Small Charitable Donations and Childcare Payments Bill
Tuesday 18th October 2016
(7 years, 6 months ago)
Public Bill CommitteesRead Full debate Small Charitable Donations and Childcare Payments Act 2017 View all Small Charitable Donations and Childcare Payments Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 18 October 2016 - (18 Oct 2016)
The Committee divided: - Ayes: 7 / Noes: 9 - Question accordingly negatived.
The Chair
Before we begin, I have a few preliminary announcements. Members may, if they wish, remove their jackets; I see some have already done so. I remind Members that no refreshments other than the water provided may be consumed during Committee meetings. Will all Members ensure that their mobile phones, pagers and iPads are off or turned to silent?
Not everyone is familiar with the procedure of a Public Bill Committee, so it might help if I briefly explain how we will proceed. The Committee will first be asked to consider the programme motion on the amendment paper, for which debate is limited to half an hour. We will then proceed to a motion to report any written evidence. We will then begin line-by-line consideration of the Bill.
The selection list for today’s sitting is available in the room. It shows how the clauses, amendments and new clauses have been grouped together for debate. Where a group includes the words “clause stand part”, that means Members should make any remarks they wish to make about the content of the clause during the course of the debate. Clause stand part debates begin with the Chair proposing the question that the clause stand part of the Bill. There is no need for the Minister or any other Member to move that a clause stand part of the Bill. A Member may speak more than once, depending on the subject under discussion.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 18 October) meet at 2.00 pm on Tuesday 18 October;
(2) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Tuesday 18 October.—(Jane Ellison.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Jane Ellison.)
Clause 1
Meaning of “eligible charity”
Question proposed, That the clause stand part of the Bill.
The Financial Secretary to the Treasury (Jane Ellison)
It is a pleasure to serve under your chairmanship, Mrs Moon. I am grateful to all Members for being here to examine the Bill in detail and to many Members for their participation in the good and constructive debate we had on Second Reading. I welcomed the Opposition’s pledge to support the principles of the Bill, and I hope that today we can submit the Bill to further constructive scrutiny.
I will give a little bit of general background information before specifically addressing clause 1. The Bill makes a number of amendments to the Small Charitable Donations Act 2012. I know there are Members present who served on the Committee responsible for considering that Bill. The changes will ensure that the gift aid small donations scheme operates effectively and flexibly for a greater number of charities and community amateur sports clubs. The Bill also makes minor and technical changes to the tax-free childcare scheme, to improve parents’ experience.
The reforms to the gift aid small donations scheme are intended to simplify and increase access to it, particularly for new and small charities. We heard more about that on Second Reading. That will be achieved by removing a number of eligibility criteria to allow more small and new charities to benefit sooner, which I will discuss in a moment; reforming the community buildings rules to allow more charities to benefit from the important work they carry out in their local communities; simplifying the rule specifying the total top-up payment that charities and CASCs are entitled to claim, which will ensure fairness and parity of treatment between charities that carry out similar activities but are structured in different ways; and future proofing the scheme by allowing contactless donations to be eligible for top-up payments.
Clause 1 substantially simplifies the gift aid small donations scheme by removing two of the existing eligibility requirements, enabling smaller and new charities to access top-up payments much sooner. A number of charities have voiced support for that. Currently, a charity must have been registered for at least two full tax years and have claimed gift aid in at least two of the previous four tax years without a gap of longer than a year. However, the Government are keen to encourage take-up of the scheme, particularly among small and newer charities. Removing the two-year registration requirement will help to achieve that by allowing the up to 9,000 new charities that apply for recognition by Her Majesty’s Revenue and Customs each year to receive top-up payments as soon as that recognition is granted.
During the Government’s review of the small donations scheme, we heard about the difficulties faced by small charities making irregular or intermittent gift aid claims. The Government therefore consulted on relaxing the gift aid history requirement to only one year, rather than two. However, after listening to the views of the sector, we decided to go even further. Clause 1 removes the two-in-four-year gift aid history requirement entirely, which is a significant simplification for charities. The reforms are a good thing and have been widely welcomed by the charity sector.
The Charity Tax Group commented that relaxing the gift aid history requirement
“will hopefully widen access to the scheme, particularly among smaller charities.”
The Charity Finance Group said:
“The Bill is scrapping these rules and this means that more charities will be eligible and will reduce complexity.”
The removal of the two-year rule and the gift aid history requirement is a meaningful and significant simplification of the gift aid small donations scheme. It will make the scheme more accessible to smaller and new charities. I hope that the clause stands part of the Bill.
Rebecca Long Bailey (Salford and Eccles) (Lab)
It is a pleasure for me, too, to serve under your chairmanship, Mrs Moon.
As the Minister outlined, clause 1 amends the meaning of “eligible charity” for the purposes of the gift aid small donations scheme, removing the requirement for a charity to have been registered for at least two full tax years before it can access the scheme. The provision also removes the two-in-four-year claims rule, which dictates that a charity must have made a successful gift aid claim in at least two of the previous four tax years with no more than two years’ gap between claims. Those measures will simplify the scheme and allow newly formed charities to access the Government top-up payment.
I am pleased that the Government have taken heed of responses to their consultation on reform to the scheme and scrapped the two-in-four-year claims rule fully. The initial proposal was to replace the rule with the requirement that charities must have made a successful gift aid claim only in the previous tax year. I understand that respondents felt that that could disqualify some charities that are currently eligible for the scheme but did not claim gift aid in the previous tax year for a variety of reasons. In the light of that change, the measures are welcomed by the Opposition and the industry. We are happy to support them. However, I have one concern on which I hope the Minister can provide some reassurance.
The requirement for a charity to have been registered for two years is arguably a way of ensuring that charities are not set up for the purposes of claiming a top-up from the Government illegitimately. The Opposition have tabled a new clause about anti-fraud measures, which we will debate later, so I will not digress too much. However it would be helpful if the Minister would assure me that the Government have carried out an assessment of whether removing the two-year rule poses an increased risk of fraud. Other than that small but important point, the Opposition are happy to support the clause.
Jane Ellison
I thank the Opposition Front-Bench spokesperson for those points, for her support and for her specific question. By removing the two-year rule, we want the scheme to be more flexible and generous, but we want to ensure that there are some safeguards.
We debated the balance between flexibility, generosity and safeguarding charities on Second Reading. That is why, as the Government made clear in the original impact assessment, the lack of evidence that a cash donation has been made makes the gift aid small donations scheme vulnerable to fraud. We must continue to protect against that but—as we will come to later—that is one of the reasons why the Government are retaining the gift aid matching requirement, which provides sufficient protection while getting the light-touch regulatory balance right. I will say more about that later. I hope that my response is sufficient and that the clause stands part of the Bill.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clause 2
Meaning of “small donation”
Rebecca Long Bailey
I beg to move amendment 1, in clause 2, page 2, line 1, leave out lines 1 to 6 and insert—
“(a) in the heading after “small”, delete “cash payment” and insert “donation”
(b) in sub-paragraph (1) omit the words “in cash”;
(c) after that sub-paragraph insert—
“(1A) The gift must be made—
(b) by cheque;
(c) by electronic communication; or
(d) by a contactless payment.”
(d) in sub-paragraph (3) after the definition of “cash” insert—
““cheque” means a written order instructing a bank to pay upon its presentation to the person designated in it, or the to the person possessing it, a certain sum of money from the account of the person who draws it;
“electronic communication” means a payment made via the internet or text message;””.
This amendment would extend the range of methods by which payments can be made under the Gift Aid Small Donations Scheme.
The Chair
With this it will be convenient to discuss the following:
Amendment 2, in clause 2, page 2, line 1, after “contactless”, insert “or SMS message”.
Amendment 3, in clause 2, page 2, line 6, at end insert
“, or
(c) by an SMS message”.
Clause stand part.
Rebecca Long Bailey
Clause 2 amends the types of donations eligible under the small donations scheme to include those made by contactless payment. Only cash payments under £20 are currently considered eligible donations. The Opposition support the clause but we question why contactless payments have been singled out in that way.
Amendment 1 would widen the scheme to include donations by text, by cheque or via the internet. A survey carried out by the Charity Finance Group for the National Council for Voluntary Organisations, the Institute of Fundraising and the Small Charities Coalition found that only 36% of the 340 charities surveyed wanted contactless payments to be included in the scheme. It also found that cheques were the method favoured for inclusion: more than 75% of respondents wanted them to be included. Half wanted text donations and two thirds wanted one-off online donations to be eligible. The amendment, which would include all those methods, is supported by the organisations mentioned and by the Charity Tax Group.
The Government’s likely response is that the methods do not need to be included in the scheme because a gift aid declaration can be provided, but the same logic applies to a bucket collection of cash donations: the fundraiser holding the bucket would simply need to hand over a pen and a piece of paper and—voilà—they have a gift aid declaration. However, the point is that it is difficult, albeit not impossible, to get the declaration. Most people send a donation via text in a spur-of-the-moment decision. A follow-up text is then required to ascertain whether the donation is eligible for gift aid, and most people are not as responsive as we would like, so it makes sense to include donations via text in the scheme. As for cheques, I understand that someone who is able to sign a cheque is probably able to sign a gift aid declaration at the same time, but 75% of charities surveyed said that including cheques would increase the efficacy of the scheme for them, so I would be interested to hear the Minister’s reasons for not doing so.
Amendments 2 and 3 would include SMS or text messages in the scheme. For the same reasons that I have already outlined, we see the logic in tabling them and we support them. I hope the Minister will accept our amendment or explain more fully her reasons for not accepting it, but I will not press it to a vote.
Kirsty Blackman (Aberdeen North) (SNP)
We support the amendments. As has been stated, a number of charitable organisations have got together and have come back with a really comprehensive survey that says that charities are hugely in favour of such an approach.
The gift aid small donations scheme is a really good Government initiative that has done part of the job it was set up for, but we can see from the number of people making a claim that it has probably not done as well as was intended—it has not quite reached the number of claims that were expected. That is partly because the way the world works has changed: people are giving through other methods. I rarely put money in a bucket, but I quite regularly make text donations or online donations, and I am as guilty as anyone of not following up with that second text with my name and address for the gift aid. In a world that is moving forward, we need to consider that.
I understand the Government’s reluctance to take on cheques, but it has been really clear from the groups that have come forward, particularly church groups, that they receive an awful lot of their funding from small cheques. It would be much better for them if they were able to claim for cheques under the gift aid small donations scheme. Although that may seem almost a backward step, we need to ensure that the gift aid small donations scheme works as best it can, particularly for small charities that do not have the staff—the people power—to fill in all the forms, which is still a requirement. Widening the gift aid small donations scheme would make it better, particularly for small charities.
Nigel Mills (Amber Valley) (Con)
It is a pleasure to speak in this debate. I spoke on a similar clause four years ago when this Bill first went through Committee; I think that the hon. Member for Clwyd South was here as well. Looking back, many of the Members who served back then appear to have moved on to far greater things than I have, so they will not be repeating this debate.
It is worth looking back at the debate four years ago, when the topic was whether restricting the measures to cash was appropriate and whether we should include different technologies or different means of giving impulse donations for which getting a gift aid declaration is hard, in order to achieve the objectives of the scheme. The current scheme is worthy. It is meant to give a level of support equivalent to gift aid to small donations, in order to give hard-pressed charities extra money. It is regrettable that four years into the scheme, the amounts claimed are much lower than we thought. Ideas to help charities claim and achieve the £100 million that Government thought this would originally cost are to be welcomed.
Four years ago, I was perhaps a bit prescient on this point; I even referred to contactless payments in that debate. I thought that the world might move on, that cash would become less common and that we would all find different ways of donating, whether by making contactless payments on terminals or by clicking buttons in an app. The Bill risked becoming out of date quickly if we were not careful. I suggested at that point that perhaps the Government should take the power in the Bill to amend by statutory instrument the definition of “cash or cash equivalent” in that situation, so we could keep up to speed with technology and not have to keep coming back every few years to primary legislation to fix it.
Here we are four years on, trying to fix contactless payments. That is quite right, and I will happily support it. We have even included Android Pay and Apple Pay, again quite sensibly, but we cannot predict where we will be in four years’ time. How will impulse donations be made? Will it still be by text message, by app, by cash in a bucket or contactless payments, or will we have found some new technology, perhaps fingerprint swipe? It is hard to imagine where we will be in four years’ time. If we are to keep the Bill as effective as we want it to be, why not have that power available so that the Government can say quickly, “Let’s make a tweak here, and allow this to fall within the scheme”?
James Duddridge (Rochford and Southend East) (Con)
My hon. Friend is making lucid points with which I agree fully, but he recommends that Ministers could make a change through statutory instrument. Would he perhaps consider allowing them to make the change without a statutory instrument, maybe by short consultation or even ministerial decision? That would be liberalisation.
Nigel Mills
My hon. Friend is being quite generous as a Back Bencher, offering the Government more power than they want to take. I suppose that there would be spending issues if the Government generously expanded some new and risky technology and that Parliament might want to scrutinise that. I would prefer, in my perfectionist world, some order that undergoes parliamentary scrutiny, but I concede the argument he is putting forward.
The then Minister four years ago, who is now the Secretary of State for Communities and Local Government, the right hon. Member for Bromsgrove (Sajid Javid), was called a “dinosaur” for rejecting the Labour amendments. I am hoping that this Minister will not be called something like that today, given the liberalising approach that she is taking. The then Minister was not keen to accept the amendments, which were meant to apply to cash in order to help people who do bucket collections and so on, where one cannot get a gift aid declaration, as it is an impulse donation and people are not inclined to stop and give those details.
My argument for amendments 2 and 3 is that an SMS message is also an impulse donation. We see adverts on the TV where it says to text a number with “YES” or “FIVE”. If I do that, I do not provide them with any more information. It is a small, impulse donation. The evidence that we have from the various charity groups is that people do not make a gift aid declaration after doing that.
If we cannot tempt the Minister to accept amendments 1, 2 or 3, perhaps she will think on Report whether she can take the power to allow new ways of donating to be included in future, so that she can gradually evolve the scheme and put the extra money into achieving the objectives that we all share. Especially at this time of year, when British Legion volunteers will all be out doing great work shaking their buckets to collect cash, we want the scheme to be as effective as possible. I fear that, by being too restrictive on how donations qualify, we will not give more money to charities, as we all really want to.
Susan Elan Jones (Clwyd South) (Lab)
It is a pleasure to follow the hon. Member for Amber Valley and other colleagues. It was a great joy to be here in 2012 when the first Bill on small charitable donations appeared. It is lovely to see that contactless donations have made it into this Bill. I am speaking in favour of amendments 1, 2 and 3 because it is important that we expand the methods available.
The recent briefing from the main charitable organisations—the Charity Finance Group, the Institute of Fundraising, the National Council for Voluntary Organisations and the Small Charities Coalition—has made it clear that, although the scheme has been welcome, it is not reaching the number of charities that it could. The briefing said:
“Only one quarter”
—or 21,300—
“of the charities that could have used the scheme”
—it puts that number at 84,000—
“are using it.”
Clearly, we need to do everything we can to support the development of the scheme, particularly with a new generation of donors, and to encourage and to support the new philanthropists who may be giving by text donation or in other forms.
At the Bill Committee last time around, I was intrigued by a great debate initiated by the hon. Member for Foyle (Mark Durkan). It was possible to include euros in the scheme at the time, although it was not possible to include contactless donations. I am glad that the situation regarding contactless payments has been remedied, but I cannot see the sense in saying that, in one of our great abbeys, churches or cultural buildings, the euro, dollar, yen or whatever may be included in the scheme, but not a simple, humble cheque written in sterling. To me, that does not make any sense. I hope that the Minister considers that point.
Another related point is that this scheme works rather well for churches—I presume it also works well for other faith groups—because many small churches are part of larger denominations. Often the denomination, the diocese or whatever is registered in terms of gift aid. My slight fear, and why I think we need to look at how we can enhance and expand the scheme, is about whether we have the same reach for other small charities, because with a small church or perhaps another small faith group, the registering—the formal bit, the gift aid stuff—has already been sorted out at a higher, larger level. I question whether the scheme always has the same reach for some of the smaller charities in other sectors.
I welcome the positive move on contactless donations but hope, in the same spirit, that the Minister can extend the scope of the proposals, as my hon. Friend the Member for Salford and Eccles and other hon. Members have suggested. It would be truly dreadful if we had to wait another four years to come back to the issue and to thank the Government for including these methods in the scheme.
Jane Ellison
I thank colleagues for that debate; some points were made by veterans of the previous Bill Committee and I will try to respond to them.
Clause 2 is about amending the meaning of “small charitable donation”. Amendment 1 would extend the gift aid small donations scheme to include donations made by cheque, online or by SMS. Amendments 2 and 3 would extend the scheme to include SMS donations.
The scheme was introduced to address a specific problem. That is at the heart of the debate. It is intended to allow charities and community amateur sports clubs to claim a gift aid-style top-up payment when it is not practical or feasible to collect a gift aid declaration, such as with street collections. It is not simply a lighter-touch alternative to gift aid. I think this is probably at the heart of our debate. The scheme exists to provide a similar outcome in situations where charities cannot realistically obtain a gift aid declaration, but the Government are clear that, if a charity can get a gift aid declaration and claim gift aid, it should do so. There are obvious reasons for that, as colleagues will appreciate. For example, there is no cap on gift aid, whereas there is on this scheme. For that reason, the Small Charitable Donations Act 2012 restricted the scope of the gift aid small donations scheme to small donations in cash—coins and notes. Although I understand entirely the motivation behind the amendments, they are actually contrary to the stated policy intention of the scheme.
Anna Turley (Redcar) (Lab/Co-op)
I am struggling to understand why the way in which money is donated matters, given that there is a cap on the amount that can be donated anyway. I do not understand why whether a donation is made in cash or by contactless affects the integrity of the purpose of what we are trying to do.
Jane Ellison
We are keen to extend the scheme to cover contactless as well as cash payments, but as those who were here in 2012 will know, the scheme augments what we expect charities to raise through gift aid donations and covers means such as bucket collections that it is just not feasible to do gift aid on. The scheme is capped. We actually want charities to claim as much as possible under gift aid, which is not capped and allows them to form a long-term relationship with donors, as many of us probably know from charities that we give to. From the simple point of view of a charity, a wholesale switch to claiming through this scheme rather than gift aid would move it away from such long-term relationships and limit what it could claim. The scheme is meant to be a complement to gift aid, not an alternative or a lighter-touch version of it, and it would be to many charities’ disbenefit if that were the case.
As I explained on Second Reading, the small donations scheme was never intended to cover methods of donations for which well-established and well-used processes for claiming gift aid already exist, such as donations made by SMS or online. It may help if I explain in a bit more detail the processes for claiming gift aid on electronic donations. As the Minister for Civil Society, the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Reading East (Mr Wilson), outlined on Second Reading, there is a simple and well-established process that allows charities to solicit gift aid declarations from donors who make SMS donations. I take the point that the hon. Member for Aberdeen North made about the way people respond to that, but it is a pretty straightforward and well-established process none the less. The donor sends a short code word to a six-digit number—for example, “Dog” to 606060—to donate a set amount through their phone bill. A reply is then sent to the donor thanking them for their donation and asking them for their name, house number and postcode and confirmation that they are a UK taxpayer. Once the donor provides that information, the charity can claim gift aid.
I think that is a straightforward process, and I hope that hon. Members would agree that, in circumstances such as that, where a donor provides a charity with a ready means of making direct contact—their mobile phone number—it is feasible for the charity to solicit a gift aid declaration, and indeed many charities regularly do so.
Kirsty Blackman
Does the Minister not recognise that people generally see text messages as the same kind of thing as putting money in a bucket? They do not want to hang around or have to give their name and address. The two things are really parallel.
Jane Ellison
I have been stressing the point that this scheme was intended to work where it is not practical to establish such a relationship—where someone is passing in the street, is in a rush or whatever, and throws something into a bucket. That is not the same as an SMS donation. Yes, the motivation for an SMS donation might be quite instantaneous—perhaps someone has seen an advert or a documentary, or there is an appeal on the television, or whatever—but in terms of someone’s ability to respond to the gift aid query that follows, the relationship has been established, because they have given their mobile phone number. That is not comparable with a person rushing past someone with a bucket outside the supermarket and throwing something in, where that person is already on their way and cannot be pulled back to fill in a form.
David Warburton (Somerton and Frome) (Con)
Given that the Government have not included SMS or internet donations in the Bill, can the Minister tell us what the Government are doing to help the charities that benefit more from those kinds of donations?
Jane Ellison
Of course. If my hon. Friend will let me, I will go through the process for claiming gift aid. I have talked about how that can be done via SMS, but let me talk about how it is done online and how it can be made even easier. Online donations require donors to take the time to enter their name and payment details. The only additional information needed for a gift aid declaration is an address. Donors are then encouraged to tick a simple box to add gift aid at the point of donation. Most of us would agree that in those circumstances it is entirely practical for a charity to ask a donor to complete a gift aid declaration. Many fundraising websites have invested substantial effort in making the process for adding gift aid as simple and straightforward as possible. I am sure it will continue to get even more simple and straightforward; we have all seen the astonishing simplification of the online charitable giving world over the past few years, and we have every reason to think that it will continue to progress.
The Government want to make it even easier for donors to add gift aid to donations made through digital channels; indeed, we recently published consultation draft regulations intended to achieve that. Work is already taking place on gift aid and to make it simpler to make an online donation.
Nigel Mills
Has the Minister had a chance to look at the consultation issued by the Treasury in 2013 on ways of improving gift aid donation? At paragraph 1.8 it set out all the reasons why there was such difficulty in getting a gift aid donation on an SMS donation, and it was looking to consult on ways to improve the situation. The Treasury view seems to have hardened since that consultation, which recognised the difficulties, but the fundamental issues that it raised—getting someone to pay to send a second text message and to type in details on their screen while they are out and about—have proven very hard to tackle, and the take-up has been nothing like as high as for other methods of donation.
Jane Ellison
I understand my hon. Friend’s point, but I think it relates to how we can make giving under the gift aid scheme even easier; I do not think it is as germane to the issue of how to improve the small charitable donations complement to gift aid. However, I hope what I have to say about contactless will be closer to what he wants to hear. I confess that my familiarity with paragraph 1.8 of the document he mentions is not as great as his own, but I will familiarise myself with it when I get back to the Treasury.
As I said, draft regulations about making gift aid donations through digital channels easier are out for consultation; I am sure Members will have a look at them. As for contactless donations, Members may ask how they differ from other forms of electronic donation. The difference is, quite simply, speed. On Second Reading, the Minister for Civil Society used the example of commuters passing through the ticket barriers of a tube station to demonstrate just how quick contactless technology is—we are all familiar with the Oyster scheme, for example. That speed of transaction means that donations collected using dedicated contactless collection terminals have a lot of the same practical issues as bucket collections. Individuals can donate as they pass by a fundraiser without having to stop and talk—it is almost instantaneous. Fundraisers therefore do not have the opportunity to engage donors and solicit gift aid declarations. That is not the case with other methods of electronic donation, as I have explained. A lot of work is going on, as the Minister for Civil Society said in the debate. Big charities are already showing significant advances in technology: their terminals replicate the simple cash payment as nearly as we can imagine, and we expect to see them in use pretty quickly—they are already being trialled.
As for cheques, I understand that they remain a popular method of payment, particularly among older people, but writing a cheque is not an instant process. The payer needs to write the date, the payee’s name and the payment value, both in words and numerals, and then sign it. Our contention is that, if a donor has the time to stop and write a cheque, it is not unreasonable to suggest that he or she also complete a gift aid declaration. We are all familiar with those small envelopes with the simple form on them; they have only a fraction of the number of items to fill in that a cheque has. Moreover, by writing a cheque the donor is already providing some of their details to the charity, so the additional information needed for a declaration is relatively small. We believe that it is entirely feasible to obtain a gift aid declaration in those circumstances.
Alison Thewliss (Glasgow Central) (SNP)
Perhaps I can suggest a scenario that may help the Minister. If an elderly person in their home sees something on television for a charity and they then sign a cheque and put it in the post, with no details about how to contact them on it, how does the charity get back to that person?
