that some deaf people are finding services very inaccessible indeed.

[Lord Addington]

I totally agree with the noble Lord: it is another way of skinning the cat—that is all.

[Lord Hunt of Kings Heath]

The NHS has a long way to go to use the technology that the noble Lord has put forward. I welcome the suggestions that he made.

My noble friend Lord Ponsonby asked the Minister a number of questions. I would like to put forward a number of proposals for the Government to consider. For many years, the outcome of health services for deaf people has been overlooked. We are talking about a relatively small group of people—people who inevitably find communication difficult. Will the Government consider the appointment of a national champion—perhaps a national clinical director—to champion health services for deaf people? The clinical directors that the department and NHS England have taken on have been outstanding in giving leadership in relation to a number of clinical areas. I wonder whether, for deaf people in particular, having a champion at national level could help disseminate information and really bang heads together to ensure that much more focus is given to the needs of these people.

Secondly, will the Minister encourage Healthwatch to continue to build on its work to give specific focus on services for deaf people?

Thirdly, will the Minister encourage health and well-being boards at local level to pick up our concerns about across-the-board services? The noble Lord, Lord Addington, made a very strong point about the role of the Minister for the Disabled at national level. At local level, the health and well-being boards could clearly carry out that same function.

Fourthly, will the Minister encourage the development of clinical networks in each local health area so that there is co-ordination of services across primary, secondary and tertiary care as regards the needs of deaf people?

Finally, will the Minister institute regular meetings between deaf organisations and the NHS within each local health area so that there can be proper discussion and debate about the needs of deaf people?

This is a very important debate and I am sure that we all look forward to a positive response from the Minister.

20:02

[Baroness Jolly (LD)]

My Lords, I thank the noble Lord for securing this short debate on the health of deaf people, and I welcome the opportunity to discuss the serious concerns that he raises. This has been a really good, well informed debate and many excellent questions have been asked. I would point out that my scripted speech is six-minutes long, so I hope to answer as many of the other questions as possible within the rest of the time available to me. However, in tested and time-honoured tradition, I will send a letter to all noble Lords to address anything that I have not covered.

I would also like to take this opportunity to pay tribute to the work of SignHealth and the efforts that it has made to achieve equal access to healthcare and better health outcomes for deaf people. The findings outlined in its recent report, Sick of It, are truly shocking. The fact that deaf people are more likely to have undiagnosed conditions such as high blood pressure and diabetes and that they are more likely to receive inadequate treatment when they are diagnosed, is completely unacceptable. This Government are committed to delivering health outcomes that are among the best in the world for people with hearing loss.

Before getting to the main issue of the health of the deaf population, I would like to spend a few seconds outlining service improvements to those with hearing loss or who are deaf. These include the rollout of a national screening programme for newborn children; significantly reduced waiting times for assessment and treatment, with almost all patients now treated within 18 weeks, with the average being four and a half weeks; and greater choice of hearing aid services—for example, through independent high street providers. In particular, by taking forward measures which enable the early identification of deafness, we are able to provide a clear care pathway for services and enable parents to make informed choices on communication needs.

However, as SignHealth’s report shows, it is in the most basic way that we are failing deaf patients. Small adjustments could make a real difference by enabling those with hearing loss to communicate with their health providers. Have services thought about how deaf patients can book a GP appointment if they cannot just pick up a telephone? Once they have made an appointment, will they know when their name is called or will they be left sitting in the waiting room? Once they get to see their GP or hospital clinician, will they be able to communicate with them? I am sure that SignHealth would readily identify with the questions I have posed.

The noble Lord, Lord Addington, talked about the use of technology in communication, and he brings his personal knowledge to bear. Online signing is something that might be sensible, and an intelligent use of services such as Skype might also be helpful. Critical to all of this—and I shall come to it later— is the co-commissioning of these sorts of services. That sort of approach would not only give patients their dignity but also help make the GP’s job more straightforward.