Jane Ellison
I understand the point, but I am not entirely clear how adding cheques to the scheme would help. I want to stress that, if we make changes that encourage charities to switch to claiming under this scheme, essentially moving away from trying to claim under gift aid, that will severely limit—cap—the amount they can claim and it will also prevent them from forging a relationship with the donor. I accept that there might be circumstances, like that one, in which claiming under gift aid might be more difficult, but the answer is not to include cheques in the scheme. The scheme has always been about trying to replicate the instantaneous cash-collection type of situation.
Anna Turley
I am still a bit confused. I appreciate the point about trying to keep people focused on gift aid as the preferred means of donation, but the whole purpose of the Bill—its raison d’être—is to ensure that the scheme
“operates effectively and flexibly for the greatest number of charities and Community Amateur Sports Clubs”,
and we have heard that only a quarter of the charities that could use the scheme are doing so at the moment. Surely, therefore, we should be encouraging more charities to use it, rather than pushing them towards gift aid only. This scheme is much more accessible and more suited to small and locally based charities.
Jane Ellison
We want the charities to use both methods, and there is evidence that many do. The scheme was always envisaged as a complement to gift aid, so it is not an either/or.
I totally accept that there is always more to be done in getting charities to claim gift aid. In the Second Reading debate, the Minister for Civil Society talked about the charities day that is coming up and I mentioned that HMRC has an outreach team, which has already delivered more than 600 sessions with charities, talking about how they can make the most of what is on offer. Of course we want to see donations maximised. It is true, as my hon. Friend the Member for Amber Valley said, that we have not yet reached the point we wanted to, but the Bill takes us a good way in the right direction.
We do not want to incentivise a switch to this scheme from gift aid. In any case, there is a matching requirement, so any charity would have to do gift aid to access this scheme. We will perhaps debate that matching requirement later. It is important. We mentioned it briefly in terms of the assurance process.
The Government’s position has always been clear. The scheme was introduced to provide a payment similar to gift aid when charities cannot obtain a gift aid declaration. If a charity can claim gift aid, it should do so, because that is more beneficial to them in the long term, for the reasons I have touched on. Robust processes exist to allow charities to claim gift aid on electronic donations and the Government will shortly introduce legislation to make doing that even easier. I hope, therefore, that Members will not press their amendments to a vote.
Nigel Mills
This is just a technical question. Does the definition of contactless include Oyster cards? Donations can be made using an Oyster card, by registering to pay a penny a journey, and unused funds can be donated to various charities around London. Would that fall within the definition of contactless or has it accidently been excluded?
Jane Ellison
We believe that the definition of contactless payment is wide enough to cover most likely developments but I am more than happy to look into that further before the next stage of the Bill.
Clause 2 amends, as we have discussed, the meaning of “small charitable donation”, enabling charities to claim top-up payments on donations received using contactless technology. Confirmation comes, as if by magic, for my hon. Friend: can the definition include Oyster cards? Yes it can.
As my hon. Friend knows, because he was one of the people discussing it, the matter was raised during the passage of the 2012 Bill. The gift aid small donations scheme was devised only four years ago, when contactless payment technology was in its relative infancy. At the time, the Government promised to look at the issue again during our three-year review of the scheme, and that is what we have done. I hope that the answer I have just given about Oyster cards shows that we are trying to future proof that aspect of it, as my hon. Friend predicted we would need to do.
The changes made by the clause reflect the fact that there is a clear trend away from cash transactions generally in society. They are declining, while contactless payments are increasing. We accept that, unlike other methods, such as cheques, text messages and online giving, which require donors to stop and actively engage with their chosen charity, contactless donations share many of the same limitations. People can just tap to donate and walk away without stopping to fill in a gift aid declaration. Indeed, in some of the situations in which we find bucket collections, it is almost impossible to stop and give a gift aid declaration. Contactless technology could be extended to augment bucket collections in busy tube stations—I imagine we would be less than popular if charities cause great queues to form in busy tube stations—so it is easy to envisage situations in which this measure would be useful. Accordingly, clause 2 amends the scheme, allowing charities to claim top-up payments on contactless donations of £20 or less.
Although the take-up of contactless technology among charities is relatively low, we have had feedback from the sector and have seen demonstrations suggesting that the cost of the technology is likely to decrease. Therefore, we anticipate that the take-up will increase. It is important, as the new technology develops—it is developing at a fast rate—and as the charity sector innovates, that the legislation continues to reflect the realities of the way charities are fundraising.
Clause 2 will allow charities to claim top-up payments on donations made using credit and debit cards, as well as services such as Apple Pay and Android Pay. The scheme will therefore become more flexible, and the charity sector will have more opportunities to claim top-ups on small donations of £20 or less. Including that measure in the scheme will not impose any significant extra burdens on charities that choose to use the technology. Charities will not be compelled to use contactless payments if they do not wish to do so.
Clause 2 will without doubt future proof the gift aid small donations scheme, as was discussed in 2012. It will ensure that charities continue to benefit in years to come as contactless technology expands. I commend the clause to the Committee.
Rebecca Long Bailey
I welcome the Minister’s comments. From the contributions from Members on both sides of the Committee, it is clear that there is an issue in relation to some charities being able to avail themselves of the gift aid scheme for the donations. If the Minister will not accept these amendments, will she consider launching a Government review of the gift aid scheme as a whole within the next six months to address the issues that have been raised today?
Jane Ellison
I reiterate the comments I have already made. This is about how we make this scheme, which was always designed to be a complement to gift aid, work. We are separately consulting on some changes to regulations around gift aid, which are designed to make it easier. We are seeing an evolution in the way people are able to donate. The question is whether the amendments are suitable for this scheme, which was always meant to deal with the issue of cash or cash-like transactions—instantaneous donations, bucket collections and donations from people walking by in the street.
I am unpersuaded that a review in six months’ time would add anything to the information we have before us today. It goes without saying that all these things remain under constant review, and this small donations scheme is no exception. It is kept under review in the Treasury—the Treasury keeps charity and tax law under review—and the team there has regular meetings with key stakeholders. The Minister for Civil Society also has extremely regular contact with stakeholders, and I look forward to having contact with charities on charity taxation.
I hope to persuade the hon. Lady that there are already data out there. HMRC publishes a national statistics package every year, which contains an absolute wealth of data, including on the total amount claimed under the gift aid small donations scheme. That is a transparent approach and it allows interested parties to monitor constantly the take-up and the effectiveness of charitable tax reliefs. Of course there is more to do to encourage charities to take up such measures, but the answer lies more in the things I mentioned—the outreach I talked about and the work being done by the Minister for Civil Society—than in some of the changes that have been proposed today.
Kirsty Blackman
I appreciate the fact that the Government have consulted on the gift aid small donations scheme and received a variety of responses. Does the Minister not feel that charities and charitable organisations have largely spoken with one voice in calling for the methods under the scheme to be increased, at least a bit? I understand that things are under review, but do the Government not accept that it might be better to listen to people on this matter? I acknowledge that they have listened with regard to some of the other things they are doing.
Jane Ellison
Picking up on the hon. Lady’s last point, the Government have listened. There is always a bit of scepticism in politics—I think we have all felt it—on whether things change as a result of consultations, but the consultation in question was really open. We consulted and asked for ideas and, as a result the responses we received, made further liberalisations in the regime. I think that we have listened and that I have given good reasons why we do not want to go in the proposed direction for this scheme because of the nature of what it was designed to do. We are looking to future proof it for contactless payments.
On gift aid more generally, as I said, changes are already being proposed and there is a lot more we can do to increase charitable take-up. I am unpersuaded that the issues being advanced in this debate are the ones that will aid take-up without having unforeseen consequences. Perhaps we will debate those issues later in our discussions of other clauses.
Susan Elan Jones
I have a quick question about texts. The Minister spoke about the issue being people engaging with a chosen charity, but I am not sure that it is. For example, one might give to an appeal for a dog that appeared on the television, but the charity might be a wider animal charity. The donor might be drawn to a very specific appeal, not to wider support for the charity. As donors, consumers and even voters are much more fluid in their loyalties, can the Minister not see a case for the support running with the donation, not necessarily the institution it is going to?
Jane Ellison
I understand entirely the point being made, but that takes us into issues relating to the motivation and behaviour of people as they give to charity. I think that relates more to the gift aid scheme itself than to the scheme at hand.
Rebecca Long Bailey
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 ordered to stand part of the Bill.
Clause 3
Charities running charitable activities in community buildings
Question proposed, That the clause stand part of the Bill.
Jane Ellison
Clause 3 will simplify the small donations scheme, making it easier for charities to operate while ensuring that the scheme delivers its original policy intention. It is about issues relating to community buildings. The clause also makes certain of the community building rules requirements more flexible, to give more charities the opportunity to benefit from the scheme. Clause 4 ensures that, for “connected charities” running charitable activities in community buildings, the rules retain the flexibility to claim top-up payments under the gift aid small donations scheme in the way that best suits their circumstances.
To explain the background, when the gift aid small donations scheme was introduced in 2013, the core principle was that each charity should be entitled to one allowance to top up their gift aid claims in circumstances in which asking a donor to complete a gift aid declaration was really not practical. As we have just discussed, that might be during a bucket collection or church service. The intention was also, most definitely, that the rules should operate as equitably as possible and not give manifestly unfair results when similar charities doing similar things in a similar way just happen to be organised differently. For example, the rules treat “connected charities” as if they are one charity for the purposes of the gift aid small donations scheme. It might help if I explain that, put simply, broadly charities are connected when they are controlled by the same people and have similar objectives. In that way, a charity is entitled to one allowance. For example, the head office and the regional offices could together register as one single charity, or each office or local branch could register separately. I am sure that everyone agrees that that is a fair and necessary rule.
Charities that regularly carry out charitable work in local communities are able to claim community buildings allowances in addition to the one core or main allowance. We want to ensure that, where a charity has a presence and is engaged in valuable charitable activities in our communities, such as in a church or village hall, it may claim a top-up allowance in respect of the local donations. Again, I do not think that anyone would argue that that was unfair. However, we have come to realise that the rules as cast do not always give the outcome that the Government want, or deliver on the intent of the scheme.
Some charities are able to claim many more allowances than others simply by virtue of the way in which they are structured, which is different, even though they might be carrying out similar activities in a similar way to the others. That disparity is acknowledged by the overwhelming majority of charities that can benefit from double allowances, as is the need to rectify the problem to restore the original policy intent.
The changes made by clause 3 will therefore make it clear that charities may claim one allowance, currently set at £8,000, or a community buildings allowance for each community building, with a maximum allowance for each building being £8,000. For example, therefore, a charity with three community buildings will, assuming that it has collected enough donations, be able to claim a top-up on £8,000 in respect of each of those community buildings. It will not, however, be able to collect an additional allowance in respect of any donations collected by its head office. That change will remove the scope for some charities to be able to double-claim allowances.
In making the change, we are adopting the approach that many respondents to the consultation suggested both as a way to ensure equity of treatment, and as a simplification of the scheme. In addition to simplifying the operation of the rules, the clause also makes the community buildings rules much more flexible and generous. At the moment, only donations actually made in the community building while charitable activities are being carried out count towards the community buildings allowance—that is, the amount of donations on which top-up payments may be claimed.
The Government, however, recognise—as I am sure we all do—that many charities carry out charitable activities in a community building, but collect donations to fund that valuable work outside the building itself, such as in collection tins in the local area. One hon. Member at least was taken back to his bob-a-job days with the scouts by our debate, but that is a perfectly good illustration of what we are talking about.
Rebecca Long Bailey
I shall try to keep my comments brief. Clauses 3 and 4 relate to the community buildings rule. Additional top-up payments may be made to those charities that meet and collect small cash donations in a community building. Every charity is entitled to an £8,000 a year allowance. Charities that carry out charitable activities in one or more community buildings can claim additional top-up payments of £8,000 per building subject to certain criteria. As the stewardship comprehensive guide to the scheme explains:
“A community building is a building, or part of a building, to which the public or a section of the public have access at some or all of the time.
So, a building which is kept locked other than at the times that Sunday services are held will qualify, provided that the public have access to it when it is open for public worship. Equally, if a church rents space in a local community centre on a Sunday morning, for the purpose of Christian worship, provided that the public have access to it, the use by the church on a Sunday will mean that the parts of the community centre used exclusively by the church will qualify as a community building.”
The community building is eligible if the charity carries out charitable activities on six or more occasions in the tax year with a group of at least 10 people. Clauses 3 and 4 would make a series of changes to the rules governing community buildings. Clause 3 would allow a charity to claim up to £8,000 from small donations raised anywhere, or up to £8,000 from donations collected from each community building it has. In the latter case, donations would include those made in person in the local authority area in which the community building is situated. Clause 4 affects the rules for connected charities making claims under the scheme where one or more of the charities run charitable activities in a community building. The House of Commons Library briefing paper summarised the change, stating that a group of charities will be entitled to claim
“up to £8,000 small donations made in the local authority area in which each community building is located.”
Alternatively it would be able claim
“up to £8,000 small donations made anywhere in the UK.”
As the first would generally be more beneficial, that would be the default option. The Opposition are very happy to support these changes to the rules governing community buildings. However, the Charity Tax Group has raised one point. It has called for a review of the requirement for there to be at least six events a year in a community building, and that they must be attended by at least 10 people. The group said that the rule is “arbitrary” and “impractical” for many charities, especially those in isolated community buildings or that have peaks in use, for example. Could the Minister use this opportunity to address the Charity Tax Group’s concerns about that rule? Other than that point I have no further comments.
Jane Ellison
The issue is really about the balance that we are trying to achieve. It is about trying to ensure that we keep a light touch in terms of what we ask of people claiming under the scheme. We feel that a reasonable balance is struck by the requirement that charities must carry on their charitable activities six times a year and, as the hon. Lady said, to be attended by at least 10 people. Most charities that are regularly active in most communities should be able to meet the requirements. It is not so generous that it is easy to contrive to meet it, and this is the issue. There will be other opportunities, in our debate on the Bill, to talk about striking that balance, but it is important to remember that protecting our precious charities means ensuring that we do not allow the rules to be so easily circumvented that abuse is widespread and that charities and the sector attract criticism for it.
We feel that this is a reasonable balance to strike. It is a light-touch requirement, but it is important to ensure that people do not contrive to work around it.
Question put and agreed to.
Clause 3 accordingly ordered to stand part of the Bill.
Clause 4 ordered to stand part of the Bill.
Clause 5
Childcare payments
Question proposed, That the clause stand part of the Bill.
Jane Ellison
We now change tack slightly. The second issue addressed by the Bill is childcare payments. Clause 5 will make a number of minor, technical amendments to the Childcare Payments Act 2014, which introduced a new Government scheme to provide tax-free childcare. We had a broader debate about childcare on Second Reading, but I make it clear to the Committee that these are technical amendments to ensure that the scheme works for the benefit of parents who claim financial support for their childcare costs. I will first explain how the tax-free childcare scheme will work and then explain the changes and why they are needed.
Tax-free childcare will support working parents and help with the costs of childcare, enabling them to go out to work or to work more. Parents will be able to set up a childcare account online, deposit money into their account and receive a 20% top-up from the Government to pay their childcare providers. For every £8 a parent pays towards their childcare costs through the account, the Government will provide a top-up of £2. Parents will be able to receive up to £2,000 of support towards childcare costs of up to £10,000 per child per year, up to the age of 12. That support will be doubled for parents of disabled children, who are entitled to up to £4,000 top-up on childcare costs of up to £20,000 per year, up to the age of 17.
Tax-free childcare is digital by default. Parents first apply for and then use their childcare account online, although non-digital routes will of course be provided for those unable to use the default digital form. HMRC will check a parent’s eligibility for tax-free childcare. Parents will then be able to open and pay into a childcare account for each of their children, and the Government will top up the account. Parents can then use their childcare account to pay for a regulated childcare provider.
We are ensuring that childcare accounts are as simple as possible for parents to operate, because we do not want to add to their burdens. Once HMRC has confirmed that a parent is eligible, the parent is entitled to use the scheme for a three-month entitlement period. Each quarter, parents must confirm their circumstances and that they still meet the eligibility requirements, with a quick online declaration for all their children at the same time. Tax-free childcare will be trialled with more than 1,000 parents later this year and gradually rolled out from early next year.
James Heappey (Wells) (Con)
I speak as a father. My wife and I take advantage of exactly this scheme. Digitising the process once the employer has put it in place is very helpful, but will the Minister look at digitising the process that the employer follows to get the childcare vouchers registered initially? Most employers are still using the paper mechanism for that, which delays the system somewhat.
Jane Ellison
I note my hon. Friend’s point and will ensure that it is looked at. It relates to a different aspect of the childcare provision that the Government provides, but he neatly illustrates the point that we do not want the process for getting support for childcare to be onerous. Tax-child childcare, which is designed to be digital by default, is a move forward.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
Will the Minister set out what conversations she is having with colleagues in the Department for Education about ensuring adequate places for children? She may be aware that the Public Accounts Committee has raised concerns about the number of childcare places available to parents. It is all good and well to put schemes in place to help parents, but we need to make sure that there are places for children to take up.
Jane Ellison
Although not directly germane to the Bill, I am happy to draw the hon. Lady’s remarks to the attention of colleagues in the Department for Education. I suspect that they have already noted the PAC’s reports—I think most of us as Ministers would take great note—but I will of course ensure that they see the point she has made.
To reassure the Committee, HMRC has been user-testing its systems with parents with regard to tax-free childcare. Over 400 parents have been consulted so far. That allows HMRC to improve the services it offers to parents. As a result of that user testing, the first change that the Bill proposes relates to the quarterly reconfirmation process. HMRC has the power to change the length and entitlement period to make parents’ online journey as simple as possible. At the moment, they can change the standard three-month period by up to one month, so entitlement periods of between two and four months can be set. The one-month rule does not allow reconfirmation dates for all of a parent’s children to always be aligned—for example, where a parent applies for a childcare account for an additional child at a later date, or if a new household is formed. If the application is made in the middle month of their existing entitlement period, then alignment for reconfirmation is not possible.
Let me give the Committee an example. Helen is returning to work after maternity leave for her second child, Jenny. She already has a childcare account for her first child, Iain. Her current entitlement period for Iain runs from January to March. She is returning to work on 15 February. Whether the first entitlement period for Jenny is shortened to two months or lengthened to four months, it will not align with that for Iain. Therefore Helen is faced with two online reconfirmation journeys a quarter instead of only one. This amendment to the Childcare Payments Act will allow entitlement periods to be varied to between one month and five months. That will allow HMRC to always give parents such as Helen a single reconfirmation for all her children.
I am taking the second and third changes made to the Childcare Payments Act by this clause together as they are very similar in nature. Both allow HMRC to set out what online forms parents should use when querying HMRC decisions. The first does this for ordinary review requests; the second does it for requests made outside the normal time limits. Parents can query any HMRC decision that adversely affects them, for instance a decision that they are not eligible or a decision to impose a penalty on them. If they remain unhappy after the review they can appeal to an independent tribunal. As I have set out, tax-free childcare is a digital-by-default system. Parents apply to open childcare accounts, and then use those accounts, via online forms set out by HMRC for that purpose.
These amendments give HMRC the power to specify in regulations the online forms to be used by parents when requesting a review of any HMRC decisions. That will allow tax-free childcare to be consistently digital by default across the full service. Regulations under these powers will provide the same safeguards for those unable to interact digitally with HMRC as in-scheme regulations. The safeguards allow those unable to interact digitally to get the same service through other means, which is important. The safeguards are in regulation 22 of the Childcare Payments Regulations 2015.
In conclusion, these are minor, technical amendments to the Childcare Payments Act 2014 that will allow HMRC to improve parents’ experience and the consistency of tax-free childcare. I therefore urge the Committee to accept that the clause should stand part of the Bill.
Rebecca Long Bailey
I will keep my comments brief. Clause 5 relates to the Government’s tax-free childcare scheme and makes minor changes to the Childcare Payments Act 2014, which is the legislative basis for the scheme. First, it would allow HMRC to vary the entitlement period in certain cases by two months rather than one, as currently stated in the legislation. The entitlement period refers to the period of time after which parents must confirm that they still meet the eligibility criteria. Typically this must be done quarterly; however, HMRC can vary that in certain cases. Clause 5 changes this variable amount to two months, to
“enable alignment of eligibility periods for additional children when parents already have another child in the scheme.”
We certainly welcome these proposals.
The other change relates to parents who want to apply for a review of a decision made by HMRC that affects them, or who wish to do so outside the usual time limits. Normally that must be done within 30 days of being notified of the decision, although that timeframe can be extended. The clause also allows regulations to be made to specify the form and manner of such applications. I believe that the Government’s intention is to allow such applications to be made digitally, but perhaps the Minister will confirm that.
These are technical changes, and the Opposition do not oppose them. However, we have significant concerns about the tax-free childcare scheme more broadly. I will not say more about that now as we are debating the finer points of the Bill, but we will perhaps revisit that at a later stage.
Jane Ellison
I will of course draw the hon. Lady’s wider comments about childcare to the attention of the relevant Ministers.
Kirsty Blackman
I feel that as someone who is likely to be using the tax-free childcare scheme for eight or nine years, it is sensible for me to make some comments. The current childcare voucher scheme is quite cumbersome—particularly given the paper methods that are used—and difficult for people to access, so I am pleased that the Government have listened to comments about the need to change how parents can access the scheme and ensure that there is consistency. I am pleased that the Government have piloted online access and listened to parents about making changes to that.
I have a couple of questions. First, I would like to check that the Minister is committed to ensuring that during the scheme’s roll-out, which I understand will happen next year, it is kept under constant review and feedback from parents is looked at. A relatively small group of 400 or 1,000 parents may not cover all the circumstances that we might see once the scheme is completely rolled out, so it would be useful if the Government were to continue in listening mode, and I would very much appreciate that assurance.
My other question relates to the conversations about the scheme with the Scottish Government. At the SNP conference at the weekend, announcements were made about changes that the SNP Government will make to some of the ways in which parents in Scotland can access childcare. What discussions have the UK Government had with the Scottish Government about how this Government’s new tax-free childcare scheme will link into the Scottish Government’s consultations on and proposed changes to the types of childcare that parents can access with their free hours? The Scottish Government are looking at making changes to the flexibility of the free hours that are provided to parents in Scotland and the settings that parents can access with that childcare provision. How will that scheme in Scotland link to the tax-free childcare scheme? Have the UK Government had any conversations yet about that with the Scottish Government? If not, will they commit to doing so?
Jane Ellison
I thank the hon. Lady for her comments. Of course we want the tax-free childcare scheme to work for parents. It is designed to make their lives easier, and that must be central to the way we approach the roll-out, which will be gradual, robust and extensively trialled with a variety of parents, to ensure that we replicate as many different circumstances as possible, as she said.
On the hon. Lady’s second point, we always deal with issues that relate to the devolved Administrations as appropriate. I will look at her broader point about how different childcare policies interact, but I do not think that that is directly relevant to the clause. In general terms, I reassure her that we are always assiduous in ensuring that where there are issues of interaction with the devolved Administrations that pertain to Bills, those are sorted out at official level ahead of proceedings such as these.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Clause 6
Extent
Question proposed, That the clause stand part of the Bill.
Jane Ellison
Clause 6 provides that the Bill extends to England, Wales, Scotland and Northern Ireland. Both the gift aid small donations scheme and the tax-free childcare scheme apply to the UK as a whole. The Small Charitable Donations Act 2012 included a provision to make the gift aid small donations scheme an excepted matter for the purposes of the Northern Ireland devolution settlement. A legislative consent motion was approved by the Northern Ireland Assembly in November 2012, providing consent for the UK Parliament to amend schedule 2 to the Northern Ireland Act 1998, to make the scheme an excepted matter. No legislative consent motion is required from the Northern Ireland Assembly.
Following a legislative consent debate in 2014, schedule 2 of the Northern Ireland Act 1998 was amended to make the childcare payments scheme an excepted matter for the purposes of the Northern Ireland devolution settlement, so the scheme applies in Northern Ireland in the same way as in the rest of the UK. No legislative consent motion is required from the Northern Ireland Assembly.
The Childcare Payments Act 2014 at section 74 defines the extent as England and Wales, Scotland and Northern Ireland. In the view of the UK Government the provisions of the Bill are not within the legislative competence of the Scottish Parliament or the National Assembly for Wales, so that no legislative consent motions are required.
Question put and agreed to.
Clause 6 ordered to stand part of the Bill.
Clause 7
Commencement
Question proposed, That the clause stand part of the Bill.
Jane Ellison
The clause simply provides that the changes to the gift aid small donations scheme will take effect from 6 April 2017. This will allow charities to benefit from the changes at the earliest opportunity. Changes to the tax-free childcare scheme will take effect two months after the Bill receives Royal Assent.
Question put and agreed to.
Clause 7 ordered to stand part of the Bill.
Clause 8
Saving and transitional provision
Question proposed, That the clause stand part of the Bill.
Jane Ellison
Clause 8 makes minor technical changes to ensure that a charity that has merged with another before 6 April 2017 does not inadvertently lose an opportunity to claim top-up payments for an earlier tax year as a consequence of the removal of two of the eligibility criteria from that date.
I explained earlier that the Bill makes changes to the eligibility criteria for claiming top-up payments under the small donations scheme. I explained that currently charities must have a gift aid history before they can claim under that scheme; in other words, they must have made a successful claim in two out of the previous four tax years.
Currently, if a new charity has taken over the activities of one or more charities, it may apply to HMRC for the gift aid history of the old charity to be taken into account for the purposes of the small donations scheme. If certain criteria are met—the old and new charities having similar purposes, for example—HMRC will issue a certificate that allows the new charity to claim top-up allowances on the strength of the old charity’s gift aid history. In other words, those rules ensure that when a new charity takes over an old charity it is not automatically denied access to the gift aid small donations scheme because it cannot meet the eligibility requirements.
As Members have heard, the Bill will abolish the two-in-four eligibility criterion and the need for new charities to have a successful gift aid history, so the merger rules will largely become redundant from 6 April next year. However, a charity may have taken over the activities of an old charity before April 2017 and want to take advantage of the merger rules to claim top-up payments under the scheme for an earlier tax year.
The changes made in clause 8 therefore retain the merger rules in their current form for cases in which a charity has taken over the activities of another, or more than one other, before 6 April 2017. The time limits for making an application to HMRC for the merger provisions to apply mean that a merger could take place before 6 April 2017, but either the charity has not made its application before that date or the charity has made its application but it has not yet been accepted by HMRC. The transitional provisions included in the clause will ensure that applications may still be made by a charity, and accepted by HMRC, in respect of mergers before 6 April next year.
The practical implications of the clause are obviously time-limited, because they apply only to mergers pre-April 2017. Nevertheless, without the clause, some charities that merged before that date may unexpectedly lose their entitlement to top-up payments.
Question put and agreed to.
Clause 8 accordingly ordered to stand part of the Bill.
Clause 9 ordered to stand part of the Bill.
New Clause 1
Abolition of Gift Aid donations threshold
“(1) The Chancellor of the Exchequer must carry out an assessment of the impact on charities and Community Amateur Sports Clubs of amending the Gift Aid Small Donations Scheme so as to remove the 10% Gift Aid donations threshold that must be met in order to access the Gift Aid Small Donations Scheme, including an assessment of the differential impact on different sizes of charities and Community Amateur Sports Clubs concerned.
(2) The Chancellor of the Exchequer must lay a report of the assessment before the House of Commons within six months of the passing of this Act.”—(Kirsty Blackman.)
Charities and CASCs must make Gift Aid exemption claims on donations received in order to make a claim under the Gift Aid Small Donations Scheme. The total Gift Aid donations must be at least 10% of the amount of the small donations on which top-up payments are claimed. The new clause would require the Chancellor to assess the impact of abolishing this requirement.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss new clause 2—Review of anti-fraud measures in relation to Gift Aid Small Donations Scheme—
“(1) The Chancellor of the Exchequer shall, within six months of the passing of this Act, publish an assessment of the efficacy of anti-fraud measures designed to regulate the Gift Aid Small Donations Scheme, including, but not limited to, the Gift Aid donations threshold.
(2) The assessment shall have particular reference to the efficacy of the matching requirement.”
This new clause would require the government to publish an assessment of anti-fraud measures designed to regulate the Gift Aid Small Donations Scheme.
Kirsty Blackman
I appreciate having the opportunity to move the new clause. Two of the three pieces of evidence that the Committee accepted today strongly support its inclusion in the Bill, one from the Churches’ Legislation Advisory Service and the other from the Charity Tax Group. The other submission is not against the new clause, it just does not mention it. As was mentioned earlier, a paper produced by the National Council for Voluntary Organisations, the Charity Finance Group, the Institute of Fundraising and the Small Charities Coalition says that it is vital that the matching requirement is changed or removed.
I take Members back to when the gift aid small donations scheme was first brought in. I was not present, but the Library has kindly produced a briefing that covers some of the matters that were discussed, and particularly the matching requirement. The right hon. Member for Bromsgrove (Sajid Javid) was the Minister at the time, and I want to quote what he said in the course of the debate on that legislation. Government amendment 30 was added to the Small Charitable Donations Bill, and it allowed the Government to make changes to the matching requirement. He said:
“It will allow us to remove the matching provision entirely…Even so, charities would always need to claim some gift aid in each year to ensure that they can claim under the scheme…It is something that many charities have asked us to introduce”.—[Official Report, 26 November 2012; Vol. 554, c. 98.]
So back then, charities were in favour of flexibility in the matching requirement and argued for it, and ultimately, the Government accepted that.
Having read the comments of Members at that time, I think the reason for that amendment was that the figures are arbitrary. The gift aid small donations scheme was amended fairly heavily during its progress through Parliament, particularly in relation to the matching requirement. When the scheme was introduced, it was suggested that top-up payments should be claimed only for amounts up to £5,000, but that was increased to £8,000. It was also suggested that the ratio of claims through the small donations scheme to gift aid claims should be 1:1 to begin with. The Government moved on that and changed the ratio to 10:1. Both those figures are fairly arbitrary, and the fact that the Government moved so dramatically shows that the figures are not necessarily set in stone.
Small charities have to receive £800 in donations under the gift aid scheme in order to claim the maximum allowance under the gift aid small donations scheme. Some very small charities will not receive £800 in donations that they can claim under the gift aid scheme, but they might receive £8,000 in very small donations, whether through church collections, people writing cheques or people making contactless payments. Unless they have that matching £800, they cannot claim the full allowance under the scheme.
The new clause, which is in my name and is supported by my hon. Friend the Member for Glasgow Central, would get rid of the matching requirement. It asks the Chancellor of the Exchequer to carry out an assessment. Because the change does not need to be made under primary legislation, the Government can carry out the assessment and make the change without being required to bring the matter back before the House in the spectacular way that they have to do with some other things.
Our proposal is widely supported by charities and would very much help the smallest charities, which feel strongly about it. As Members of all parties have stated today, take-up of the scheme has not been as high as expected. I argue that that is because some of the smallest charities are not able to manage the paperwork that is required.
I am not suggesting that we get rid of the requirement to claim gift aid in general. It is reasonable, given the Government’s desire to prevent fraud, that they have charities make at least one claim and fill in the full version of the forms. It is not, however, reasonable for the Government to expect the smallest of charities to go through that cumbersome process to claim the full amount of £800 in gift aid on small donations. That view is strongly supported by the organisations that have taken the time to write to us.
I intend to press the new clause to a vote. I understand that the Government might not want to accept it today, but I would very much appreciate it if they would seriously consider before Report the fact that a 10:1 ratio is possibly not the right arbitrary level. If they will not consider abolishing the matching requirement, will they consider making the ratio 20:1 or 50:1? That would be hugely beneficial to the smallest of charities, which benefit most from the gift aid small donations scheme and do not have the people power to fill in many of the relevant forms. I want them to continue to fill in forms, but not so many.
Rebecca Long Bailey
New clauses 1 and 2 both get to the most important issue for the charity sector: the so-called matching requirement. The requirement is that to make a claim under the small donations scheme, a charity must receive a certain amount of gift aid donations in the same tax year. The total of eligible donations on which a charity can claim a top-up payment is restricted to an amount between equal and 10 times the net donations on which gift aid is claimed for the year.
New clause 1 would require the Government to carry out a review of the impact of abolishing the matching requirement within six months of the passing of the Bill, and Labour’s new clause 2 would require the Government to conduct a review into the efficacy of anti-fraud measures designed to regulate the gift aid small donations scheme, with particular reference to the matching requirement. On Second Reading, the Minister said that the requirement is
“to protect from fraud the small donations scheme, which has substantially fewer record-keeping requirements than gift aid—an important factor that was looked at when the scheme was first designed back in 2012. It is by retaining the rule that donations under the scheme must be matched with gift aid donations that we best can do that.”—[Official Report, 11 October 2016; Vol. 615, c. 215.]
However, as far as I am aware, she did not produce any evidence that the matching requirement is an effective anti-fraud measure.
As we have heard, the sector says that the requirement is a huge barrier for many small charities. They would like it to be significantly reformed, if not scrapped entirely. For instance, the Churches’ Legislation Advisory Service has suggested extending the requirement to 20:1. Given the Government’s reasons for not proposing any amendments to the requirement, the Opposition think that we should simply have a chance to see the evidence that the requirement works.
We agree, of course, that preventing fraud in the scheme is of paramount importance, but if the measure is simply adding a layer of red tape and is not effective, the Government should review it. The Charity Finance Group has highlighted the fact that only 275 reports of suspicious activity were shared between HMRC and charity regulators in 2015, which represents a rate of one suspicious activity per 500 charities. The group considers that to be a sign that fraud in the scheme is not of a high enough level to justify the effects of the matching requirement. That might well be the case, or it could be that the requirement is an effective caveat to the scheme, but we would only know that if there was a publicly available assessment of the effectiveness of all the measures in the scheme designed to combat fraud and of where the requirement sits within that. I can see no reason why the Government would not want to carry out such an assessment, and I hope that the Minister will accept our new clause 2, or work with us to table a Government amendment on Report that deals with any issues or concerns with our wording.
Finally, I would welcome the Minister’s comments in response to evidence produced by the Charity Finance Group, which welcomes the intention behind our new clause but believes that the Government should focus on increasing punishments for those who commit abuse and providing more opportunity for charities to report on suspicious organisations.
Jane Ellison
As the hon. Member for Aberdeen North said, new clause 1 would require the Chancellor to lay before the House an assessment of the impact of removing the gift aid matching requirement within six months of the passing of this Act. New clause 2 would require the Chancellor to publish an assessment of the efficacy of the scheme’s anti-fraud provisions in the same period.
I should start by saying that I welcome the cross-party consensus on the importance of protecting the gift aid small donations scheme, and charitable tax reliefs more generally, from abuse. Indeed, I completely agree with the shadow Minister, the hon. Member for Salford and Eccles, who said on Second Reading:
“We must make sure that any loosening of the rules for access to Government grants or tax reliefs does not provide a further incentive for tax avoiders, albeit a small minority, to set up a charity.”—[Official Report, 11 October 2016; Vol. 615, c. 220.]
She was exactly right to draw our attention to that. The Government also agree with the hon. Member for Bootle (Peter Dowd), who said during his closing remarks on Second Reading that
“it is vital that sufficient safeguards are in place to prevent fraud when Government funding or tax breaks are provided, as in this case, to the charity sector. I think that sentiment would get cross-party support.”––[Official Report, 11 October 2016; Vol. 615, c. 247.]
Indeed, I think that sentiment does have cross-party support.
Let me say a little about fraud in the charity sector, which is relevant to the new clause. None of us likes to contemplate it or talk about it, but sadly it exists. As the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Reading East (Mr Wilson), said on Second Reading,
“it is an unfortunate fact that unscrupulous individuals seek to exploit charitable status for criminal purposes.”––[Official Report, 11 October 2016; Vol. 615, c. 250.]
It might shock colleagues to hear that the “Annual Fraud Indictor 2016” document produced by Experian, PKF Littlejohn and the University of Portsmouth’s Centre for Counter Fraud Studies estimates that fraud costs the charity sector about £1.9 billion each year. The report also states:
“Fraudsters are fast, inventive, adaptable and willing to quickly exploit new opportunities.”
I am sure hon. Members will therefore agree that it is vital the Government make sure that any initiatives, no matter how well intentioned, have suitable safeguards in place to limit opportunities for abuse, particularly when those initiatives involve spending public money. Indeed, both the hon. Member for Salford and Eccles and the hon. Member for Bootle made exactly that point on Second Reading.
The gift aid matching requirement provides a deterrent for those who would seek to exploit the small donations scheme. A number of hon. Members have raised concerns about the matching requirement; we have heard them again today. A few hon. Members, including the shadow Minister and the hon. Member for Clwyd South, cited a survey by the National Council for Voluntary Organisations and others that suggested that the matching rule acts as a barrier to claiming from the gift aid small donations scheme, with 50% of respondents with an income under £10,000 wanting the matching rule to be removed or reduced. However, it is worth drawing the Committee’s attention to the fact that the same survey also found that only 5% of respondents claimed no gift aid at all, and just 10% felt that they did not claim enough gift aid to make claiming top-up payments worthwhile. Similarly, the Government’s own assessment found that 92% of charities claiming gift aid for the tax year 2014-15 claimed on donations of £500 or more, entitling them to the maximum small donations allowance, which at that time was £5,000. That is interesting evidence that for the vast bulk of charities, the matching rule is not a barrier.
Anna Turley
I would put the burden of evidence and proof back on the Minister. This provision has existed for three years now. Does she have any evidence of its benefit or usefulness, either in promoting the use of gift aid or in reducing fraud? If there is none, then given the clear objection from the sector, I really do not see any benefit to it whatever.
Jane Ellison
First, I would argue that the matching rule has become more relevant because of the provisions in the Bill to simplify the scheme, for example the end of the two-in-four rule. Secondly, I have been sat here musing as I have listened to Members making their points about the need for me to prove that the rules are necessary. I cannot see how that can be done without first relaxing them and then having to report to the House that there had been large amounts of fraud, public money had been wasted and so on. In other words, the only way to prove it is to prove a negative.
Susan Elan Jones
I am a bit concerned, because when we were here a few years ago the example we cited was the Cup Trust, where there was wide-scale evidence of fraud. We asked whether it was registered for gift aid and the answer was yes. I am concerned about linkage.
I appreciate that we are looking at is a review to do with gift aid six months after the Act comes into law, but in view of the changes made last time when we were told initially it had to be same for same—we ended up with something vastly different and vastly better—will the Minister look at those arguments? Even if the Government’s view is that there has to be some sort of matching, it need not necessarily be set at the current level. That is our big concern.
Jane Ellison
Two arguments are being advanced. One is that there should be no matching requirement at all. I am afraid I reject that for the reasons I have given, and I will try to provide more evidence. I understand the point that the hon. Member for Clwyd South makes and I understand that there was movement during the passage of the previous Bill with regard to the ratios. With all of these things it is sometimes about trying to strike a reasonable balance, and I think 1:10 is a reasonable number. It is an easy number from an administrative point of view and it keeps matters much more straightforward for the charities in question. I am glad however that she supports the principle that there should be a matching rule to avoid fraud. I will say a bit more about why we think that is important.
The Government’s own assessment found that 92% of charities claiming gift aid for the tax year 2014-15 claimed on donations of £500 or more. That would have allowed them to claim the maximum small donations top-up allowance, which at the time was £5,000.
It is worth adding that while the 8% of charities claiming on less than £500 of donations would not have benefited from the maximum small donations allowance because of how the matching rule operates, the vast majority would have been entitled to a proportion of that allowance. In fact, 98% of charities claiming gift aid in 2014-15 claimed sufficient amounts to receive a small donations allowance of at least £1,000. I submit to the Committee that with 98% of charities claiming enough to get an allowance of at least £1,000, the rules are not proving a barrier; they are being used and people are managing quite well with them. The figures do not support the assertion that the matching rule is a major barrier. Indeed, I think most people would say that it strikes the balance of reasonableness.
As I have said, the Bill is a simplification measure—it removes the two-year registration requirement and the gift aid history requirement—and leaves only the matching rule as the link between the gift aid small donations scheme and the wider gift aid scheme. The Government have always been clear that a link to gift aid is necessary to allow HMRC to carry out effective compliance activity. I ask hon. Members on both sides of the Committee to support that principle.
Steve Double (St Austell and Newquay) (Con)
Does the Minister agree, in response to the concerns raised by the SNP spokesman, that the Government have done an awful lot to simplify the gift aid claiming process for charities? I speak as someone who has been involved in operating gift aid claims for charities for many years. The process now is incredibly simple in its online form, so it is not the burden that perhaps it was in the past.
Jane Ellison
I think that is right, and I thank my hon. Friend for that intervention. We are really trying to make this as simple and straightforward as possible, but we need some safeguards. That is why the matching rule is important. I would suggest that requiring HMRC to publish a detailed analysis of compliance activities and the efficacy of anti-abuse rules could be unhelpful. I would hate us inadvertently to provide a roadmap for fraudsters. If there was a requirement to publish that information, it would provide valuable information to that dishonest minority whom the Government are trying to root out.
I would like to reassure the Committee that HMRC works with charity regulators to ensure that charities are properly regulated, the abuse of charities is properly and robustly dealt with, and the tax reliefs claimed are used for charitable purposes. If a charity is suspected of fraud, HMRC will share that information with the Charity Commission, which can consider further action, including removal from the charities register. We have made it easier to report fraud. I hope that it goes without saying that all tax policy remains under constant review, and this scheme is no exception. The Government will of course continue to monitor the effectiveness of the small donations scheme, as they do with all charitable tax relief.
We are very keen to make sure that the good name of all those charities that do wonderful work at international, national and local level is not abused. I will give the Committee just one example. In May this year, three individuals were jailed for a total of 22 years for defrauding HMRC of £5 million in fictitious gift aid claims. I am afraid that there are more examples of large sums of money where that is true. Those people are out there and, as the report I cited earlier pointed out, they are very quick to spot loopholes, however well intentioned.
HMRC publishes a comprehensive national statistics package, to which I alluded earlier, which allows anyone to scrutinise the efficacy of the Government’s support for charities. However, requiring in legislation that the Government publish separate assessments within six months of the passage of the Bill is both arbitrary and unnecessary and, for the reasons I explained, in the case of one of the reviews it is likely to be impossible to prove what it seeks to prove. I therefore urge hon. Members not to press their new clauses to a vote.
Kirsty Blackman
Regarding the new clause that I tabled, I have asked the Government to undertake an assessment of the differential impact on charities of different sizes. As I have tried to make clear, both on Second Reading and today, my concern is particularly about the very smallest charities, some of which find that this is a barrier. I am slightly bothered by some of the conversation both today and on Second Reading. Perhaps I am naive, but I do not think that charities generally set out to defraud the Government. That is pretty unusual, and it bothers me how much of this conversation has been slanted towards concern about issues relating to fraud. I appreciate that some people try to commit fraud, but they are a small minority. It is only in relation to the largest amounts of money that we should be particularly concerned about that.
Jane Ellison
I want to clarify my remarks, which were principally centred on the fact that there are people out there who are fraudsters and who would seek to exploit loopholes in charity law and in gift aid rules. My comments were not focused so much on charities themselves being defrauders, although there have been one or two examples of this. Predominantly, this is about people exploiting charity law and the reliefs available in the same way that they exploit other loopholes.
Kirsty Blackman
I am really grateful for that clarification. I was concerned about the tone of some of the conversation that had been taking place. In relation to the new clause that I have tabled, I am asking the Chancellor of the Exchequer to look at the differential impact on different charities of removing the 10% matching requirement. The Government have made it clear, and it has been suggested by charities, that this could be changed to a different level of matching requirement.
The Government have accepted that this is a relatively arbitrary figure. It is good because it is a nice round number, but that is not necessarily helpful, particularly for the smallest of charities. I would very much appreciate it if the Government would consider accepting new clause 1, which looks at an assessment, and which would help those very small charities which most need this matching requirement to be removed.
Question put, That the clause be read a Second time.
Rebecca Long Bailey
I beg to move, That the clause be read a Second time. New clause 3 would ensure that local scout groups, guide groups and Army, Navy and Air Force cadet branches are able to claim individually under the gift aid small donations scheme, rather than being considered as part of a single national charity for the purposes of the scheme.
We have received representations on behalf of those groups arguing that the current treatment under the scheme is unfair. Under the connected charities rules, those organisations are considered to be one charity. However, local organisations fund-raise independently and are independent from one another financially. The Charity Finance Group has suggested that the amount of top-up received by individual scout groups in particular equates to about 17p a year. The new clause would simply allow individual groups to make individual claims through the scheme.
According to the sector, that would improve take-up of the scheme and ensure that small local organisations, which were intended to benefit, are able to do so. I appreciate that there are probably many other organisations with comparable structures that would benefit from similar changes. New clause 3 is more of a probing amendment to try and tease out from the Government why they do not want to reform the scheme in such a way. Perhaps we can return to this issue in more detail on Report. I would welcome any moves by the Minister to review the position and propose an amendment on Report that would catch all similar organisations with comparable structures.
James Duddridge
I dropped off my kids at beavers and cubs; and one of them is going to scouts. In this amendment, would the division apply to the 2nd Thorpe Bay unit, or would it apply to each constituent part, whether beavers, scouts, cubs, guides and so on?
Rebecca Long Bailey
The hon. Gentleman makes a very good point, and that is why I would welcome a review by the Minister of the proposal in the new clause. We need to catch more than what is simply on paper at the moment; the provision needs to go beyond the scope of local scout groups, for example. There are many other organisations that would benefit from being included individually in the ways I have proposed and I welcome comments on this point by the Minister. I also point Members to a note that they received this morning from the Charity Finance Group, which makes some helpful suggestions on this very point.
Jane Ellison
The new clause is designed to exempt scouts, guides and military cadet groups from the connected charities provisions of this Bill. We believe the new clause is not necessary.
The connected charities rules are intended to protect the gift aid small donations scheme from abuse and they work in conjunction with the community building rules to deliver fair and broadly equal outcomes for charities structured in different ways.
Without the connected charities rules, large charities would have a perverse incentive to splinter into groups of smaller charities to increase their entitlement to small donations allowances. I am sure none of us would want that to happen. However, it is important to make it clear that while connected charities are entitled only to a single shared £8,000 small donations allowance, they are still entitled to an £8,000 allowance for each of their community buildings.
Anna Turley
I think this is a really important provision that deserves greater explanation from the Government. It goes much more widely, as my hon. Friend the Member for Salford and Eccles said. It should seek to include organisations, such as Age UK or Mind, which have much more devolved operational structures. For example, on the back of the loss of the steelworks in Redcar and Cleveland, the number of referrals to Redcar and Cleveland Mind went up by 93%. That charity relies almost entirely on its own local fundraising. That is an exact example of where the charity ought to be able to have a lot more freedom to raise money and keep its gift aid donations locally, rather than having to be part of a national structure. I implore the Minister to take this away and explore it much more widely.
Jane Ellison
I am fairly certain that the hon. Lady’s example will benefit from the Bill. At the moment, that is a good example of where a charity probably does not do fundraising in its premises, if it has a local office. If it fundraises in the local area through quizzes or events or whatever, it will now be entitled to claim against its community building for any activity in the local area. I will obviously double-check, but I think exactly that charity will benefit from the provisions in the Bill, for the very reasons the hon. Lady gives: they are people who have a base, but it is not usually the place where they fundraise. By contrast, when the original debate took place, the focus was on churches and cash donations within church buildings.
As I said at the outset, the new clause is unnecessary because the provisions in the Bill allow for what it proposes. The hon. Lady has neatly illustrated why we would reject it: it carves out a few selected charities, but we want the provisions to benefit a very broad range of charities, some of which are not named in the new clause.