The noble Baroness, Lady Howe of Idlicote, urged noble Lords to carry out checks in their own practices. I do not think that anyone would dare not to do so after that. Certainly with my own practice in Bodmin, in the heart of Cornwall, I can book online to see a doctor or a nurse. When I turn up for a visit I do not talk to a receptionist, I just press a touch-screen pad which asks me for my date of birth and my gender. It then says, “Ah! Are you Mrs Jolly?”, and tells me to sit down and wait. All those services would work perfectly well with deaf people and there is no reason why they should not be replicated throughout the land. What happens behind the consulting room door may not be as good as all of that—I just do not know.

There are currently over 10 million adults in England living with hearing loss; the World Health Organisation estimates that by 2030 the figure will rise to 14.5 million. It is therefore vital that health and social care services are geared up to be able to communicate with deaf people and those with hearing loss in order to promote good health and address their health needs. All options should be considered. The noble Lord, Lord Hunt, told the House about the public sector equality duty. This requires all public bodies, including those who provide health and social care, to, “advance equality of opportunity” and to,

“have due regard to the need to eliminate discrimination”.

SignHealth’s Sick of It report is right to remind deaf people that they have a right to complain when a service provider has not taken their particular needs into account. However, it is up to the service providers to anticipate the requirements of disabled people and the reasonable adjustments that may have to be made for them in advance, before any disabled person attempts to access their service. The reasonable-adjustment duty is an anticipatory duty, so it is just not acceptable for health services not to be equipped to provide communication support for those who need it. This may involve the use of British Sign Language, but it may also involve the use of basic technology such as display screens in GP waiting rooms. It may also involve something as simple as text messaging—nearly all noble Lords referred to that—as all of us become increasingly reliant upon this and other electronic forms of communication.

My noble friend Lord Borwick talked about skills possibly being superseded by technology and referred to cochlear implants, texts and the internet. I defy any noble Lord not to be touched by the moving story of Joanne Milne as she heard for the first time this week but a lot of this will take a long time to roll out. It will take a while before the youngsters reach the age of older people who are deaf or have hearing loss. This will not be an instant fix.

I am happy to be able to report that progress is being made on the NHS information standard. As part of the commitment to improve the experience of patients using NHS services and empower people to be equal partners in their own care, NHS England is developing an information standard for the provision of accessible, personalised information. The standard will ensure that disabled patients, service users and carers receive information from NHS bodies and providers of NHS care in formats that they can understand. It also requires that they receive appropriate support to enable them to communicate with service providers. Successful implementation of this information standard will improve the health outcomes and experience of disabled people. It will also reduce the number of appointments and screening opportunities missed by patients who have received invitations or information in formats that are inappropriate for them. It is intended that the standard will be finalised in late 2014, with organisations required to comply in 2015. Alongside the statutory information standard, NHS England will publish guidance on making reasonable adjustments to meet the communication needs of service users with disabilities.

We know that there is a need to improve both the commissioning and integration of health and social care services for people with hearing loss, as well as the provision of new and innovative models of care. This is why we are also developing a new action plan on hearing loss. The action plan will identify the key actions that will make a real difference to health and social care outcomes for children, young people and adults with hearing loss. NHS England is currently engaging with a range of stakeholders, including the Department of Health, Public Health England, other government departments and agencies and key stakeholders, and aims to publish the action plan as soon as possible.

I hope that I have been able to reassure the House that the Government have a strong commitment to promoting the needs of deaf people across a range of public services but, in particular, ensuring that deaf people have equal access to health and social care and improved outcomes equal to people who do not have hearing loss. Equality is the watchword.

To answer noble Lords’ questions, the noble Lord, Lord Hunt, asked about the decision on psychological therapy provided in British Sign Language and where the responsibility for that should be in specialised commissioning. Following advice from the prescribed specialised services advisory group, and in consultation with NHS England, Ministers have taken the decision that responsibility for commissioning psychological therapies for deaf sign language users should remain with the clinical commissioning groups.