Clause 3 achieves what Opposition Members are seeking to achieve but in a fairer way. It does not carve out a few selected charities, wonderful though they are, to benefit, but looks at how churches and other connected groups can claim more against their activities in a local area. The new clause is unnecessary and I hope that the hon. Lady will withdraw it.
Rebecca Long Bailey
I thank the Minister for her comments. Before we complete today’s proceedings, I would like to draw her attention to comments made by the Charity Finance Group this morning. It stated that “Scouts and so on often cannot claim under community building rules, because buildings have to be open to the public or a section of the public, some or all of the time. Their huts or barracks are often closed and unless they open up their buildings to the public during their activities or rent out part of their building for community activities, they will not benefit from this rule.”
To address that and deal with some of the issues we have just discussed, the Charity Finance Group has made a suggestion that HMRC could develop regulations and criteria to define local groups for the purposes of the Act, as it has done with other aspects of the gift aid regulations. Would the Minister give serious consideration to that proposal?
Rebecca Long Bailey
I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Bill to be reported, without amendment.
Higher Education and Research Bill (Thirteenth sitting)
Tuesday 18th October 2016
(7 years, 6 months ago)
Public Bill CommitteesRead Full debate Higher Education and Research Act 2017 View all Higher Education and Research Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 18 October 2016 - (18 Oct 2016)
The Minister for Universities, Science, Research and Innovation (Joseph Johnson)
I beg to move amendment 246, in clause 83, page 51, line 23, after “Innovation” insert
“or, in Welsh, Ymchwil ac Arloesedd y Deyrnas Unedig,”
This amendment sets out the Welsh name for UKRI.
Joseph Johnson
It is good to have you in the Chair for the last day of our Committee’s proceedings, Sir Edward, to see us safely through to the end.
Amendment 246 is a minor amendment that places the Welsh language name for UK Research and Innovation on the face of the Bill. Amendments 274 to 276 are consequential and update the English and Welsh language versions of the Welsh Language (Wales) Measure 2011 to acknowledge the establishment of UKRI.
Amendment 246 agreed to.
Clause 83, as amended, ordered to stand part of the Bill.
Schedule 9
United Kingdom Research and Innovation
Gordon Marsden (Blackpool South) (Lab)
I beg to move amendment 330, in schedule 9, page 92, line 11 after “members” insert—
“(e) at least one member of the OfS Board with at least observer status”.
This amendment would ensure an interface between research and teaching.
The Chair
With this it will be convenient to discuss the following:
Amendment 334, in clause 103, page 59, line 11, leave out “may” and insert “must”.
This amendment would ensure cooperation and information sharing between OfS and UKRI.
Amendment 333, in clause 103, page 59, line 12, after “functions” insert—
“(1A) The OfS and UKRI must cooperate with one another on—
(a) the health of disciplines,
(b) awarding of research degrees,
(c) post-graduate training,
(d) shared facilities,
(e) knowledge exchange and
(f) skills development”.
This amendment sets out where UKRI and the OfS must cooperate on issues at the interface between teaching and research.
Amendment 335, in clause 103, page 59, line 13, leave out subsection (2).
This amendment would ensure cooperation and information sharing between OfS and UKRI.
Gordon Marsden
It is a pleasure to serve under your chairmanship on this last day, Sir Edward.
Because of the mysteries of grouping, these amendments are fairly far apart on the Order Paper, but fortunately they hang together. The amendments focus on co-operation and collaboration between research and teaching, specifically the relationship between the office for students and UKRI, which we have touched on previously. They spell out what the interface should be between teaching and research.
This question is probably as old as the hills. Ever since universities have been established, no doubt, people have been saying, “What on earth is he or she doing, doing all this teaching and no research?” and vice versa. The issue comes into particular focus after our lengthy discussions about the teaching excellence framework. In that process, reference is made to assessment of the research process. We are moving forward in general terms as well as in this Committee, and I think there is consensus across the Committee not only that research and teaching are of equal value, but that it is a mistake to put either into a silo. We would not previously have said that, even five or 10 years ago, but in general that is the position in the sector now.
The amendments draw on a wide series of comments that have been made about part 3 of the Bill by learned societies and the research and higher education communities. To be pedantic, we are considering the splitting not of the Higher Education Funding Council for England but of its responsibilities. As the Minister pointed out when we discussed this previously, HEFCE will be dissolved under the Bill. However, there is concern that the process of separating teaching and research—in this context, the Research England body—will mean that issues and activities at the interface of teaching and research, such as the health of disciplines, the awarding of research degrees, postgraduate training, the sharing of facilities, knowledge exchange and skills development, might not be effectively identified and supported.
There is no sense of a secret agenda; it is just a case of what can sometimes fall out if there are unintended consequences from perfectly reasonable regulation. I go back to what I and others have said about the weakness of the Bill, which was conceived entirely before the referendum and does not reflect changes since it took place. That is especially true in terms of the issues thrown up by Brexit. Of course one consequence of the referendum, as we all know very well, was a change of Government, a change of Prime Minister and, indeed, a change of Departments—the machinery of Government —that is almost but not quite as significant as the machinery of Government changes introduced in 2007 by Prime Minister Gordon Brown, when he split, largely on an age basis, responsibilities for apprenticeships and other elements between the Department for Education and the Department for Business, Innovation and Skills. That produced a situation, which continues after the latest changes, in which Ministers and shadow Ministers sit in two separate departmental and Opposition teams. The Minister sits in two teams. I sit more in one team than the other, but have to have a strong connection with the Department for Business, Energy and Industrial Strategy because of the research issue.
The concerns about the lack of effective identification and support for the list of things that I have mentioned have been intensified by the machinery of Government changes, in particular the division of teaching and research responsibilities between the Department for Education and the new or expanded Department for Business, Energy and Industrial Strategy. We cannot have an industrial strategy without skills or without higher education, or further education for that matter, so there will have to be that element of co-operation between the two Departments. Our concern, which is reflected in the amendments, is how that will translate and transfer into a strong interface between research and teaching, although what we are talking about will primarily be the responsibility of the Department for Education. I imagine that the Minister will comment on that. In amendment 333, we make specific suggestions about how the process might be accomplished. We do not claim copyright; the Royal Society and many other learned bodies and institutions made suggestions, but they are ones that we are happy to share with the Committee today as they probably cover the most important functions.
We have talked about the OFS and UKRI co-operating with each other on the health of disciplines, the awarding of research degrees and postgraduate training. I am sure that my hon. Friend the Member for Sheffield Central agrees with me that postgraduate training and indeed, the whole position of postgraduates and their future in detailed terms, have received relatively short shrift in the Bill. I hope that that will not be the case in the advice and guidance that will come. Postgraduates too, of course, will be keenly affected by the inter- connectedness of teaching and research, not least because many of them, in order to do research, end up having to do some teaching, although that is probably less prevalent here than in the United States. As someone who was doing postgraduate research and teaching at the same time, I do not think that is a bad thing. The ability to do both activities at the same time, provided they do not impinge on the postgraduate study, is very useful, not least in preserving some clarity of English when writing one’s thesis—but that is another matter.
The amendment proposes a mechanism by which this collaboration could be achieved. The Royal Society, as I am sure the Minister will be aware, has suggested that a committee on teaching and research should be established. I am sure the Minister will say it is not for us to dictate to UKRI, but it would be helpful to probe whether the Government are minded to say to the new body, its new chairman, chief executive and board members that this is something that ought to be high up in their in-tray. We also seek assurance that the requirement for the OFS and UKRI to co-operate will be included in governance documents for both organisations. Again, I am not expecting the Minister to give chapter and verse on that today, but we have in mind things such as operating frameworks, strategic plans and other relevant documents. No doubt that all sounds a little dry for breakfast on a Tuesday morning, but heavy fibre is good for us and that is why I am including it at this point in the proceedings.
The Wellcome Institute, which I am sure hon. Members are familiar with, has also offered thoughts in this area. Teaching and research are intrinsically linked, but that intrinsic link would be lost from higher education if the bond between them were broken. Clause 103 sets out the interactions between OFS and UKRI. Amendment 335 would ensure co-operation and information sharing between OFS and UKRI, strengthening the clause by replacing “may” with “must”—we are back to the old “may” and “must” scenario.
We see positive interactions between teaching and research responsibilities in many institutions, often most clearly in research-led undergraduate projects and modules, not least in the sciences. The Royal Society of Chemistry says:
“Bringing cutting edge research ideas into teaching helps ensure a dynamic and relevant curriculum. Close interactions with researchers can motivate students when considering their future in the chemical sciences. There is a risk that the separation of teaching and research in the new HE architecture will mean that the benefits of research informing teaching and learning practices could be lost. The current draft of the Bill allows for information sharing between the OfS and UKRI. It does not, however, require their cooperation unless directed by the Secretary of State”.
Other learned bodies and societies have contacted me and probably other members of the Committee to make similar points.
This issue is made more pressing because of the new machinery of Government structure and the shared responsibilities across the two Departments. That is why we suggest that the Bill be amended to provide that the OFS and UKRI must co-operate without being required to do so by the Secretary of State. Apart from anything else, the Secretary of State is going to have a hell of a lot in her in-tray—I am thinking of some of the other ground-breaking Government initiatives such as grammar schools and other measures that, by depute, would then fall to the Minister. I am sure the Minister would like to feel that this sort of thing can go ahead freely without him having to sign things off every other week. That is the principle, in a nutshell—a rather large nutshell—of our amendments to schedule 9.
Joseph Johnson
I thank the hon. Gentleman for giving me the opportunity to explain further how the OFS and UKRI will work together on a range of issues relating to their respective remits. I appreciate the considered tone of his comments and observations. We understand that these matters are important and we have taken considerable care to try to address them when crafting the reforms and the Bill. I am happy to try to give some further clarification now as to how we see those two bodies working.
I assure the Committee that the Government are committed to the continued integration of teaching and research within the HE system. We believe the Bill reflects that and proposes safeguards to ensure joint working, co-operation and the sharing of information between the OFS and UKRI. Both organisations also have a statutory duty to use their resources in an efficient and effective way, meaning they will look for all opportunities to collaborate and share information.
On the specific points made by the hon. Gentleman, I will start with those relating to changes to the machinery of Government in July. We understand his concern about the potential impact of those changes, with the Department for Education now having responsibility for higher education but research policy remaining the responsibility of the Department for Business, Energy and Industrial Strategy. For my part, I am committed to my role across the two Departments and will be working closely with the two Secretaries of State and the heads of the two new organisations coming into existence through the Bill, UKRI and the OFS, to ensure a coherent approach and to maintain the continuity of day-to-day business.
As the Committee has seen, the Bill is supported by me, a shared Minister across the two Departments, and as the hon. Gentleman will see on the back page of the Bill, it also has important support from senior members of the Government. That provides significant continuity across the two Administrations we have seen since the general election, including the current Prime Minister, who supported the Bill in her former capacity as Home Secretary, and the current Secretary of State for Business, Energy and Industrial Strategy in his former capacity as Secretary of State for Communities and Local Government, and so on and so forth. There is significant continuity.
Gordon Marsden
We entirely welcome not only that instrumental move across, but the move across of the individual concerned. I have always found the right hon. Member for Tunbridge Wells (Greg Clark) to be very forward thinking, and I think he will bring strength and hopefully some strategic vision to the Department for Business, Energy and Industrial Strategy.
Joseph Johnson
I will not comment on any absence of strategic vision prior to my right hon. Friend’s arrival, which I would not deem to be a fair comment, but he will take the Department to further great heights.
The hon. Gentleman asked about postgraduates and postgraduate study and why there is not more on that in the Bill. The OFS and UKRI will work closely together to ensure there are no gaps between their respective roles. In a way, that is no different to the current situation in which an institution receives funding from a research council but is still subject to HEFCE’s regulatory oversight of the sector. Individual students will have little if any exposure to either body, as interactions primarily take place at an institutional level.
Turning to the hon. Gentleman’s questions around teaching and research and the so-called split, we see the research excellence framework, administered by Research England within UKRI, and the teaching excellence framework, overseen by the office for students, as mutually reinforcing quality processes. We will ask institutions to consider how they promote research-led teaching in their TEF submissions. Lord Stern’s recent review of the REF recommended that academics be rewarded for the impact of excellent research on teaching. We will ensure that deadlines and timescales have the flexibility to enable institutions to plan and schedule the demands of the two systems.
Gordon Marsden
I am listening carefully to what the hon. Gentleman has to say, because this is a complex issue for both him and me. Obviously, I will want to reflect on this when I see the Hansard report. The hon. Gentleman has been positive in thinking about having an observer on the two boards, but I wonder why even at this stage the Government appear to be relatively timid about the joint committee. A whole range of organisations have said similar things. MillionPlus stated in its evidence to the Committee that a committee and an annual report which referenced the areas and activities outlined in the amendment would help to achieve that symbiosis and provide greater public oversight and parliamentary scrutiny. I am a little surprised that at this stage the Minister is not considering a mechanism which might make some of these things easier and more automatic.
Joseph Johnson
I am glad that the hon. Gentleman is pressing this point, because it gives me a further opportunity to say that I am reflecting carefully on his amendments and thinking of ways in which we can address the points he has raised. I reiterate our willingness to think very carefully about what he has said. In the event that the OFS and UKRI were not working together, the Bill provides an important safeguard. It gives a power to the Secretary of State to require the two bodies to work together. Of course, that does not mean that they cannot work together without his explicitly asking them to do so. They can do so, and that is what clause 103 makes clear.
Amendment 333 proposes a specific list of activities on which both organisations would be required to work together. I believe that it is undesirable and unnecessary to be prescriptive in the Bill. I wholeheartedly agree that it will be important for the OFS and UKRI to work together on those areas, but we would not want to restrict the areas on which they should work together by providing a list of that sort. Although it details many important areas for joint working that have been raised by the community, the list is not comprehensive, and it is not likely to be so in future. An example would be ensuring efficient interaction between the teaching excellence and research excellence frameworks. On that basis I ask the hon. Gentleman to withdraw his amendment.
Gordon Marsden
I thank the Minister for his positive and proactive response to the amendments which, as he knows, are probing amendments. I am encouraged by his recognition of the importance of getting such things right at the beginning. No list, in any Bill, whether drawn up by a university body or by Opposition Members, could possibly compete with the perfect list for ever and a day, for the next 20 years. However, if I may use a term that I often use, such lists are points of entry to provoke further discussion. I am encouraged by the Minister’s focus on the issues. There will be other opportunities in other places to discuss the matter further, and on that basis I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Paul Blomfield (Sheffield Central) (Lab)
I beg to move amendment 304, page 92, line 16, after “chair” insert “and the House of Commons Select Committees”.
This amendment would ensure that the relevant House of Commons Select Committees are consulted before any appointments are made.
It is a pleasure to serve under your chairmanship, Sir Edward. My hon. Friend the Member for City of Durham took the initiative in drafting the amendment, but she cannot be here today because she is leading for the Front Bench in another Bill Committee. [Interruption.] We multitask.
The amendment goes with the flow of the Government’s intention in other areas. It is intended to ensure that before appointing the chief executive, chief finance officer and other members of UKRI the Secretary of State should consult not only its chair but the relevant House of Commons Select Committees. That would be consistent with the approach suggested by the Minister to OFS appointments.
In the Committee’s oral evidence sessions, the vice-chancellor of the University of Cambridge and former chief executive of the Medical Research Council, Professor Borysiewicz, told us that
“the choice of members of that committee will be absolutely vital.”––[Official Report, Higher Education and Research Public Bill Committee, 6 September 2016; c. 26, Q40.]
It is therefore important that the Secretary of State should consult with others to make sure that the membership is the best possible.
Such broad consultation would enhance the scrutiny of the choices that were made, and therefore improve the likelihood of the best person being appointed, because it would require the Secretary of State to make a clear, strong case for choosing particular candidates. We saw the importance of that during the evidence sessions, because a number of witnesses made forceful points about who should be on the board of UKRI. Alastair Sim, director of Universities Scotland, suggested that membership should be
“expertise-based but it should also be based on geographic balance so as to have people with experience from across the UK sitting on UKRI and on the councils within it.”––[Official Report, Higher Education and Research Public Bill Committee, 6 September 2016; c. 68, Q106.]
Professor Borysiewicz suggested that UKRI should be made up of
“individuals who are broadly respected across the devolved Administrations, the different elements of research across industry and the different players”.––[Official Report, Higher Education and Research Public Bill Committee, 6 September 2016; c. 26, Q40.]
It is important to take into account those and other perspectives on appointments. We would all have confidence and agree across the House that consultation with Select Committees would make it more likely that a full and diverse range of opinions is taken into account before appointments are made.
In relation to appointments with the OFS, the Minister assured us that
“we fully intend to actively involve the Select Committee or Select Committees, as appropriate, in the appointment process”.––[Official Report, Higher Education and Research Public Bill Committee, 8 September 2016; c. 75.]
If that is good for the OFS, given the critical importance of UKRI, I assume it would be good in that case too and I am confident the Minister will be able to reassure me of that.
Joseph Johnson
I thank the hon. Member for Sheffield Central for the amendment and the chance to discuss the involvement of Select Committees in UKRI appointments. The establishment of UKRI involves a number of particularly important public appointments. For all of these, subject to parliamentary approval in the passage of this Bill, we will run an open and competitive process in line with the guidance of the Office of the Commissioner for Public Appointments. This will apply to the permanent chair, CEO, CFO, other independent UKRI board members and the executive chairs of each council. I am happy to confirm that a pre-appointment hearing will be held in the House of Commons by the Select Committee on Science and Technology for the permanent chair of UKRI. That is in line with Cabinet Office guidance and, in keeping with this practice, the current interim chair, Sir John Kingman, has just appeared before the Committee.
Given the scale and importance of UKRI, I assure the Committee that I agree that it is appropriate to offer a pre-appointment hearing by the Science and Technology Committee with the chief executive officer. For other key positions, we intend to continue the current approach, which I believe works well.
Although it is not a statutory requirement for prospective research council chairs to appear before a Select Committee, it is common practice. I assure the Committee that we expect this practice to continue with any new executive chairs of the UKRI councils. This will ensure that the appropriate Select Committees are engaged in the appointment process for key leadership positions in UKRI. I hope that I have provided the hon. Gentleman with the assurances he is looking for and I urge him to withdraw the amendment.
Paul Blomfield
I thank the Minister for his assurances, which go some way towards meeting the points made in the amendment. I ask him to reflect on the opportunities to cast the net slightly wider to other Select Committees as appropriate in the way that it suggests. With the hope that he will reflect on that, and reassured by his comments, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
I beg to move amendment 186, page 92, line 18, after “experience” insert
“in the higher education sector in England, Scotland, Wales and Northern Ireland”.
This amendment would ensure that the new research body, UKRI, would include appropriate membership from the devolved nations.
The Chair
With this it will be convenient to discuss amendment 187, page 92, line 38, at end insert—
“(6) UKRI must, in appointing members of each Council, have regard to the desirability of the members (between them) having experience of research in the higher education sector in England, Scotland, Wales and Northern Ireland.”
This amendment would ensure that the membership and strategy of the new research body, the UKRI, takes proper account of the policies and priorities of the devolved nations.
Roger Mullin
I declare that I have an interest as I remain an honorary professor at the University of Stirling.
During the earlier stages of debate on the Bill, I remained remarkably quiet for someone with my background. I have been saving myself for today because it is a vital one if there is to be proper and respectful consideration for the university sectors in Scotland, Wales and Northern Ireland. When I first read the Bill, I thought Scotland must already be independent because there was absolutely no recognition of the sector’s importance—so too, perhaps, in Wales and Northern Ireland.
The Bill was clearly not written in the spirit of the Nurse report, which stated:
“There is a need to solicit and respond to distinct research priorities and evidence requirements identified by the devolved administrations…it is essential that the Research Councils should play a strong role in…shaping research priorities and promoting the distinctive requirements of UK research, including in association with the devolved administrations.”
It is clear that when drafting the Bill the Government ignored to a great extent such an injunction. As it stands, UKRI is accountable only to the UK Government with principally English interests.
Gordon Marsden
I rise to make some observations on the amendments tabled by SNP Members. I have mentioned Hamlet without the prince once, so I will not do it again, but I entirely share the puzzlement of the hon. Member for Kirkcaldy and Cowdenbeath that the Bill, and indeed the White Paper, have been drafted with scant recognition of the knock-on effect and implications of what may be extremely valuable new structures on the devolved Administrations. At the risk of being tediously repetitive, I will simply remark that this is yet another example of why the Bill should have been looked at again after 23 June.
I add in passing, since we are talking about traditions in universities, that Scottish universities have historical traditions and strengths that could match many, if not all, of those in England. I am surprised that the Minister, being cut from that cloth, should not think that the legacy of the Scottish enlightenment—Adam Smith and other entrepreneurial characters who have flitted through Conservative party pamphlets—worth consideration in this process.
The hon. Member for Kirkcaldy and Cowdenbeath has done the Committee a service. Looking around, I can see no Members from Wales, and obviously none from Northern Ireland. Yet in both Wales and Northern Ireland, universities and higher education institutions will be significantly affected by this process. They will also be affected if the process with the new bodies is not universally seen to be fair in sharing out its attentions at an important time for our university system. I speak as a Unionist; the Labour party believes in the Union. Not to consider including such provisions in the Bill is a great mistake. The Minister and I will probably agree that one should not put people on committees and bodies simply on a symbolic basis, on which so many matters are often discussed and organised. Surely we should consider those interests in the context of a new research body.
What I have to say is highly relevant to the future of those research bodies. As I have said previously, the Government’s White Paper has overlooked a vital factor. There is little sense of the knock-on effects on what I describe as the brand of UK plc. I am not the only one to make that observation; other commentators and academics have also done so.
HE providers across England and the devolved nations are internationally competitive because of a trusted UK brand. If we are to have a trusted UK brand, it is important that all the integral parts of the UK feel that they have a say at the table. If they do not feel that and there is dissension and disgruntlement, then at a time that the UK Government need to be doing everything they can in the Brexit negotiations to safeguard that UK brand, there will be a weak link.
There needs to be a proper UK-wide strategy to safeguard the position of our researchers. We will talk about that in later clauses. For now, the amendments tabled by the SNP, whatever one’s views on the future of Scotland, are doing a valuable service to the Government by waking them up to some of the implications and pitfalls of having a body, though not what they wished, that might appear too Anglocentric. On that basis, we support the amendments.
Joseph Johnson
I thank the hon. Member for Kirkcaldy and Cowdenbeath for his amendments and the opportunity to discuss the important role that UKRI will play in representing science and research across all of the United Kingdom.
I agree with him that Scottish institutions are a vital part of our vibrant research base. I am sure he will be aware that they gain more than a proportionate share of competitive funding from the research councils due to the excellence of their research under the current arrangements. The research councils and Innovate UK serve, and will continue to serve, the research and innovation communities across the UK.
Our reforms have been deliberately developed with the needs of all the devolved Administrations in mind, going all the way back to the Green Paper in November. The White Paper is clear that it is our policy intent to ensure that Research England, as part of UKRI, can work jointly with devolved funders. We have tabled a Government amendment to the Bill that supports this policy intent, which the hon. Gentleman will have seen. This will mirror HEFCE’s current effective working relationship with the devolved Administrations’ funding bodies, for example, with respect to the research excellence framework.
Research councils and Innovate UK as part of UKRI will continue to operate throughout the UK. We will work closely with the devolved nations as UKRI is established to ensure the UK’s research and innovation base remains one of the most productive in the world. The hon. Gentleman will have seen that we have tabled a series of amendments in recent days to ensure UKRI can work effectively across all four nations. We have been working closely with the Scottish Government in developing these clauses.
To deliver our integrated and strategic ambitions for UKRI, the body must have a proper understanding of the systems operating in all parts of the UK. It will need a detailed insight into not just the research environment but innovation strengths and business needs across the UK. That should include regional differences across England as well as the devolved Administrations.
In relation to the UKRI board and the composition of the councils, we have two primary objectives: first, that we attract and appoint the best people wherever they come from; and, secondly, that the board and councils are of a size that allows them to function effectively. As Professor Sir Leszek Borysiewicz said when he appeared before this Committee a few weeks ago,
“the choice of members of that committee will be absolutely vital. These will have to be individuals who are broadly respected across the devolved Administrations.”––[Official Report, Higher Education and Research Bill Public Bill Committee, 6 September 2016; c. 26, Q40.].
I agree with him completely on both counts. We must seek the highest quality individuals with a broad range of experience, not necessarily limited to the UK research community or UK higher education institutions. We need to learn from and bring in the best individuals nationally and internationally. They will be recognised for their experience and expertise spanning research and business-led innovation and their ability to represent the full range of interests of the UK’s research and innovation system.
We are very fortunate in the UK in the quality and extent of our research base. It is common for members of the research community to move around the UK or, indeed, abroad over the course of their careers. It is also common for researchers to collaborate extensively within the UK and abroad. As it is likely the members appointed on merit will have worked and will have extensive links across the UK research community, I ask the hon. Gentleman to withdraw his amendment.
Roger Mullin
I thank the Minister for his response, although I am slightly disappointed he has not gone further in saying that he would take the recommendation more seriously. We will have to return to this matter on Report.
I say to the Minister that the way in which he describes the role the devolved Administrations might be able to play in this regard sounds slightly complacent. If it were as precise and clear as he suggested, I wonder why he thinks Universities Scotland, the University of Wales, the Royal Society of Edinburgh and many others I have cited support the amendments and do not support the Bill as it stands. With the intent of bringing this matter back on Report, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Joseph Johnson
I beg to move amendment 247, in schedule 9, page 92, line 21, leave out “and new ideas” and insert
“, new ideas and advancements in humanities”.
This amendment provides that the Secretary of State must, in appointing members of UKRI, have regard to the desirability of them having between them experience of the development and exploitation of advancements in humanities (including the arts), as well as the development and exploitation of science, technology and new ideas. A similar amendment is made to clause 85(1)(c) in amendment 256.
The Chair
With this it will be convenient to discuss the following:
Amendment 315, in clause 85, page 52, line 8, after “out” insert “basic, applied and strategic”.
See amendment 316
Amendment 317, in clause 85, page 52, line 8, after “humanities” insert “social sciences, arts”.
This amendment would ensure that UKRI’s functions extend across the full breadth of research.
Amendment 316, in clause 85, page 52, line 9, after “support” insert “basic, applied and strategic”.
This amendment and amendment 315 would ensure a commitment to supporting basic, strategic and applied research.
Amendment 318, in clause 85, page 52, line 10, after “humanities” insert “social sciences, arts”.
This amendment would ensure that UKRI’s functions extend across the full breadth of research.
Amendment 319, in clause 85, page 52, line 12, after “technology” insert “humanities, social sciences, arts”.
This amendment would ensure that UKRI’s functions extend across the full breadth of research.
Amendment 336, in clause 85, page 52, line 12, after “technology” insert
“arts, social sciences and humanities,”.
This amendment explicitly names the arts, social sciences and humanities as being part of the remit of the UKRI.
Government amendment 256.
Amendment 320, in clause 85, page 52, line 14, after “humanities” insert “social sciences, arts”.
This amendment would ensure that UKRI’s functions extend across the full breadth of research.
Amendment 321, in clause 85, page 52, line 16, after “humanities” insert “social sciences, arts”.
This amendment would ensure that UKRI’s functions extend across the full breadth of research.
Amendment 322, in clause 87, page 53, line 34, after “life” insert
“and social and cultural wellbeing”.
This amendment would ensure the Bill includes the full breadth of research and innovation and their benefits for humanity.
Joseph Johnson
Clause 85 sets out the functions of UKRI in broad terms. Among its key functions, UKRI will be responsible for facilitating, encouraging and supporting
“the development and exploitation of research and technology.”
It is intended that UKRI may also support the exploitation of advancements in the humanities, including the arts. However, this is not currently explicit in the provision made in clause 85(1)(c). Amendment 247 is a technical Government amendment that addresses that. For the avoidance of doubt, I should clarify that for drafting purposes, references to humanities in this Bill are defined as including the arts and references to sciences include social sciences. These definitions are given in clause 102.
In addition, amendment 256 seeks to amend paragraph 2 of schedule 9 which sets out the areas of experience that the Secretary of State should have regard to in appointing the board of UKRI. The consideration of the development and exploitation of advancements in humanities should form part of this consideration; the amendment enables this. As Professor Sir Leszek Borysiewicz, from whom we have already heard today, said:
“There is a lot of sense in having a body that will scrutinise and ensure that we can take a wider purview of the UK R and D effort.”––[Official Report, Higher Education and Research Public Bill Committee, 6 September 2016; c. 22, Q30.]
Gordon Marsden
If I can find them in this bagatelle list which sends one diving across the paper, I rise to speak in support of our amendments, which are amendment 315, 317, 316, 318, 319, 320, 321 and 322.
Let me start by welcoming the technical amendments tabled by the Minister. As someone who has taught humanities, I was interested in his clarification that the arts were included in the humanities. I do not propose to have an etymological discussion about it, but I was also interested that social sciences— if I understand the Minister rightly—are included under the definition of sciences. I pause to think for a moment about the Minister’s first degree. Perhaps he might like to comment on whether he thought at the time that he was doing a science degree or a humanities degree. That is a little jeu d’esprit but nevertheless, it illustrates that this is a hazy area. Without being too pedantic, it is of merit to try to get some of the clarifications right so I welcome what the Minister has said.
Our amendments 317 and 318 would insert “social sciences” and “the arts” after “humanities”. I appreciate that there might be some overlap between what we have tabled and what the Government have tabled but obviously we did not necessarily consult them. The principle is straightforward: first, to ensure that UKRI’s functions extend across the whole breadth of research; and, secondly and not unimportantly given that this is a major change—this comes back to what I have said previously—to give reassurance to those in those areas that their interests are being properly and carefully catered for.
Amendment 319 is part and parcel of the same process although this time, after “technology”, we are inserting the words “humanities”, “social sciences” and “arts”. The amendments we tabled to clause 85, which include the words “basic”, “applied” and “strategic”, are intended also to reflect concerns expressed by both the Royal Society of Chemistry and the Royal Society of Edinburgh and probably other bodies too that basic science is essential for a good research system—often laying the ground for future applications — and that its funding should be a core function for UKRI. The royal charters of the research councils protected such fundamental research by requiring that basic strategic and applied research were all funded, hence their use in our amendments, but there is no commitment as such in the Bill, hence the suggestion that these amendments should be moved to include a commitment to supporting those issues.
Amendments 320 to 322 follow the same argument, inserting the words “social sciences” and “arts” after “the humanities”. Likewise, amendments to clause 87 insert a reference to social and cultural wellbeing after the word “life”, ensuring that the Bill includes a focus on the full breadth of research and innovation and their benefits for humanity. Without starting a philosophical discussion, I wish to be clear that we understand that much research and innovation does not always have an immediate practical application. Indeed that is not required, and that should not be the case. That is one of the elements of tension in this Bill between the effects of various changes, which we will be discussing later in terms of their structure and architecture.
At a time when people are bombarded—not least in the popular media—by sometimes highly contentious claims for research, it is important that we place in the Bill a recognition that research and innovation significantly benefits the man and woman in the street, either by the words suggested here or by other appropriate mechanisms. At a time of continued austerity and continued arguments over funding, which no doubt will tighten up during the Brexit process, it is important that that is made clear in the corridors of Government, not just to the general public.
Paul Blomfield
I will speak to amendment 336, recognising and welcoming the fact that Government amendment 256 covers a significant part of what we were trying to achieve with this amendment. I wanted to probe a little further on going beyond reference to the humanities, and looking at arts and social sciences. That is covered in the footnote, but I would like further clarification on the Government’s view of their inclusion more generally. The Minister will recognise the value of the creative industries and social sciences to the economy and to our culture, and this amendment seeks to recognise arts and social sciences within the legislation.
A number of organisations submitting evidence to us, including MillionPlus and Goldsmiths College—part of the University of London—have raised concerns about the Bill’s lack of provision for the arts, emphasising that the legislation must work for all subjects. In their written evidence, Goldsmiths College made the point that,
“we also believe excluding the words ‘arts’ from the description of the UKRI remit could jeopardise future funding for arts research. We believe this also to be the case for the social sciences, which could be overlooked in favour of more traditional science subjects. As well as signalling a commitment to these important disciplines, this would also fully reflect the objectives of the research council’s reporting into the UKRI.”
The point on which I am seeking reassurance is that the Government do regard the arts and social sciences as being of important academic worth.
Joseph Johnson
I welcome the amendments supported by the hon. Members for Blackpool South and for Ashton-under-Lyne, who are sitting in the absence of the hon. Member for City of Durham, which seek the same ends as the Government’s amendments. As hon. Members have said, it is absolutely right that UKRI should be able to take full advantage of the advancements that the UK research sector makes in the humanities, including the arts. In response to the point made by the hon. Member for Sheffield Central, I repeat that clause 102 makes it clear that “‘humanities’ includes the arts” and “‘science’ includes social science.”
I turn to the other tabled amendments to clause 85, which seek to spell out explicitly that the research UKRI may carry out should include “basic, applied and strategic” research. I welcome the opportunity to assure hon. Members that it is absolutely the Government’s intention that UKRI will support all forms of research, including “basic, applied and strategic” research, as hon. Members have put it. However, it is not necessary to be prescriptive in that way. The reference to research in clause 85(1) is drafted to be broad enough to include those types of research, and it is right that research experts, not politicians, decide what specific projects are supported.
I welcome the intention behind amendment 322 to clause 87(4). It seeks to require the councils to have regard to improving “social and cultural wellbeing”, in addition to the currently drafted “improving quality of life”, when exercising their functions. While I agree that the potential human benefits of research are wide-ranging, I am certain the current duty on councils to consider the desirability of improving quality of life is sufficient to cover those. I therefore ask hon. Members to withdraw their amendments.
Amendment 247 agreed to.
Joseph Johnson
I beg to move amendment 248, in schedule 9, page 92, line 37, leave out “A Council may include” and insert
“A majority of the ordinary Council members of a Council must be”.
This amendment replaces the provision which made it clear that a Council of UKRI could include persons who were neither a member of UKRI nor one of its employees and provides instead that a majority of the ordinary members of a Council must fall into that category.
The Nurse review highlighted the importance of maintaining the distinct identities and integrity of councils within UKRI. Sir Paul Nurse recommended that the councils should comprise an independent membership drawn from their respective research communities. Professor Sir John Bell recognised the sense of that, saying:
“This would appear to be a sensible implementation of the Nurse Review, and will provide opportunities for better collaborations between scientific disciplines in the context of the new Board. It will hopefully provide the leaders of research councils to be able to devote more time to strategy and less time to administrative functions.”
In addition, the Government said in our White Paper:
“In addition to the Executive Chair, each Council will be made up of…experienced independent members drawn from the relevant community.”
The amendment means that membership of each council must comprise a majority of ordinary members who are neither members nor employees of UKRI. It replaces the current provision in paragraph 3, which only allowed for the possibility of councils’ including members who fell into that category. The amendment will ensure that the integrity and autonomy of the individual councils will be maintained through their having an independent membership.
Amendment 248 agreed to.
Joseph Johnson
I beg to move amendment 249, in schedule 9, page 93, line 34, leave out “The Secretary of State” and insert “UKRI”.
This amendment and amendments 251 and 252 provide that it is UKRI rather than the Secretary of State who pays members of UKRI and Council members their remuneration, allowances, expenses, pension and compensation. The amounts paid are, however, still to be determined by the Secretary of State.
The Chair
With this it will be convenient to discuss Government amendments 250 to 255 and 312.
Joseph Johnson
This group of amendments relates to provisions in paragraphs 7 and 8 of schedule 9, which provide for powers for UKRI to make payments to UKRI members and its employees. Turning to amendments 249 to 252, paragraph 7 of schedule 9 is intended to place a duty on UKRI to pay salaries, pensions and allowances, compensation and expenses to the UKRI members as determined by the Secretary of State. The amendments make it clear that it is UKRI, rather than the Secretary of State, that pays members and council members of UKRI.
Amendments 253, 254 and 255 provide further powers for UKRI to pay expenses and allowances to existing and former members of UKRI staff and to provide pensions to these people.
Amendment 249 agreed to.
Amendments made: 250, in schedule 9, page 93, line 35, leave out “, allowances and expenses”.
This amendment removes an unnecessary reference in paragraph 7(1) of Schedule 9 to allowances and expenses for members of UKRI or Council members as they are covered in paragraph 7(2).
Amendment 251, in schedule 9, page 93, line 37 leave out “The Secretary of State” and insert “UKRI”.
See the explanatory statement for amendment 249.
Amendment 252, in schedule 9, page 93, line 43 leave out “the Secretary of State” and insert “UKRI”.
See the explanatory statement for amendment 249.
Amendment 253, in schedule 9, page 94, line 8, leave out “, allowances and expenses”.
This amendment is consequential on amendment 254.
Amendment 254, in schedule 9, page 94, line 9, at end insert—
‘( ) UKRI must pay, or make provision for paying, to or in respect of a person who is an employee of UKRI, such sums as UKRI may determine with the approval of the Secretary of State in respect of allowances or expenses.”
This amendment makes the duty to pay allowances and expenses to UKRI employees consistent with the power to pay such allowances or expenses to former employees inserted by amendment 255.
Amendment 255, in schedule 9, page 94, line 9, at end insert—
“( ) UKRI may pay, or make provision for paying—
(a) to or in respect of a person who is or has been an employee of UKRI, such sums as UKRI may determine with the approval of the Secretary of State in respect of pensions or gratuities, and
(b) to or in respect of a person who has been an employee of UKRI, such sums as UKRI may determine with the approval of the Secretary of State in respect of allowances or expenses.”—(Joseph Johnson.)
This amendment makes clear that UKRI has power, subject to approval by the Secretary of State, to make pension provision for its employees and former employees other than under the Superannuation Act 1972 (as provided for in paragraph 8(4) of Schedule 9), to pay them gratuities and to pay former employees allowances or expenses.
Gordon Marsden
I beg to move amendment 331, in schedule 9, page 95, line 26, leave out “any” and insert “some”.
This amendment seeks to clarify which functions UKRI intends to delegate to its Councils.
This amendment relates to paragraph 12 of the schedule, “The delegation of functions by UKRI”. This probing amendment raised a metaphorical eyebrow when we— and, I think, others—were looking through the Bill. Paragraph 12(1) of the schedule states:
“UKRI may delegate any of its functions to—
(a) a member of UKRI,
(b) an employee authorised for that purpose,
(c) a Council or a Council sub-committee, or
(d) a general committee.”
I am fairly confident that this is not designed to confer—to borrow a phrase from another context—Henry VIII-type powers—on UKRI to delegate. And I am fairly confident that when the Minister responds he will probably say that it replicates—I do not want to be so unkind as to use the word “boilerplate”—things that normally appear in Bills at this point in the proceedings. However, I think it is worth probing because in this instance it is not simply that the Government are setting up a new body in UKRI, but that the relationship between that body and its research councils, for example, is one that has inevitably provoked a lot of comment and some concern as to how that process will be taken forward.
This probing amendment seeks to clarify the division of responsibilities between UKRI and its councils and, at least, to elicit from the Minister some sense—I appreciate this is an evolving conversation—of whether that particular subparagraph of the schedule is intended to be a passe-partout, if I may put it that way, for this process.
I also say that because we had the interim chairman, Sir John Kingdom, before us in our somewhat attenuated evidence session. He has also very recently appeared before the Science and Technology Committee. I confess that I have only scanned the minutes of that meeting; I presume the Minister has read them from cover to cover. It seemed to me that in the best traditions of the civil service, from which he emanates, Sir John had skipped rather lightly on some of those questions to the Committee thus far; but that is for members of the Science and Technology Committee to judge.
It is important that we try to get some greater clarification before the Bill goes to the other place, not least because the Government will undoubtedly be peppered with questions and observations by Members of the House of Lords. I am actually trying to give the Minister a little assistance.
To be fair, the factsheet published by the Government, “Higher Education and Research Bill: UKRI Vision, Principles & Governance”, makes the point that there is much detail still to come. It states:
“The government is working with Sir John, our existing Partner Organisations and key stakeholders to explore detailed organisation design options…This will inform the final design which will be refined and agreed in partnership with the UKRI Chief Executive and Board once appointed.”
I appreciate that that will not necessarily happen anytime soon. The factsheet then says:
“Further detail will be set out in guidance including the framework document between BEIS and UKRI, which will be published once agreed.”
I have already referred to, and the Minister has commented on, the evolving implications of the machinery-of-Government division of research in that fashion. Therefore, as well as moving the amendment, which, as I have said, is a probing amendment designed to reflect the concerns, may I ask the Minister—I will do so in a constructive way—how he sees that framework document developing and at what stage he thinks it might be available to be considered? Does he think that it will be available before the Bill leaves this House, or when it goes to the other place?
Joseph Johnson
I thank hon. Members for the opportunity to explain in more detail what functions UKRI intends to delegate to the councils within it. As we have set out in the White Paper and the factsheet that we published on 12 October, our intention is that UKRI will delegate decisions on scientific, research and innovation matters to the nine councils. That will include, but is not limited to, the leadership of their area of expertise, including prioritisation of budgets and the development of delivery plans; ensuring the future of skilled researchers and other specialists essential to the sustainability of the UK’s research and innovation capacity; engaging with their community to develop ideas, raise awareness and disseminate strategic outputs; and appointing and setting terms and conditions of academic, specialist and research staff in the relevant council and any associated institutes.
As Sir Alan Langlands, vice-chancellor of the University of Leeds, told the Bill Committee, in his view the new overarching research funding body, UKRI,
“has the potential to retain the best of the current individual research councils, while bringing greater strategic oversight and direction.”
Of course, some functions will be retained at the centre of UKRI. Those include a lean but highly effective strategic brain, which will facilitate development of the overall direction, ensuring that we invest every pound wisely; the management of funds with cross-disciplinary impact; and responsibility for administrative and back-office functions across the organisation, such as procurement, human resources and grant administration. The Bill does not seek to set out the detail of all that, as that would be—
Gordon Marsden
I do not want to interrupt the Minister’s flow unduly. I am still slightly struggling to digest, at this time of the morning, the concept of a “lean” brain, as opposed to possibly a fatty one or another type of one. The serious point that I want to make is this. How lean is this brain—to continue the analogy—likely to be? I ask that because throughout the Bill, not the elephant in the room but certainly the discussion in the antechamber is about what resources Government can bring to the administration of this area. It would therefore be helpful if the Minister, even if not today, gave some indication of that. Are we talking about dozens of people, hundreds of people or what?
Joseph Johnson
I thank the hon. Gentleman for his question and draw his attention back to the impact assessment that we made at the start of the Bill Committee process, which gives a feel for the resources to be allocated to UKRI and the savings likely to be generated from the back-office efficiencies that will be enabled through its creation. It will be no bigger than is necessary to undertake its core functions, which, as I have described, are to provide a strategic vision for the sector, to ensure it can operate a cross-disciplinary fund in a way that the current research councils cannot and so on. The Bill does not seek to set out the details of all this, because we will put out a framework document in due course. The hon. Gentleman asked when that will be published. I assure him that it will be published before the formal launch of UKRI.
Gordon Marsden
Again, I am not trying to tie the Minister down unduly, but can he give any indication of whether the document will be available when discussion of this matter goes to the House of Lords?
Joseph Johnson
We have provided, as I said a few minutes ago, quite a detailed factsheet that outlines our policy thinking with respect to the creation of UKRI and the general principles that will guide its approach to its functions. That goes into some detail about the broad approach that UKRI will take—for example, its recognition of the fundamental importance of Haldane with respect to how it will operate funding for science and its fundamental support for the dual support system and balanced funding.
The factsheet also goes into considerable detail about the governance arrangements that will apply to the work of the chair, executive chair and councils within UKRI, as well as the way the board and senior management team will relate to each other and the leadership and autonomy of the nine councils. I believe that hon. Members in the other place have a considerable body of material to consider as they deliberate on our proposals to create UKRI.
This approach allows UKRI or another council to carry out certain functions normally exercised by a particular council. That will enable existing collaborative working across councils to continue and for UKRI to deliver one of its key aims: improving the UK’s support for inter and multidisciplinary research. Details of which UKRI functions will be delegated to the councils will be captured in guidance included in the framework document between the Department for Business, Energy and Industrial Strategy and UKRI. That will be published in due course, once agreed with UKRI’s future leadership.
I agree with hon. Members that it is important to have clarity on the functions of UKRI that will be delegated to the councils. However, it is not necessary to put that on the face of the Bill. I therefore ask the hon. Gentleman to withdraw his amendment.
Gordon Marsden
The Minister’s observations and the detailed examples he has given are a helpful move along this road. There will be further discussion in other forums, and on that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Gordon Marsden
I beg to move amendment 332, in schedule 9, page 97, line 1, leave out
“except with the consent of the Secretary of State”.
This amendment seeks to understand how UKRI will work with the private sector.
This is, again, a probing amendment. We are genuinely trying, along with people in the scientific community and associated areas, to understand the extent to which UKRI will work with the private sector. The Minister is keen on the private sector. We are keen on the private sector and believe it has a very important role to play. The way in which research councils can currently enter into contracts to conduct spin-out activity and form companies—MRC Technology is one example that has been cited—is extremely valuable to research and innovation.
Joseph Johnson
I welcome the opportunity to set out how we expect UKRI to work with the private sector. Paragraph 16 of schedule 9 provides flexibility in how UKRI performs its functions, balanced by controls that safeguard public funding and guard against large, high-risk commitments being made against future public spending. The research councils currently possess significant flexibilities, and it is our intention that UKRI should retain those freedoms. We have, however, balanced that with the need to safeguard public funding.
To ensure appropriate use of public money, a number of activities have been made conditional on approval from the Secretary of State. Those include entering into joint ventures and borrowing money—namely, areas that could build up commitments and risks against future public spending. This mirrors current practice, where research councils are already required to seek approvals for such activities. That is in line with the principles of managing public money, by which all public bodies need to abide.
The amendment would inadvertently make it impossible for UKRI to do any of those things. We are saying that it can do these activities, subject to approval by the Secretary of State, in the same way as before. In practice, the details of those approvals will be set out in guidance from the Department to UKRI. That may, for example, include a de minimis level for an activity below which the Secretary of State grants approval without further process. That is in line with current arrangements for the research councils.
The amendment would unduly restrict the scope of UKRI and limit its flexibilities, putting at risk its capacity to fulfil the ambitious remit we have set for it and make best use of its resources. Specific details of how UKRI will work with the private sector will be developed by UKRI and the councils themselves, in consultation with the Government. However, we expect UKRI to build on the relationships that the legacy bodies currently enjoy with the private sector, and I ask the hon. Gentleman to withdraw the amendment.
Gordon Marsden
I thank the Minister for that additional information and helpful explanation. As I said at the start, the amendment was a probing one, simply designed to facilitate further discussion. We have had that discussion and the Minister has given us more useful information, so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 9, as amended, agreed to.
Clause 84
The Councils of UKRI
Gordon Marsden
I beg to move amendment 314, in clause 84, page 51, line 39, after “Secretary of State” insert “following consultation”.
This amendment would ensure there will be a process of consultation before any changes are made to the Councils of UKRI.
The Chair
With this it will be convenient to discuss amendment 323, in clause 87, page 53, line 36, after “State” insert “following consultation”.
This amendment would ensure there was a process of consultation before any changes are made to the Councils of UKRI.
Gordon Marsden
We now move on to some of the meat of an area which has developed quite a head of steam: the relationship between UKRI and the councils. We have previously talked today about some of the ways in which UKRI might devolve its powers, and the Minister has been helpful regarding the councils, but the devil is always in the detail of parliamentary scrutiny.