The noble Lord, Lord Hunt, also made five points. There was that of the national champion and how to build on the work thus far. I am happy to take that back and will write to him. On health and well-being boards, they should pick up across-the-board services. We hope that they are doing so. I suspect that health and well-being boards will, in their second report for this coming year, pick up on that sort of thing if they are not doing so already. On co-ordination of services, again, it should be within the gift of health and well-being boards to ensure that social care and all health services are not only properly commissioned but also properly co-ordinated. It sounds an admirable idea that there should be regular meetings with the NHS in each local area for people with hearing loss and deafness. I imagine many people with other sorts of disability would like to see that as well. Perhaps that is something that Healthwatch might be able to facilitate.

Do GPs have to pay for their translation services? Each provider of a public service is responsible for ensuring that they make reasonable adjustments to meet the needs of disabled people. This is not funded centrally but must be found from within local budgets.

The noble Lord, Lord Addington, asked about co-ordinating help for deaf people in other fields, such as education and employment. The Minister of State for Disabled People, in his capacity as chair of the interdepartmental group on disability, recently wrote to Ministers in other government departments to ask what their departments are doing to support their deaf users.

On the questions of the noble Lord, Lord Ponsonby, about plans to ensure that NHS Choices increases the number of videos available in BSL, NHS Choices is very keen to provide more BSL content. It has approached SignHealth and in turn secured funding for the existing BSL videos. Noble Lords might be interested to know that there are videos available on: breast cancer, diabetes, heart disease, lung cancer, prostate cancer, back pain, depression and low mood, getting tested for Chlamydia, preventing high cholesterol and tinnitus. Those are the ones currently signed.

What would the Minister recommend to a deaf person who wants to see a doctor but is told that no interpreter is available? We recommend that they lodge a formal complaint with the GP practice. If the complaint is not resolved, we recommend that the complaint is escalated to CCG or NHS England as set out in the complaints procedure.

What does the Minister think would be the best way to raise deaf awareness among staff working in the health service? It is ultimately the responsibility of individual employers to support the development of the staff they employ. However, Health Education England will provide leadership and work with local education training boards—LETBs—regulatory bodies and health care providers to ensure professional and personal development continues beyond the end of formal training.

What steps will the Government take to encourage NHS England and Public Health England to promote the health of deaf people? The NHS is a universal service for the people of England and NHS England is under specific legal duties in relation to tackling health inequalities and advancing equality. The Government will hold NHS England to account for how well it discharges these duties.

Can we expect NHS computer systems to be able to tell us how many deaf people there are and which services they are accessing? The short answer is regrettably no, not yet. However, the new system being commissioned by NHS England to upgrade the hospital episodes statistics—the HES service—will mean that they include a richer source of hospital data, plus data from care provided outside hospital. While this will not tell us how many deaf people there are, it will tell us about deaf people’s access of services. I am sure other improvements to care data in time will be able to give us the number of deaf people there are.

Will implementation of the proposed information standard be supported by a funded programme which can help to educate and support? As part of the engagement activity, we asked health and care professionals and organisations to advise us as to the challenges they experience in meeting the communication needs of patients, carers and services users, as well as the ways they have identified to overcome the challenges. These will be reviewed. The intention is that the findings will inform the drafting of the standard itself and the development of supporting tools. Regarding the psychological therapies question, following a device from the prescribed specialised services group, Ministers have decided that these services should be commissioned by CCGs.

I move on to the question of the noble Lord, Lord Borwick: what can be done to encourage more teachers to work in this specialist area? Schools and local authorities are responsible for assessing their workforce and have adequate recruitment and training strategies in place. We expect authorities to work with schools so that they know and build the appropriate skills for the teaching workforce, and the DfE is funding scholarships for teachers to develop their knowledge and skills, including postgraduate qualifications. Regarding the question of texting information, this sort of thing is a local decision. I have told noble Lords how my local GP practice chose to sort it, and others may choose to use texts.

On teacher numbers, so far 600 teachers have achieved or are working towards a qualification relating to special educational needs, and a further 500 have applied for the current funding round. I have exhausted the supply of responses from the Dispatch Box, but I feel absolutely sure that when we go through Hansard, many more questions will come to light, so we will write a letter to all noble Lords who have taken part in the debate.

House adjourned at 8.21 pm.