There is considerable disquiet about some of the blanket powers that the new body UKRI may have and, indeed, that the Secretary of State may give him or herself. This is not a comment on any particular Secretary of State, or any particular universities Minister. If we are to make good legislation, we need to work to the potential scenarios that are most difficult rather than to the simplest ones. If everything went simply in government we probably would not need to think about this, but of course things do not always go simply.
I come back to the reputational issue, which I touched upon earlier when commenting on the amendments tabled by the hon. Member for Kirkcaldy and Cowdenbeath. We are at a critical period in our higher education history because of the big question marks over Brexit, and the lesser—although still significant—question marks over the machinery of Government changes. We should be doing everything we can to reassure the academic community and indeed the broader business community. We should not propose changes, potential changes or potential shutdowns that will cause problems. It is all very well for Ministers to say, “Well, this would never happen,” or, “It would be dealt with in guidance,” or whatever, but I am sure that we can all think of examples over the years where changes in legislation have set off great concern and scepticism, and in some cases had very bad financial and economic consequences involving overseas investors and overseas academic institutions.
We are debating this Bill at a time when our researchers, our research institutions and research bodies in our universities are being put under severe pressure and are concerned about their future relationship with organisations within the EU. It is highly relevant to changes that might be made to the councils of UKRI that changes in the EU or changes in our relationship with our EU partners do not necessarily have an adverse effect only on relationships with the EU, of course. They have, or can have, an adverse effect on relationships with other international institutions. At a Royal Society fringe meeting at our party conference last month at which I was present, comments were made by Professor Hemingway to the effect that when we think about these sorts of things, we also need to think about the implications for research in francophone Africa or lusophone Latin America, for instance, in terms of what we need to do to maintain our relationships there.
All these things are connected and related. That is why apparently arcane issues around the Secretary of State being allowed to change the name or responsibility of the council by issuing a statutory instrument subject to the affirmative procedure are important. Behind that dry statement lie some of the issues that I have described. As far as I can see, the Bill does not require the Secretary of State to undertake any public consultation before changing the name or responsibilities of a council. We have already had some discussion about the merits or otherwise of automatically deleting references to the Privy Council from the structures and architecture of the Bill, and the OFS in particular. The Government declined to think creatively about ways in which the Privy Council might be a backstop.
The Royal Society is particularly concerned about this, as are most of the major research-intensive university groups. It is worth the Committee reflecting on the Royal Society’s position statement.
“The landscape of Research Councils has changed over time. The Bill giving the Secretary of State the authority to change their number, name, and fields of activity through a statutory instrument is a pragmatic reflection of this. While this change is reasonable, both Parliament and the research community should be able to inform and scrutinise properly any major proposed changes to Research Councils’ form and function. The Society believes the Bill should include a duty for the Secretary of State to consult with the research community on any proposal for major Research Council reform.”
It says it should include a duty, not a possibility. I emphasise those words because I do not want the Minister to come back with the boilerplate response that if the Secretary of State had to consult on all these matters, he or she would not get anything done. We are not suggesting that and nor is the Royal Society. It is saying there should be a duty to consult on a proposal for any major research council reform.
The issue has also been taken up by MillionPlus and the Russell Group. The Russell Group specifically sought clarification that the affirmative procedure must be used to change the councils. That is not a point we have included in any amendments but it is certainly a concern that the Minister should strongly focus on.
We have tabled these amendments to emphasise the vital role of consultation, not simply because it is the right thing to do, but because if it is not done there will be negative effects on our economy, the wider world’s perception of us, the status of our research councils and the flourishing of UKRI, which we all want to develop strongly in its formative years.
Joseph Johnson
Again, I thank the hon. Gentleman for giving me the opportunity to reassure the Committee and to explain in more detail how the powers would be exercised. They would allow the Government to react to the evolving needs of the research landscape and to keep the UK at the forefront of global research and innovation, while ensuring that the science and humanities councils cannot be altered without legislative scrutiny and the agreement of Parliament.
The hon. Gentleman mentioned the 23 June referendum. That is an event and process that has encouraged the science and research community to understand that UKRI can add value to the community in bringing coherence and strength to the voice of science and research in this country in the months and years ahead. I would like to highlight the evidence that Dame Julia Slingo, the chief scientist at the Met Office, gave to the House of Lords Select Committee on Science and Technology in September. She said:
“So the creation of UKRI is a real opportunity at this moment when we are thinking about where we are going on Brexit.”
Her views reflect an emerging, indeed strengthening, consensus across the learned societies and science community in general that UKRI is something that they want to get behind.
Gordon Marsden
I thank the Minister for introducing that reflection. I agree with him. We are not saying that UKRI is likely to be an impediment to that process. For what it is worth, I entirely agree with the points the Minister has made; my concern—shared by the Royal Society and others—is that the Bill will need both to stand the test of time and to work well in its first years because of the post-Brexit complications and because there is a need for UKRI to be established as a strong, independent and credible force. With due respect, I do not see that the point that the Minister has made deflects or undercuts the points made by others, including the Royal Society.
Joseph Johnson
I thank the hon. Gentleman for giving me the opportunity to elaborate on how I believe we are putting in place provisions to deal with his concerns. I welcome his support for UKRI and his recognition of the contribution it can make once it is up and running.
The powers reflect similar existing powers that have been used several times in the past to merge or create new discipline councils as priorities change and evolve, as happened with the creation of the Arts and Humanities Research Council in 2005. I assure hon. Members that future changes of that sort would not be undertaken lightly. The Government would seek the views of the research community through proper consultation before putting forward any proposals. I am sure that hon. Members would not hesitate to challenge any change of that kind that did not have prior consultation, but it is not necessary to place a formal duty on the Secretary of State to do that. Under clause 107, a statutory instrument must be laid before and approved by both Houses of Parliament via the affirmative procedure. That follows the current process to change the structure and remit of the research councils under the Science and Technology Act 1965.
In any future use of the powers I am sure that hon. Members would not hesitate to challenge changes on which there had not been proper consultation with the sector. I agree with hon. Members that consultation would be essential before the exercise of the powers in question, but it is not necessary to put that on the face of the Bill. I therefore ask that the amendment be withdrawn.
Gordon Marsden
I thank the Minister for his response and for the opportunity to have a broader discussion of the circumstances in which UKRI would develop. I think I made it clear that on looking at the drafting of the provision we thought there was already a requirement for an affirmative resolution, but I am grateful to the Minister for confirming that, with reference to clause 107. At the end of the day, the list of people whom the Minister must satisfy includes not just the Opposition but the whole academic and scientific community. I am glad that he recognises that, and beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 84 ordered to stand part of the Bill.
Clause 85
UK research and innovation functions
Amendment made: 256, in clause 85, page 52, line 12, leave out “and new ideas” and insert
“, new ideas and advancements in humanities”.—(Joseph Johnson.)
This amendment provides that UKRI may facilitate, encourage and support the development and exploitation of advancements in humanities (including the arts), as well as the development and exploitation of science, technology and new ideas.
Paul Blomfield
I beg to move amendment 289, in clause 85, page 52, line 18, at end insert—
“(h) provide postgraduate training and skills development, working together with the OfS.”
This amendment would ensure UKRI reflects the current activities of the Research Councils as set out in their Royal Charters in respect of the learning experience of postgraduate research students, and would require joint working on this with the OfS.
I welcome the remarks made by my hon. Friend the Member for Blackpool South in his opening comments and I am pleased to be able to give the Minister an opportunity to clarify an area that our discussions have not so far touched on much, but which I think we will all agree is of some importance. The proposal for the office for students is at the heart of the Bill, and it deals primarily with the learning experience of undergraduates. It goes on to talk about the learning experience for postgraduate taught students, but fails to address a third, important category: postgraduate research students. Clearly they have a very different learning experience; nevertheless it is crucial for them because they are not only learners but teachers.
I am sure the Minister will agree that there is a number of issues relating to postgraduate research students, and although there is good practice across the sector, there are also areas where such students are occasionally let down. A crucial relationship for them is with their supervisor. Although there is much excellent supervision, there are also areas, such as feedback, where supervisors can get things wrong. Feedback and assessment are crucial to every student’s learning experience, but get them wrong and, given the particular intimacy of the relationship between a supervisor and a postgraduate research student, that can be quite destructive.
I recently saw comments that an early academic had written in The Guardian based on their own experience, making the point that feedback
“can take the form of constructive feedback for improvement, or demoralising sarcasm. I have experienced the full range, and it has had a direct impact on my research.”
Unfortunately there are examples of supervision being interrupted by:
“Unannounced departures for conferences, holidays and research projects.”
Those of us with experience of the sector will know about problems with the sudden retirement of supervisors. That could be halfway through a programme of work for a postgraduate research student, but I have known cases where people accepted a place based on a particular supervisor’s expertise, but found on arriving at university that that person was no longer in place. There is a whole range of issues there.
There is also the relationship between research and teaching. Two or three years ago the National Union of Students published a very useful report highlighting the challenges for postgraduate research students in taking on teaching responsibilities, the difficulty that there often is in getting the balance right between the two, and the pressure that is sometimes put on them to undertake teaching work, which can be to the detriment of their research and own learning experience.
The third area, which will be close to the Minister’s heart—I know the other two will be as well—is the issue of access and widening participation, because we need to be clear that those opportunities exist at every level of our higher education system. The initial focus was on undergraduate access and the Government have taken some welcome steps to address issues relating to postgraduate taught programmes, but we also need to have a focus on postgraduate research opportunities.
The amendment gives UKRI a clear responsibility for postgraduate training and skills development—it is phrased in a way entirely consistent with the royal charters of the current research councils—in conjunction with the office for students. As the Minister will remember, I raised this point with some of the expert witnesses at our oral evidence session. Professor Philip Nelson, the chair of Research Councils UK, agreed that this was an “important issue”. He went on to say that
“we in the research councils have three main ways of supporting PhD students across the sector. We do interact with HEFCE on that currently. I think it will be very important—the point has already been made in evidence to this Committee—that the OFS and the UKRI connection is carefully made.”
Professor Ottoline Leyser from the University of Cambridge agreed that that was an important point and went on to say that
“one of the opportunities generated by UKRI would be the possibility to have more integrated research into teaching and research training…we could develop better understanding of the most effective ways to do research training and teaching. That is one opportunity that is more difficult within a single research council.”––[Official Report, Higher Education and Research Public Bill Committee, 8 September 2016; c. 87, Q137.]
There are issues with how to address the learning experience of postgraduate research students. We are supported in the sector; there are problems that we are all aware of. Can the Minister reassure me on how he sees the roles of the two bodies? Will the OFS’s role in relation to postgraduate students include the regulation and assurance of quality, information needs for PGR students and their access to and participation in student protections? How does he see UKRI exercising its responsibility for the learning experience of PGR students, in conjunction with the OFS?
Joseph Johnson
I welcome the opportunity to set out the importance of postgraduate training and skills development to the future of our economy, and in particular to the strength of our research and innovation sectors. That is reflected in the provisions of the Bill that ensure that UKRI is able to support postgraduate training and work with the OFS on postgraduate and wider skills issues. The OFS and UKRI have been designed to work closely together, but let me offer some thoughts on the division of responsibilities between them and on how they might work together.
The OFS will be the regulator for all students, including postgraduate students, and will monitor the management and governance of HE providers, as well as their overall financial sustainability. The research councils within UKRI will continue to provide research grants for projects. Research England will deliver HEFCE’s current research funding powers, such as the quality-related research funding block grant. The Bill proposes safeguards to protect joint working and
“cooperation and information sharing between OfS and UKRI”,
which reflects the integration of teaching and research that we discussed earlier.
Research England, within UKRI, will lead on quality-related funding, the allocation for which currently includes an element that recognises research degree supervision. UKRI will fund postgraduate research, as research councils do now. HEFCE currently provides some funding from the teaching grant to support masters-level PGT; all teaching grant responsibilities and associated responsibilities will transfer to the office for students.
UKRI and the OFS will work together on monitoring and evidence gathering on the pipeline of talent from undergraduate study to postgraduate study, early career research and beyond. That underscores our intention for the OFS and UKRI to work closely together to ensure that there are no gaps between their respective roles. We want there to be no difference from the current situation in which an institution may receive funding from a research council but is still subject to HEFCE’s oversight of the sector. In practice, individual students will have little, if any, exposure to either body, since their interactions normally take place at an institutional level.
The Bill is a legal framework for these reforms, with the functions of UKRI broadly defined, as are the current functions of the existing bodies. They are drafted to be inclusive and permissive, and to ensure that the functions currently performed by the existing nine funding bodies can continue.
Paul Blomfield
A number of the Minister’s comments are reassuring. In describing the architecture and exercise of functions, he is talking largely in the context of continuity. The Bill has, at its heart, a drive to improve teaching excellence. Does he also see it as an opportunity to improve the learning experience of postgraduate research students? Should that be as much at the heart of what we are trying to do with the bodies we are creating as it is for the TEF?
Joseph Johnson
We see the research quality assurance process, through the REF, and the teaching excellence framework—the teaching quality assurance process that we are introducing—as being mutually reinforcing, as I have previously indicated. We want institutions to consider how they promote research-led teaching in their submissions, and Lord Stern’s review of the REF recommended that academics be rewarded for the impact on teaching of the excellence of their research. We will ensure that the two processes are co-ordinated and that timescales and deadlines have flexibility so that institutions can plan for the demands of the two systems.
Jo Churchill (Bury St Edmunds) (Con)
I listened to what the hon. Member for Sheffield Central said, and I contend that it is purely by having a flexible, open system that the things he asks for are actually possible. The problems within the system that he articulated are often due to the inadequacies of the departments involved. I know that because I have been closely affected by it. Allowing institutions to work with these overarching bodies but driving quality from the institutions themselves is what is wanted. Furthermore, an individual benefits from being asked to teach. It is not always detrimental for a researcher to expand their skills in that way.
Joseph Johnson
In answer to the question from the hon. Member for Sheffield Central on the teaching excellence framework and postgrad research, in the first instance, no, it will not deal with the postgrad experience; it focuses on undergrad and part-time. The Bill sets out clear responsibilities for UKRI and the OFS, with the OFS being the regulator for all students, including at postgraduate level.
There are a number of areas that will require close co-operation between UKRI and the OFS, including on postgraduates, and it is vital that they are empowered to work together. The Bill does that through clause 103, which enables and ensures joint working, co-operation and the sharing of information. An emphasis on working together will run through the leadership and management of both organisations, supported by a legal framework that will be sufficiently flexible to deal effectively with areas of shared interest.
Paul Blomfield
I thank the Minister for taking an intervention before he concludes, because I want to push a little further on the point I made earlier. The Bill seeks to improve the learning experience of taught students. Does he see that this is also an opportunity to improve the learning experience of postgraduate research students? Does he hope that the OFS and UKRI will work together to do that?
Joseph Johnson
Yes. We obviously recognise that our intention to drive up opportunities for informed choice and for students to receive a higher-quality experience in HE applies to all levels of study and all modes of provision. We certainly want to see postgraduate research included in that.
In the initial phase of the teaching excellence framework, as it develops and as it is trialled, we are focusing on undergraduate provision in the first instance, but we hope that in time it will be able to capture aspects of postgraduate provision, including postgraduate teaching. That is not something that we anticipate happening in the first three years of the new teaching excellence framework, but it could be something that we put into practice in the years that follow.
I conclude by reassuring hon. Members that I recognise the importance of postgraduate training and skills development in ensuring the continued strength of research and innovation in the UK, which is reflected in the Bill. I therefore ask that the amendment be withdrawn.
Paul Blomfield
I thank the Minister for his reassurance. I say in passing to the hon. Member for Bury St Edmunds that I was not suggesting that teaching is to the detriment of research. Teaching is vital to the learning experience of many PGR students, but it is sometimes a question of getting the balance right, as it is when dealing with some of the other issues and challenges that postgraduate research students face.
On the basis of the reassurance the Minister has given that he sees the OFS and UKRI as having a role in ensuring we enhance the learning experience of PGR students, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Chair
We are coming to the end of our allotted time. It might be convenient to draw stumps before we start consideration of the next amendment. I apologise that I will not be here this afternoon for the last sitting. Appropriate words will be said at the end, but I thank Mr Marsden for his dogged perseverance in holding the Government to account and the Minister for defending the Government.
Ordered, That further consideration be now adjourned. —(David Evennett.)
Higher Education and Research Bill (Fourteenth sitting)
Tuesday 18th October 2016
(7 years, 6 months ago)
Public Bill CommitteesRead Full debate Higher Education and Research Act 2017 View all Higher Education and Research Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 18 October 2016 - (18 Oct 2016)
The Committee divided: - Ayes: 8 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 11 - Question accordingly negatived.
The Chair
Welcome back for what I regret to inform Members will be the final sitting of the Committee. I remind Members that we finish at 5 pm precisely, which means we have to deal with any matters outstanding before then.
Clause 85
UK research and innovation functions
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
I beg to move amendment 180, in clause 85, page 52, line 21, at end insert
“but must be exercised in such a way as to be for the benefit of England, Scotland, Wales and Northern Ireland.”
This amendment would place a general duty on UKRI to discharge its functions under section 85 for the benefit of the UK as a whole.
The Chair
With this it will be convenient to discuss the following:
Amendment 181, in clause 88, page 54, line 4, at end insert—
“having regard to the economic policies of the UK Government, the Scottish Government the Welsh Government and the Northern Ireland Executive”
This amendment would ensure the specific duty of Innovate UK will be to have regard to the economic policies of the devolved administrations.
Amendment 326, in clause 89, page 54, line 33, after “appropriate” insert—
“including relevant bodies in the devolved administrations”
This amendment allows Research England to coordinate with its devolved counterparts.
Amendment 182, in clause 91, page 55, line 16, at end insert—
‘(4A) Before exercising his powers under subsection (4), the Secretary of State must consult the Scottish Government, the Welsh Government and the Northern Ireland Executive and have regard to their views in respect of any proposed research and innovation strategy.”
This amendment would place specific duty on the Secretary of State to consult the devolved administrations before exercising his powers in relation to a research strategy in section 91(4).
Amendment 184, in clause 94, page 56, line 24, at beginning insert “Subject to subsections (4A) and (4B),”
See explanatory statement for amendment 183.
Amendment 183, in clause 94, page 56, line 34, at end insert—
‘(4A) In giving direction to UKRI, the Secretary of State must act in the best interests of all constituent parts of the United Kingdom and, before giving such direction, must consult—
(a) the Scottish Government,
(b) the Welsh Government, and
(c) the Northern Ireland Executive
on research and innovation policies and their priorities.
(4B) Before giving any direction to UKRI under subsection (1), the Secretary of State must seek agreement to the terms of that direction from—
(a) the Scottish Government,
(b) the Welsh Government, and
(c) the Northern Ireland Administration.”
This amendment would ensure the Secretary of State takes account of the views of devolved administrations, including different research and innovation policy, before giving direction to the UKRI.
Amendment 185, in clause 96, page 57, line 14, at end insert—
‘(3) In exercising functions under this Part, the Secretary of State must act in the best interests of England, Scotland, Wales and Northern Ireland, having consulted—
(a) the Scottish Government,
(b) the Welsh Government, and
(c) the Northern Ireland Executive
before exercising these functions.”
This amendment would place a duty on the Secretary of State that in exercising their functions in relation to UKRI they must consider the needs of the entire UK and consult the Ministers of the devolved jurisdictions
Roger Mullin
What a pleasure it is to see you, Mr Hanson —my favourite Chair—[Hon. Members: “Ah!”]—for a Tuesday afternoon.
The Minister is such a reasonable person that I am sure he is keen to accept amendments 180 to 185. They would place a duty on the Secretary of State that in giving direction to UK Research and Innovation regarding research priorities, it is incumbent upon UKRI and the Government to ensure that the needs of the entire United Kingdom are met and to consult with Ministers in all the devolved jurisdictions.
The Scottish, Northern Irish and Welsh Governments must have a formal role in providing input to the UK Government. Too often, the needs of Scotland, Northern Ireland and Wales are forgotten. Allow me to give two examples related to the Bill—neither of which, I hasten to add, arose out of malice. My hon. Friend the Member for Glasgow North West and I noticed a few days before oral evidence sessions were due to start that every major institution in Scotland had been omitted from the list of those being called to give evidence. I know the Minister, and I know the Whip. They are reasonable people. I know they did not exclude us out of malice, but that omission demonstrated that we were an afterthought in a Bill Committee where they knew there would be representation from Scotland. For Scotland to be treated as a mere afterthought shows the need at times to put into legislation the right to be consulted. Being an afterthought is just not good enough.
Let me give another example. Later today, we will discuss an amendment relating to post-study work visas—a matter that has been raised many times by Scottish Members in this House and by the Scottish Government as it is of great concern to us and of great importance to our economy and our universities. What happened a few short weeks ago? Suddenly, the UK Government announced a pilot that involves no university in Scotland, Wales or Northern Ireland, nor any consultation with the Governments in the devolved Administrations. That is another example of us not being treated with any respect whatsoever. The amendment calls for formal recognition in the Bill that we will not be consigned to the role of a mere afterthought at the whim of this or any other Government.
The Scottish research sector has different priorities from much of the rest of the UK, and there is a concern that those priorities will be missed within the new UK-wide research body. For example, Scottish higher education institutions have been pioneers in research collaboration since the establishment of the first research pools in 2004. One of the key principles behind research pools was that they should support research excellence “wherever it is found”, which is sometimes in relatively small research groups in less research-intensive institutions. We are concerned that initiatives to encourage collaboration between mere institutions can sometimes exclude such pockets of excellence through, for instance, threshold criteria dependent on scale. Scotland’s higher education sector, as the Minister will know, is worth more than £6 billion to our economy, and we must ensure that that continues. As it stands, the Bill has the potential to harm Scotland’s world-renowned research.
The Minister and his Government need to ensure that devolved Administrations have an equal say and that their voices are heard within UKRI to ensure that this Bill will be of no detriment to any part of the United Kingdom. It is also critical to be able to take account of the different economic and social priorities of devolved Administrations. Mention was made of Brexit this morning—by the Minister, if memory serves me correctly—and it immediately brought to mind not the example of Scotland but that of Northern Ireland, where there are going to be particular challenges, not least in how cross-border trade, cross-border research collaboration and the movement of people will be handled. That presents a context in Northern Ireland that is not present in any other part of the United Kingdom. Its voice needs to be heard as well. Not to have proper input on these and other matters would potentially be not only disrespectful, but damaging. In Scotland our drive for innovation and growth and our highly distinct social agenda need to be factored in. I have no confidence that that will be possible without ensuring that a statutory duty is placed in the Bill. I beg to ask leave to move the amendment.
Gordon Marsden (Blackpool South) (Lab)
I wish to elaborate on my Scottish colleague’s comments, first by saying that you are my favourite Chair of all time, Mr Hanson, and not just for Tuesday—at least until someone else comes along and makes me a better offer.
Amendment 326 would allow Research England to co-ordinate with its devolved counterparts. I am very much in tune with the sentiments just expressed by the hon. Gentleman: nobody likes to be treated as an afterthought, though sometimes people are pleased just to be noticed. In these circumstances, the hon. Gentleman has put forward a powerful case. It is not a question of omission by design, we hope, but it is certainly omission by amnesia, to put it kindly. Rightly, he did not just put the case for Scotland, which he is bound to do, but referred to the situation in Northern Ireland. Those of us who can just about remember back to that steamy day of Second Reading, before the summer recess, will remember that there were representations from Northern Ireland Members on the Bill, not just about issues such as the teaching excellence framework and the future for Northern Irish students, but on some of the border issues. Since then those issues have come further to the fore.
It is a question of looking back as well as looking forward. The reality is that Research England will be inheriting, and will be challenged to perform on, the existing system. At the moment, the UK’s dual support system underpins an excellent research base. As Committee members probably know, it consists of two complementary streams: one targets specific discipline areas; the other is a block grant to institutions. Currently the former is disbursed by the seven research councils and the latter through the Higher Education Funding Council for England and its devolved counterparts, the Scottish Funding Council, the Higher Education Funding Council for Wales and the Department for the Economy in Northern Ireland.
As we heard this morning from the Minister, the proposed reforms will bring the seven research councils and the England-only research functions of HEFCE in the form of Research England—if the Committee has not been lost by this point, it will be shortly—into UKRI. The Scottish Funding Council, the Higher Education Funding Council for Wales and the Department for the Economy in Northern Ireland will remain sitting outside UKRI. Therefore, as the hon. Member for Kirkcaldy and Cowdenbeath rightly pointed out, it would be helpful to probe how UKRI will work with institutions in Scotland, Wales and Northern Ireland in providing strategic oversight of UK research.
I say gently to the Minister that the hon. Member for Kirkcaldy and Cowdenbeath has made it fairly clear—I support his view, and if I was a Member from one of the devolved Administrations, I would feel the same—that on this occasion simply rehearsing the line that we can be assured that UKRI will take such things into account is not going to be adequate, either practically or symbolically. If the Minister is in any doubt, since we have mentioned Scotland and Northern Ireland, I am now going to mention Wales and quote the written evidence that the Committee received from Universities Wales about three or four days ago. I refer to the section about UKRI governance and operation. Very much in the same spirit as the hon. Member for Kirkcaldy and Cowdenbeath, Universities Wales says:
“In the past the legislation has relied heavily on the Secretary of State and the Research Councils to act in the interests of the UK as a whole. With the increased divergence as a result of devolution, however, we question whether this will continue to be effective in appropriately reflecting devolved policy and interests. We welcome the UK Government’s proposed amendment”—
that is referred to as new clause 3, which we will come to—
“to enable joint working between relevant authorities where this is more efficient or effective. We would like the legislative framework to be strengthened, however, so that it not only facilitates joint working but ensures”—
I think there is a difference—
“that interests of devolved nations are catered for appropriately. In particular we agree with Universities Scotland that the legislation as a minimum must ensure there is appropriate representation on UKRI’s Council and on the Councils’ boards. The legislation must also include appropriate duties for UKRI and the Secretary of State not only to consult with devolved administrations but also to have due regard to devolved policy.”
That is the nub of it, and that is what we have tried to embody in amendment 326, which would give Research England the facility to co-ordinate with its devolved counterparts. That is the basis on which we have a great deal of sympathy with the amendments tabled by the hon. Member for Kirkcaldy and Cowdenbeath.
The Minister for Universities, Science, Research and Innovation (Joseph Johnson)
I will not join the auction of flattery, Mr Hanson; I feel that it is unnecessary, and I am sure you do not appreciate it. I am, however, glad to have the opportunity to assure Members, in particular those from Scotland, that I share their desire to ensure that the UK operates for the benefit of the whole of the United Kingdom.
Scottish and other devolved institutions are a vital part of our vibrant research base and have not been overlooked carelessly or by any other kind of omission in our preparations for these reforms or for the Committee. I know that it feels like a lifetime ago that we were sitting in Portcullis House listening to oral evidence, but I point out to the hon. Member for Kirkcaldy and Cowdenbeath that representatives of UK-wide bodies were invited to give evidence to the Committee, including Research Councils UK, Innovate UK and Universities UK. Those bodies all represent the totality of the United Kingdom, including institutions in Scotland, Wales, Northern Ireland and England.
I understand that all parties were invited to make submissions about who should give evidence before the Committee. We put forward a number of suggestions, as did the official Opposition. Relatively late in the day, Members from the Scottish nationalist party asked for additional people to be invited to give evidence, and we were delighted to accommodate Universities Scotland, the Royal Society of Edinburgh and the Scottish Funding Council to round out the evidence that we had already requested from those other representative bodies of the entirety of the United Kingdom. There was no omission. We were delighted to make time in the Committee’s proceedings to accommodate further Scottish voices, and we welcomed them, as we welcome them now.
Roger Mullin
I never suggested that there was any malice, but there was scope to have Scotland properly represented. The Scottish National party—I see there is still scope for education there, since the Minister does not know the name of the party that I represent—was not invited by the Government to give any suggestions about who should be invited, so I think it is fair to characterise it as an afterthought.
Joseph Johnson
I thank the hon. Gentleman for his further clarification. I am always happy to be educated by him in lots of ways, but on this matter we will have to disagree. We gave opportunities to the Committee to submit names to give evidence before it. As I said, we had already invited significant representations from UK-wide bodies and were delighted to accommodate the further suggestions his party made. I think we have to move on.
Turning to amendments 180 and 181, the research councils and Innovate UK, within UKRI, will continue to fund excellence wherever it is found in the UK. UKRI has the ability to work with the devolved bodies and a statutory duty to use its resources in an efficient and effective way, meaning it will look for all opportunities to collaborate. It is also important than Innovate UK can operate independently to spot opportunities and to provide the right access to finance conditions for economic growth. To improve its understanding and response to economic policies in the devolved Administrations, Innovate UK will be appointing full-time regional managers in Glasgow, Cardiff and Belfast. That means that UKRI and its councils will have to consider the whole of the UK, ensuring that the current co-operation will continue.
Turning to amendment 326, on Research England consulting relevant bodies in the devolved Administrations on grant conditions, block funding of universities for research—so-called quality-related funding—is a devolved matter. It is therefore not appropriate to require Research England to consult its devolved equivalents, just as the devolved funding bodies are not required to consult HEFCE now. Our approach mirrors that taken in the Further and Higher Education Act 1992. Of course, that does not mean HEFCE has operated in isolation—in fact, HEFCE works closely with its devolved equivalents, such as the Scottish Funding Council, on areas like the research excellence framework. A Government amendment ensures that Research England can continue that joint working in the future.
Turning to amendments 182 to 185, on the Secretary of State consulting the devolved Administrations before taking key decisions that will have an impact on UKRI, the Government work closely with the devolved Administrations now and UKRI will continue to work with them. However, we would not seek to bind UKRI into a restrictive process of consultation. Legislation must remain sufficiently flexible for the Government and for UKRI to react quickly to emerging issues, as the research councils acted earlier this year to promptly commission research into the Zika virus.
The amendments also require the Secretary of State to act in the best interest of all parts of the UK. As a UK Government Minister, I assure the Committee that that is already the case. That was recognised by the former vice-chancellor of the University of Dundee, Sir Alan Langlands, in the evidence he gave last month:
“Even given the dynamics of devolution and the fact that essentially we are dealing with four different financial systems and four different policy frameworks, the one thing that has stuck together through all this has been the UK science and research community. The research councils, HEFCE and, indeed, BIS have played a hugely important part in that.––[Official Report, Higher Education and Research Public Bill Committee, 6 September 2016; c. 26-27, Q40.]
I agree with Sir Alan. The research community functions remarkably well across the UK political landscape, not least because the UK Government and the devolved Administrations work together to make it do so. Therefore, recognising that the Government share the hon. Gentleman’s concern in ensuring that UKRI effectively serves the whole of the UK, I ask that he withdraws amendment 180.
Roger Mullin
I thank the Minister genuinely for his responses. I will not put the amendment to a vote, but I make two observations. I do not think establishing mere regional managers in Glasgow, Cardiff and Belfast, if I recall his statement correctly, are in any way sufficient to guarantee the type of high-level involvement that is being sought. There are examples—I gave one related to the post-study work visa pilot—of where decisions have already been taken by the UK Government without proper consultation of the devolved Administrations. I therefore beg to differ with the Minister on those two points, but I also beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Paul Blomfield (Sheffield Central) (Lab)
I beg to move amendment 310, in clause 85, page 52, line 21, at end insert—
“(2A) The functions conferred by paragraphs (a) – (e) of subsection (1) may be carried out in partnership with other funding bodies”.
This amendment allows other funding bodies to work with the UKRI.
The Chair
With this it will be convenient to discuss the following:
Government amendments 111, 272, 273, 114 and 115.
Government new clause 3—Joint working.
Government new clause 17—Advice to Northern Ireland departments.
Paul Blomfield
It goes without saying what an enormous pleasure it is contribute to this debate under your chairmanship, Mr Hanson. We are all aware of the significant amount of research done in the UK that is co-funded through partnerships with other organisations, and particularly those in the charitable sector. For example, the British Heart Foundation spends £9.1 million on projects with the local research council, and the Association of Medical Research Charities provides £1.4 billion of research funding overall.
As one of the primary roles of UKRI is to “facilitate, encourage and support research” within the sciences and many other fields, amendment 310 seeks to ensure that research funded by other funding bodies, and particularly charities, can continue unaffected by the creation of UKRI. At the moment, the Bill does not fully explain how collaborations and partnerships will occur when UKRI is established. It is unclear whether contracts will be formed directly with UKRI or whether that function will be delegated to research councils, in which case partnerships may become more complicated and time-consuming to establish.
It was surprising that in the Government’s document outlining the case for the existence of UKRI and their recently issued document on UKRI’s visions, principles and governance, there is no mention of charities, let alone any description of how charities are supposed to work with Government once UKRI is formed. I appreciate —I am sure the Minister does as well—that a whole range of charitable organisations are concerned about the lack of clarity and the potential impact on research. The Royal Society, the Association of Medical Research Charities and the British Heart Foundation raised significant worries in their written evidence to the Committee. When charities with such strong contributions to make to research say they are concerned in this way, we need to stop and listen.
Ensuring a simple and clear process for charities to jointly fund research with Government is, I am sure we all agree, important. The vice-chancellor of the University of Leeds, Sir Alan Langlands, whom the Minister has regularly quoted, explained in his oral evidence to the Committee why this clarity is necessary:
“At the moment in HEFCE, there is funding related to charity support, support for research degrees, and businesses research and innovation. All those things need to be resolved. It needs to be very clear between UKRI and the Government who is doing what in those areas.”––[Official Report, Higher Education and Research Public Bill Committee, 6 September 2016; c. 28, Q42.]
Professor Borysiewicz of the University of Cambridge also raised concerns about how charitable bodies will continue to fund research, saying:
“one has to remember that of the research funders in the UK, UKRI merely looks after the Government component side of the funding. For instance, 30% of funding sits with the charitable sector. What is important with UKRI, which is fine as is currently laid out, is that the support and the safeguards proposed in relationship to Research England are also very good. It has to be a body that takes into account the whole of the United Kingdom in its purview. It also has to work closely with other funders and other organisations that have a say in this important area”.––[Official Report, Higher Education and Research Public Bill Committee, 6 September 2016; c. 37, Q25.]
That demonstrates the concerns within the charity sector, and I hope the Minister will respond to the issues raised through the amendment by giving some reassurance.
Joseph Johnson
I thank the hon. Member for Sheffield Central for raising these concerns on behalf of the hon. Member for City of Durham. The Government are keen, like the hon. Gentleman, that UKRI should be able to collaborate with any organisation if doing so would result in better outcomes. As I will make clear shortly, there are specific instances where it is necessary to put powers on the face of the Bill to allow joint working with the devolved Administrations and with the office for students. However, in all other instances I can reassure the Committee that UKRI will not need specific provision to be able to work jointly with other bodies.
Through clause 96, UKRI must look to be as efficient and effective as possible. In many instances, collaboration with other funding bodies will further its ability to achieve this aim. That will be supported by UKRI’s supplementary powers under paragraph 16 of schedule 9. The UK research base is internationally renowned for being highly collaborative and has a strong track record in successful partnerships with other funding bodies. I am therefore confident that not only are such opportunities possible, but that they will be actively sought as part of UKRI’s normal practice.
Government amendments 111, 114 and 115, new clause 3 and new clause 17 relate to joint working. Higher education and block funding of universities for research—so-called quality-related funding—are both devolved matters, but this has not meant that HEFCE has operated in isolation. In fact, HEFCE works closely with its devolved equivalents, such as the Scottish Funding Council, on areas such as the research excellence framework. The office for students and UKRI will take over HEFCE’s responsibilities for funding teaching and research and it is very important that such effective joint working can continue. That is why we, in consultation with the devolved Administrations, have prepared new clause 3, which enables the office for students, UKRI, the devolved funding bodies and Ministers, to work together where it enables them to exercise their functions more effectively or efficiently.
In addition to the new joint working clause, I have also tabled new clause 17, which gives the OFS and UKRI powers equivalent to the existing power for HEFCE to provide advice to the Northern Ireland Executive, as set out in section 69(3) of the Further and Higher Education Act 1992. This is an important power to preserve, as there is no funding council in Northern Ireland, where they have instead found it more effective to rely on advice and support from the English and Welsh funding councils, such as on quality reviews, on terms that all parties agree.
Amendments 272 and 273 are minor and consequential amendments that ensure that any references to UKRI predecessor bodies within the Government of Wales Act 2006 are corrected. I therefore ask the hon. Gentleman to withdraw amendment 310.
Paul Blomfield
I thank the Minister for his assurances on the issue and beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 85, as amended, ordered to stand part of the Bill.
Clause 86 ordered to stand part of the Bill.
Clause 87
Exercise of functions by science and humanities Councils
Joseph Johnson
I beg to move amendment 257, in clause 87, page 53, line 11, leave out “Economic and other”.
This is a drafting amendment to simplify the way the field of activity of the Economic and Social Research Council is expressed.
The Chair
With this it will be convenient to discuss Government amendments 258 to 260, 268 and 269.
Joseph Johnson
These amendments are all directed at updating the way in which the fields of activity of specific councils are reflected in clause 87(1). They ensure that the descriptions of the fields of activities for the research councils are as clear and accurate as we can make them. These are technical amendments that we have agreed with the research councils to ensure that clause 87 properly reflects their respective fields of activities.
Amendment 268 replaces the term “in relation to” with the term “into”, which is the more conventional terminology used in other provisions in part 3. The change in wording does not affect the meaning of the provisions. The policy intent—that UKRI may provide research services—remains unchanged. Amendment 269 replaces “social science” with “social sciences” in clause 102 to make it consistent with the wording in clause 87, and to better reflect the diversity of disciplines within the social sciences.
These two minor drafting amendments seek to ensure that the language used throughout the Bill is consistent.
Amendment 257 agreed to.
Gordon Marsden
I beg to move amendment 324, in clause 88, page 54, line 8, after “relate” insert
“to maintain its focus on assisting businesses and”.
This amendment seeks clarification that Innovate UK is intended to maintain its business facing focus as a Council of UKRI.
The clause is relatively brief on the exercise of functions by Innovate UK. Brevity is not always a bad thing, but we have tabled the amendment because we seek strong clarification of whether Innovate UK is intended to maintain its business-facing focus as a council of UKRI. I remind the Committee that the White Paper stated that its
“business facing focus would be enshrined in future legislation, which would replicate the functions in Innovate UK’s current charter.”
I am not a betting man, but if I were I would put money on the likelihood that, when I sit down and the Minister rises, he will look at me more in sorrow than in anger and refer me to the note published this month, “Higher Education and Research Bill: Innovate UK”, with its sub-heading, “What do the reforms mean for Innovate UK?” I shall not deprive him of the pleasure of reading substantial chunks of it to us, but I will just quote it. I do not know whether the Minister wrote it himself.
The end of the first paragraph states:
“We are very clear that Innovate UK will retain its current business-facing focus. Innovate UK will not become just the commercialisation arm of the Research Councils.”
Those are fine words, but you will know, Mr Hanson, that, in the words of the old proverb, fine words butter no parsnips. If I were to continue that metaphor I should say that, if I were a cynical person, which I am not, the mere emphasis given in the note would remind me of another old saying, that “the louder they protested their honour, the faster we counted the spoons”. On this occasion we should like to examine some of the cutlery, if I may pursue the analogy.
I refer the Minister back to the evidence session with the chief executive of Innovate UK. I thought that what she said was revealing. Her evidence was measured and confident and she was overall in favour of what was going ahead, but she put down some substantial caveats. I will remind the Minister of what she said. I asked her whether there were things with Bill that concerned her about the the financial tools. She said:
“There are three areas in particular on which we need to be absolutely sure that the intent and what was in the White Paper is still there in the Bill. The first of those is the business experience of the board and the Innovate UK champion, which is very clear in the White Paper. As I understand it, that is possible and enabled through the Bill, but I think that the balance of business and research experience is very broad and could be tightened up a bit.”
She then said, about the financial tools:
“We are keen to be able to use things such as seed loans and equity, and other councils within UKRI have dipped a toe into that.”
She went on:
“We need to be absolutely clear, in how the Bill is finalised”—
whether this is the finalised version remains to be seen—
“that we ensure we have as much flexibility as the research councils have had and some of our enterprise partners have. We work very closely with Scottish Enterprise, which uses more financial tools than we currently have, and Enterprise Northern Ireland. We want to move at speed and to empower companies to grow in scale and be really competitive, but we must ensure we have the flexibility to do that and not slow down our clock speed. I think there is a bit of work to do looking at that in more detail.”
Then when talking about institutes and research, she again said:
The Bill gives us the great opportunity to look across the whole spectrum…At the moment, as I understand it, if Innovate UK wanted to create an institute and employ researchers to do the work that businesses need, we absolutely could. I am not sure, within the letter of the Bill, that we are still going to be able to do that. I think that probably needs to be looked at.”––[Official Report, Higher Education and Research Public Bill Committee, 8 September 2016; c. 80-81, Q125.]
When I looked again at the transcript of that session and at what Ruth McKernan, the chief executive, said on that occasion, it reminded me of a little exchange between the Minister and I in the following session when we had the opportunity to put him in the box. In fact, he volunteered himself to the box for some cross-examination by the Committee. On that occasion, I pressed him rather strongly—he was not best pleased to be pressed and certainly gave a spirited response—on the subject of the reports of the House of Lords Science and Technology Committee. At the risk of inflaming the Minister further and perhaps getting him removed him from Lord Selborne’s Christmas card list, I will repeat a summary of the findings, but not the lot because I do not want the Minister to blow a gasket:
“We have serious concerns about the integration of Innovate UK into UK Research and Innovation. With the exception of the Government itself, none of our witnesses gave an unqualified welcome to the proposals. We do not believe that the Government has consulted effectively with Innovate UK’s stakeholders to achieve buy in for this proposal. The Government’s case for integration appears to be based on a flawed linear model of innovation where Innovate UK functions as the commercialisation arm of the Research Councils.”
The Minister has, of course, been keen to address and refute that.
There was a long letter from Lord Selborne and a reply from the Minister that was not as long but was substantial, and I think they probably agreed to disagree. The fact remains, however, that those concerns also remain. The Minister must do a slightly better and specifically more focused job if he is to reassure not just members of this Committee but the range of people he has prayed in aid during other sittings of this Committee—new providers, funds coming in, private equity and all the rest of it.
These other names will not easily go away and I want to quote three or four from the evidence session to which Lord Selborne referred. He quoted Dr Virginia Acha of the Association of the British Pharmaceutical Industry, who said:
“I would be concerned if Innovate UK were brought under the same decision-making approach that a research council would be brought under, because they are making very different decisions.”
Professor Luke Georghiou said:
“There is real concern about the huge disparity between the size of the budget between the existing research councils and Innovate UK, summed up by concern that Innovate UK’s influence would be dwarfed and its impact distorted. That was how members summed up the risks to us.”
Mr David Eyton, who spoke to the Lords Committee, said:
“Effectively”—
Innovate UK
“is the start-up in the context of”
the research councils.
“It is 10% of it; the other 90% is very stable. It is comparatively new and needs to really motor. Will it get the management attention and focus, which requires the quite different skills for governing innovation ecosystems from governing science? That is also the question for that body: the balance of skills on the governing body.”
Finally, but obviously not least, we have what Dr McKernan said to the House of Lords Committee on that occasion. She might have used slightly different terminology—not least because the Minister was there and in courtesy to him—but she said:
“There are also risks that I have not gone into.”
She was talking about the possibility of funding from other Departments being diminished. She continued:
“There are some other areas of mitigation where I still have concerns…We manage about £300 million of funds in partnership with other government departments, for example the Aerospace Technology Institute through BIS”—
with which I am familiar, because there is a BAE Systems site at Warton near my constituency in Blackpool. I am familiar with the work that BAE Systems has done previously with Innovate UK and the Aerospace Technology Institute. Dr McKernan went on to say that Innovate UK does a lot of work with the Department of Energy and Climate Change and the Department for Culture, Media and Sport. She continued:
“It is really important to safeguard those relationships and not feel the need to create something else because we have created”—
these are her words, not mine—
“a fracture in putting Innovate UK within UKRI.”
The Minister may feel that that is slightly overstating it and overegging the pudding, but I hope that I have done enough to show him that that succession of concerns, considerations, worries and so on will not easily be assuaged simply with a paragraph saying that the Government will allow Innovate UK to retain its current business focus. I think that people out there in the groups that I have described want something a little more substantial.
The Royal Society’s position statement on this subject sums up the issue. It says:
“There has been considerable debate about whether or not Innovate UK should be part of UKRI. On balance, the Society believes the potential benefits of creating an organisation with an integrated overview of UK research and innovation infrastructure, assets and expertise outweigh the risks of a more fragmented structure, and that Innovate UK should be part of UKRI. It is essential that in creating UKRI, however, that Innovate UK’s unique business-facing focus and links to its customer base are not put at risk.”
That is where we stand today. The jury is still out on that and on the assertions with which the Minister hoped to placate Lord Selborne, and we would be interested to hear a little more chapter and verse to assuage our concerns.
Joseph Johnson
I thank the hon. Gentleman for the opportunity to comment on Innovate UK. We need to ensure that research and innovation come together at the heart of our industrial strategy. I set that out in my letter to Lord Selborne, which the hon. Gentleman referred to, about Innovate UK’s future inside UKRI, and again in the factsheet that we published for the benefit of the Committee on 12 October.
To fully realise our potential, we need to respond to a changing world, anticipate future requirements and ensure that we have the structures in place to exploit for the benefit of the whole country the knowledge and expertise that we have. I believe that we can do that most effectively by bringing Innovate UK into UKRI. That view is now shared by bodies such as the Royal Academy of Engineering and the Royal Society, which have recognised, as the hon. Gentleman rightly said, that the benefits of integrating Innovate UK into UKRI outweigh the risks.
Those two bodies are not alone. In other parts of her testimony, Ruth McKernan herself said:
“The establishment of UK Research and Innovation, including the research councils and Innovate UK, recognises the vital role innovation plays and further strengthens the UK’s ability to turn scientific excellence into economic impact.”
Alternatively, I can again point hon. Members towards the evidence given by Professor Sir Leszek Borysiewicz of Cambridge University, who said:
“The addition of Innovate UK is welcome, because it means that industry and the translation to industry has skin in the game at the very basic level.”––[Official Report, Higher Education and Research Public Bill Committee, 6 September 2016; c. 22, Q30.]
I recognise that the hon. Member for Blackpool South raised additional concerns in his remarks and with his amendment, which I will come to now.
Gordon Marsden
I wanted to pick up the point that Dr McKernan made, which is highly relevant in the context of the debate we have just had about devolved areas. She made the point—her view was challenged by others, I think—that Scottish Enterprise and Enterprise Northern Ireland had “more financial tools” than Innovate UK had. Does the Minister share her concerns about that? If he does, what capacity is there in this new structure for Innovate UK to be able to match the flexibility she referred to?
Joseph Johnson
We want Innovate UK to have significant flexibility in the range of financial mechanisms and financial tools it has at its disposal. That is one of the reasons why we are developing the new non-grant innovation finance products at the moment, to complement the important and popular grant finance products that it has at its disposal. The Bill sets out the activities that UKRI as a whole can pursue, and activities where it needs advance permission from the Secretary of State, such as establishing a joint venture. All these restrictions and activities will apply equally to all councils in UKRI, not just to Innovate UK. The restrictions replicate the current situation that applies to Innovate UK and to the research councils. We are not looking at placing undue restrictions on the councils once UKRI is created, but the Secretary of State will need to be assured that certain activities are in line with HM Treasury rules and delegations, as I am sure he will understand, such as the “Managing public money” guidance issued by the Treasury. Once it comes into being, UKRI will be managing a budget of more than £6 billion, so we need to ensure that those kinds of control are in place.
The Bill already makes clear Innovate UK’s business-facing role, not only through directing its focus on increasing economic growth, as set out in clause 88, but through specifically ensuring that it has regard to benefiting persons carrying on business in the UK. Although I agree with the sentiment behind amendment 324, I believe that its aims are already addressed in the Bill and I therefore ask the hon. Gentleman to withdraw it.
Gordon Marsden
I am grateful to the Minister for running through those scenarios in some detail, and particularly for expanding on the potential financial instruments. It is fair to say that there is nothing more that he can do at this stage. The proof of the pudding will be in the eating, and of course the proof of the pudding will perhaps also be demonstrated by the nature of the board that is eventually set up. With that in mind, I am happy to beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 88 ordered to stand part of the Bill.
Clause 89
Exercise of functions by Research England
Gordon Marsden
I beg to move amendment 325, in clause 89, page 54, line 13, at end insert—
‘(1) Research England may—
(a) provide non-hypothecated funding to eligible higher education providers for the purpose of supporting basic, strategic and applied research; and
(b) support knowledge exchange and skills provision.”
This amendment would allow Research England to fund eligible higher education providers to support basic, strategic and applied research and to support knowledge exchange and skills provision.
This, too, is a probing amendment. We have spoken slightly in brackets, in the context of its implications for the devolved Administrations, about Research England, but this is an important clause because it starts to spell out—obviously, in the Bill there is a limit to the amount that Ministers might wish or be able to spell out—some of the issues and concerns about how funding will be separated, assessed and actioned. We tabled the amendment in an attempt to tease out just what some of the things in clause 89 might mean.
The particular set of emphases in the amendment is one that the representations that I have had from members of the scientific community and various societies show they are keen on and anxious about. The Minister referred earlier to the various types of research assessment, and of course that will include taking on quality-related research assessment for the UK and funding for England. QR funding is generally highly valued because it can provide stable levels of funding over the period between research assessment exercises in a way that means the university can deploy it at its discretion. Of course, there is always a balance to be achieved in this respect. In the original debates about the research assessment exercises in the late 2000s, the issues of QR, how micromanaged it should be and how flexible it should be were hotly debated, and no doubt they will continue to be hotly debated in the future. However, I think that there is a general acceptance and general view that QR funding provides a valuable baseline of support for facilities and research operations.
Without wishing to sound like a Jeremiah, I might say that the mixture of factors that HE institutions in this country will have to face over the next three to four years—highly variable factors to do with the implications of Brexit and what does or does not come out of that —and the general financial climate in Government make it important that there should be an element of funding to provide a baseline of support for facilities and research operations. QR gives universities the opportunity to support emerging research areas and new appointees.
I remember debating these issues in Select Committee in respect of the REF, and this was always the discussion. Which came first: the chicken or the egg? The point was made that, certainly under the old research assessment exercise, it was difficult for new, cutting-edge disciplines that had genuine merit and genuine academic reference, and all the rest of it, to break into the structure. QR still plays a valuable role in that respect. Supporting emerging research areas and new appointees is important as well, because there was a time not that long ago—perhaps five, 10 or 15 years ago—when it was extremely difficult for young academics in their 30s or 40s to come through in new research areas and to develop institutes and things of that nature, particularly but not exclusively on the science side, in universities.
For all those reasons, most people out there in the HE environment believe, like I do, that QR is an important element of funding, and it would help to enshrine that purpose in law. We have suggested a mechanism. Again, this is a probing amendment. If the Minister is minded to consider it and does not like the terminology, we would be happy for him to take it away. It is important to give reassurance to the academic community about the role of QR, on which there is relatively little in the Bill.
Joseph Johnson
I thank the hon. Gentleman for the opportunity to explain further the key role that Research England will play within UKRI. Research England’s function of providing funding for research within higher education institutions will form one part of the dual support system in England. It will take on HEFCE’s responsibility for issuing block grants to universities for the purposes of research, based on the research quality of those institutions.
The integration of HEFCE’s research and knowledge exchange function within UKRI is also critical to achieving greater strategic co-ordination across the research funding landscape. Professor Quintin McKellar, vice-chancellor of the University of Hertfordshire, said:
“I am very comfortable with the creation of UKRI. It seems that bringing together the major funders for what you might call blue-sky research with those that have responsibility for innovation and knowledge transfer is a good thing.”––[Official Report, Higher Education and Research Public Bill Committee, 6 September 2016; c. 24-25, Q36.]
UKRI will ensure a more joined-up approach in areas such as skills and UK-wide capital investment, where both HEFCE and the research councils have pioneered innovative funding approaches. For example, HEFCE’s UK research partnership investment fund has allocated more than £500 million to 34 projects running between 2014 and 2017, attracting £1.4 billion of investment from businesses and charities.
An amendment is not needed to assure the unhypothecated nature of the funding that will be provided by Research England, as clause 93(2) already provides such protections. In addition I would be cautious about placing any conditions on the funding beyond the conditions currently in place, such as the amendment suggests by referring to basic, strategic and applied research, which may inadvertently restrict what universities can do with this block grant funding. The Government believe in institutional autonomy, as the Bill demonstrates, and we do not want to place conditions on our universities that limit their freedom to undertake their missions as they see fit.
Research England will retain HEFCE’s research and knowledge exchange functions, including the higher education innovation fund. Research England and the new office for students will act together to deliver HEIF, as an example of the joint working between the two bodies and their shared remit to support business-university collaboration.
Gordon Marsden
The Minister is moving on to paragraph (b) of the amendment, which prods me to return to a subject I touched on the other day. As this process goes along and HEFCE is, in the words of the White Paper, dissolved, there is the difficult question of the transition period. I think we agree that this is likely to be a two to three-year process. Will the Minister give any indication of the point at which Research England will become the active player in this new architecture?
Joseph Johnson
As I said in answer to the hon. Gentleman’s earlier question on a similar theme, we expect the office for students and UKRI to become operational in 2018-19. They will take on functions including HEIF during that period and from that day onwards. HEFCE’s knowledge exchange functions will transfer with its research functions to Research England. That includes support for the research elements of HEIF. The reforms offer significant potential to build coherence with the knowledge exchange programmes currently operated by the research councils and Innovate UK.
Knowledge exchange is an essential mechanism to support universities in effectively contributing to UK growth, as evidenced by the Chancellor’s recent announcement of £120 million of additional funding for university collaboration on technology transfer and knowledge exchange. However, as the provisions of the Bill are sufficient to allow Research England to undertake these activities, I ask the hon. Gentleman to withdraw amendment 325.
Gordon Marsden
I thank the Minister for his response and the further detail. It is particularly helpful that he has said a little more about the situation with HEIF and the timescale, which is similar to what we discussed the other day. With those assurances, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 89 ordered to stand part of the Bill.
Clause 90
Exercise of functions by the Councils: supplementary
Joseph Johnson
I beg to move amendment 261, in clause 90, page 54, line 39, at end insert—
‘( ) Arrangements under subsection (1) may result in a function of UKRI being exercisable by more than one Council.”
This amendment and amendment 262 make it clear that arrangements under clause 90(1) may result in a function of UKRI being exercisable by more than one Council and that functions of UKRI which are exercisable by a Council on UKRI’s behalf under arrangements under clauses 87 to 89 or 90(1) may also be exercised by UKRI. This enables Councils and UKRI to engage in cross-cutting activities.
Joseph Johnson
Multidisciplinary research is of increasing importance in tackling complex challenges such as the impact of climate change. Currently, councils may hold and spend funds only for activity within their own remit. That means it is not within the remit of any of the research councils to manage and distribute inter and multidisciplinary funds such as the new £1.5 billion global challenges research fund.
Amendments 261 and 262 clarify clause 90 to enable UKRI and the councils to engage in multidisciplinary work more effectively. Amendment 261 makes it clear in the Bill that UKRI will enable councils to collaborate on funding multidisciplinary research. Amendment 262 proposes leaving out “in other ways” from the end of subsubsection (2), which provides further clarification that enables collaboration between UKRI and a council carrying out specific functions of UKRI.
As I have explained, these are technical drafting amendments that make it clear that UKRI and the councils are able to both continue with existing joint working and collaborate even more effectively in funding multidisciplinary research.
Amendment 261 agreed to.
Amendment made: 262, in clause 90, page 54, line 42, leave out “in other ways”—(Joseph Johnson.)
See the explanatory statement for amendment 261.
Clause 90, as amended, ordered to stand part of the Bill.
Clause 91
UKRI’s research and innovation strategy
Gordon Marsden
I beg to move amendment 327, in clause 91, page 55, line 8, after “approval” insert—
“(c) consult with a Committee of Executive Chairs of Councils in the development of UKRI’s strategy.”
This amendment would ensure UKRI’s governance structure includes a Committee of the Executive Chairs of the Councils who are consulted with as part of UKRI’s strategy.
Although the amendment is probing, it is important, not only in terms of the practical arrangements that must characterise the relationship between UKRI and its nine councils but in terms of the signal—or lack of signal, if the Government do not move down this road—that it is in danger of sending to the academic community and the learned societies and institutions, which have already spoken strongly about the measure. That is why we, with the advice and opinions of many of those people, have tabled the amendment, which would ensure that
“UKRI’s governance structure includes a Committee of the Executive Chairs of the Councils who are consulted with as part of UKRI’s strategy.”
I read that out carefully, because I want to engage with the paper to which the Minister referred this morning, which Committee members should have seen: “UKRI: Vision, Principles and Governance”. Produced at the beginning of this month, it is a joint paper between the Department for Education and the new Department for Business, Energy and Industrial Strategy. The White Paper and the Bill have outlined the Government’s arrangements for UKRI and its nine councils.
The board will consist of the chief executive officer, chief financial officer and chair of UKRI, as well as between nine and 12 representatives of academia and industry. We really need a huge organogram, perhaps overlaying a large 19th-century painting, on the wall at this point to understand it, but I will do my best. Each of the councils will be headed by an executive chair with five to nine ordinary council members, but—this is the crux of the matter and of this discussion—the executive chairs of the councils do not sit on the UKRI board.
The Nurse review recommended that there should be a committee of the executive chairs of the councils that includes the CEO of UKRI and provides a continuing link to UKRI’s governing board, but the governance arrangements proposed in the White Paper and the Bill do not include an executive committee, although the Bill provides UKRI with the power to establish one. The factsheet published by the Government, which I have just quoted, makes that point. It says:
“It will be critical for the Board to work closely with the Executive Chairs and ensure highly effective co-ordination across UKRI and its key partners. Therefore, our policy intent is for the Executive Chairs of the Councils—along with the CEO, CFO and other senior directors of UKRI—to sit together on an Executive Committee, to support engagement with the Board and cross-council working. This is in line with good practice on organisational governance and Sir Paul Nurse’s recommendations.”
Some people might query the definition of Sir Paul’s recommendation that the Government have chosen to incorporate into the factsheet, but even if they do not, the fact remains that it does not go as far as the Royal Society or many others have called for by making it a statutory requirement on the face of the Bill.
I return to what I have said previously: I am not questioning the current Minister’s enthusiasm or bona fides for this arrangement, simply noting an observable fact. We must legislate for all sorts of Ministers, good, bad and indifferent, over a period of time, and regulation is needed on the face of the Bill to assure people that they can survive the occasional—dare I say it—bad Minister, autocratic Minister or whatever.
The Royal Society believes that it is essential that UKRI’s
“strategy and operation is not driven only by the priorities of the Government or the Board—”
which it describes as “top down”—
“but also by the research and innovation community (bottom up).”
I see the eyes of the hon. Member for Kirkcaldy and Cowdenbeath lighting up at the reference to “bottom”; that is an in-joke related to a revelation that the hon. Gentleman made earlier in proceedings, Mr Hanson. We will not get into that now.
In his review of the research councils, Sir Paul Nurse
“envisaged this being realised through the establishment of an Executive Committee…Under the proposed reforms, the analogous Committee would include the Executive Chairs of the Research Councils, Innovate UK and Research England.”
The Royal Society believes that UKRI’s governance arrangements
“should include an Executive Committee of the Councils’ Executive Chairs”.
Just in case members of the Committee are beginning to think this resembles one of those medieval theological debates about how many angels could dance on the end of a pin, I think it is important to understand the issues and concerns at stake here. For that, I refer to the excellent speech by Lord Rees in the Queen’s Speech debate earlier this year, in which he discussed the proposals of the White Paper. The Minister will be pleased to note I do not intend to quote all of the speech, but I will quote a little bit of it. Lord Rees, who is a highly respected figure in academia, has strong concerns about the White Paper. He said:
“There are widely-voiced anxieties that the changes are needlessly drastic. It is proposed that all seven research councils will lose their royal charter—even the Medical Research Council, which has a global reputation and a century-old history.”
He then talked of the various things that will happen, saying:
“After any reorganisation, there are transitional hassles before the new structure beds down… When the research councils set up the so-called shared research service in 2008, the overheads went up, not down. The Government’s proposals are based on a review by Sir Paul Nurse, who accepted that the current research support system worked fairly well but aspired to improve it. It is seductive to believe that reshuffling the administrative structure will achieve this, but it may not prove either necessary or sufficient and may indeed be counterproductive. Moreover, it is already proving hard to attract people with the stature expected as heads of research councils. That may be harder still if the posts are downgraded.”
He concludes:
“It is plainly important that the existing research councils mesh together and collaborate when necessary…these aims can surely be achieved with good will and capable management within the present structure by strengthening high-level input from the CST and—”
here is the rub—
“reviving a body resembling the old advisory board for the research councils to play the role envisaged for UKRI’s board. When there are so many distracting pressures in the educational and research world—
bear in mind Lord Rees made the speech on the Queen’s Speech, before the outcome of the referendum was known and before Brexit—
“surely we should avoid risky upheaval in a system that is working reasonably well and which really needs no more than some fine-tuning.”—[Official Report, House of Lords, 19 May 2016; Vol. 773, c. 79.]
The Minister and others may well dispute that, but the concerns Lord Rees articulated are not restricted to him. Others, perhaps less forcefully, have said similar things. Only today, an article has appeared in The Guardian by Stephen Curry, who is a professor of structural biology at Imperial College and a member of the Campaign for Science and Engineering. He repeats the points others have made by querying the efficacy of the Bill and suggesting, in this respect, that it is not necessarily going to do the business. He says:
“The bill does not even provide for the creation of an executive forum that would allow the heads of the new research committee to communicate the views of their researcher communities to the CEO of UKRI. Although a supplementary document published just last week by the Department of Business, Energy and Industrial Strategy (BEIS)”—
—by which I assume he means the joint publication of BEIS and the Department for Education—
“now envisages such a committee, the system of governance is significantly more top-down than before.”
That is the point.
Joseph Johnson
I am glad to have the opportunity to give assurances on UKRI governance. First, I would like to address the proposition of a committee of executive chairs. I hope hon. Members were reassured by the fact sheet we published on 12 October, to which the hon. Gentleman referred on a number of occasions. As he said, the fact sheet states clearly that it will be critical for the UKRI board to work closely with the executive chairs and ensure highly effective co-ordination across UKRI and its key partners. Our policy intent is for the executive chairs of the councils, along with the CEO, CFO and other senior directors of UKRI, to sit together on an executive committee to support engagement with the board and cross-council working.
The hon. Gentleman asked why the Bill does not set that out. I refer him to the general response I have given to these sorts of request for more information on the face of the Bill, which is that the Bill is a legal framework for these reforms. In drafting it, we are trying to find the right balance between providing enough detail appropriate for a piece of primary legislation and the need to allow flexibility for UKRI to develop the right governance structures, so that it can evolve swiftly in response to changes in the science and innovation landscape.
Gordon Marsden
I entirely accept that point. I said at an earlier stage that I welcome the fact that the Bill has moved away from the tradition of some preceding Bills—not in this area—of just producing a box that everything comes through. I appreciate there is a balance to be struck, but on this particular point, to which so many people in the academic and research communities are sensitive, does the Minister not understand it is important to do the maximum that can be done, even if it is not on the face of the Bill, to reassure those people?
Joseph Johnson
I thank the hon. Gentleman for his point. We understand the desire for clarity in respect of the committee. At this stage, the detailed design of UKRI will be developed in conjunction with UKRI leadership and existing partner organisations and in line with Government guidance for non-departmental bodies. The fact sheet we have published shows, I hope, that our overarching approach on governance is clear in that respect. Further details will be captured in a framework document, which we have discussed. That will be published once agreed with UKRI’s CEO and board as per the usual practice with non-departmental public bodies. I am glad, though, that the hon. Gentleman was not pressing for the executive chairs themselves to sit on the main UKRI board—that is how I understood his remarks. That is a point on which he and I are in agreement. We do not believe that that would serve the purposes of the organisation.
The second aspect of the amendment is that it would require the committee, to which we have formally committed in the fact sheet, to be consulted on UKRI strategy. It will be for UKRI itself to define the detailed process for developing the strategy. However, I assure the Committee that we would expect it to be an iterative process involving the councils and executive chairs, and informed by engagement with the relevant stakeholder communities. The executive committee, on which the hon. Gentleman is keen and about which I am enthusiastic, seems to me to be a sensible instrument to achieve that aim. I hope the Committee will agree that this is simply a matter of good organisational governance. I do not think it would be appropriate to write it into primary legislation, so I ask that the amendment be withdrawn.
Gordon Marsden
Again, I am grateful to the Minister for taking some time to spell out the Government’s motivation, and I heard what he had to say. I am sure there will opportunities for further questioning. As he says, it is an iterative process. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 91 ordered to stand part of the Bill.
Clause 92 ordered to stand part of the Bill.
Clause 93
Grants to UKRI from the Secretary of State
Joseph Johnson
I beg to move amendment 263, in clause 93, page 56, line 6, at end insert—
‘( ) Where a grant is made in respect of functions exercisable by Research England pursuant to arrangements under section 89, terms and conditions under subsection (1) may be imposed only if—
(a) they are requirements to be met before financial support of a specified amount or of a specified description is given by Research England in respect of activities carried on by an institution, and
(b) they apply to every institution, or every institution within a specified description, in respect of whose activities that support may be provided.”
This amendment provides that where the Secretary of State makes a grant to UKRI in respect of the functions exercisable by Research England (i.e. the giving of financial support to eligible higher education providers (see clause 89)), terms and conditions can only be imposed if they are requirements to be met before the financial support is given and if they apply to all institutions or institutions of a particular description.
The Chair
With this it will be convenient to discuss the following:
Amendment 284, in clause 93, page 56, line 6, at end insert—
‘(1A) In making grants to UKRI under subsection (1), the Secretary of State must specify the separate allocation of funding to be made by UKRI to—
(a) functions exercisable by the Councils mentioned in section 87(1) pursuant to arrangements under that section,
(b) functions exercisable by Innovate UK pursuant to arrangements under section 88, and
(c) functions exercisable by Research England pursuant to arrangements under section 89.
(1B) No variation may be made to the allocation of funding specified by the Secretary of State in subsection (1A) unless the House of Commons has passed a resolution approving any such variation and the variation has the consent of the Northern Ireland Executive, the Scottish Government and the Welsh Government.”
This amendment would ensure there would be separate financial allocations to the Research Councils (collectively), Innovate UK, and Research England.
Government amendments 264 to 267.
Joseph Johnson
The Government amendments in this group will ensure that, in setting the terms and conditions of grants to Research England, the Secretary of State is under the same limitations as in the Further and Higher Education Act 1992. Specifically, amendments 263 and 265 provide that directions or terms and conditions of grants can be given only if they apply to every institution, or to every institution of a specified description. In addition, the specific requirements must be met before financial support is given. Amendments 264, 266 and 267 are consequential changes required by amendments 263 and 265, and will ensure that the purpose of clauses 93 and 94 remains clear.
Roger Mullin
I thank the Minister for indicating earlier that he was willing to allow me to say a few words on amendment 284 before he responds to the debate.
My hon. Friend the Member for Glasgow North West and I have been contacted by many institutions in the devolved nations about amendment 284 more than any other. They are concerned about the potential that hazard will be placed in their way because of the funding structure. The amendment would ensure separate funding allocations for the research councils, Innovate UK and Research England. It is supported not only by the significant number of institutions that I mentioned earlier, but by the Scottish Funding Council. I have had extensive discussions with Dr John Kemp, who is the acting chief executive there.
We know that Scotland performs well in attracting funding—grants, studentships and fellowships—from the research councils, although it does not do quite so well in attracting funding for research institutes and research infrastructure. We of course recognise that there is always scope for flexibility in funding, but there is a difference between building flexibility into something and building in something that will create a hazard to core funding. That is what particularly concerns me about the clause: as it stands, it will allow the Secretary of State or the UK Government, if they so wish, to alter the balance of funding among the research councils.
Any grant to UKRI is ultimately research project funding, which of course should be competitively available throughout the UK. It is therefore necessary to have transparency about what goes to UKRI and what goes to Research England, given that the funds distributed for research infrastructure by the latter body will be available only to English institutions. Separate financial allocations must be introduced for Innovate UK, Research England and the different research councils collectively.
We are extremely concerned, too, that there are no provisions in the Bill to ensure that the Secretary of State and the UK Government do not give directions to UKRI to move funds in year on its own initiative between constituent parts—especially to Research England. That would definitely not be in the spirit of the Nurse report, nor would it give Scotland, Wales or Northern Ireland a fair and equal say in research allocation. If for whatever reason funds had to be moved between research councils and Research England or Innovate UK by the Secretary of State, that must surely happen only if the devolved Administrations gave their consent.
Amendment 284 would ensure that fairness and transparency were at the forefront of the reserved funding allocation to UKRI and the allocation to Research England. It would also ensure that the balanced funding principle was measured in relation to the proportion of funding allocated by the Secretary of State for reserved UK and devolved England-only funding, and that clarity was provided on when that might not be achieved. Many bodies that have talked to me are at a loss as to why the appropriate funding streams are not set out in the Bill. I am therefore particularly keen to hear the Minister’s response.
The Chair
Before I call the Minister, I remind colleagues that it is now 3.27 pm and the Committee finishes at 5 o’clock. Although there is potential for further debate, Members should bear that in mind if they want to debate later issues.
Joseph Johnson
I do not believe that amendment 284 is necessary. The Bill already ensures that each research council will retain significant authority and autonomy over its functions and disciplines. The Government have also set out their intention to make funding allocations to each of the councils to support those functions. As now, such allocations will be subject to Government rules and processes for managing public money. The amendment would require the Secretary of State to specify the allocations made to the research councils, Innovate UK and Research England, with no ability to vary allocations without the consent of Parliament. That would be restrictive, and it would not be a good use of parliamentary time to scrutinise potentially small budget flexibilities that had already been scrutinised by the Treasury.
Amendment 284 would also require the consent of the Northern Ireland Executive, the Scottish Government and the Welsh Government in respect of any variation in allocations, even when those matters were reserved to the Secretary of State. Such an amendment could compromise value for money where the time delays involved in such approvals would make any budget flexibility impractical.
Amendment 284 would therefore introduce an unnecessary and overly restrictive requirement, and to make such an amendment would hinder best practice in managing public money and make the system inflexible. UKRI is already bound by rules established for managing public money and a financial accountability and assurance framework that will be set up with the Department. Those arrangements do not constitute a reduction in oversight by Parliament or devolved Administrations, and on that basis, I ask Members to support amendment 263.
Roger Mullin
I dearly wish that I could believe the Minister’s explanation. I am willing not to press amendment 284 at this stage, but I intend to go back to all those who have expressed such deep concern and potentially bring the issue back on Report.
Amendment 263 agreed to.
Amendment made: 264, in clause 93, page 56, line 22, at end insert—
“( ) In this section “specified” means specified in the terms and conditions.”.—(Joseph Johnson.)
This amendment is consequential on amendment 263.
Clause 93, as amended, ordered to stand part of the Bill.
Clause 94
Grants to UKRI from the Secretary of State
Gordon Marsden
I beg to move amendment 328, in clause 94, page 56, line 24, leave out “directions” and insert “recommendations”.
This amendment would ensure this legislation is consistent with the Haldane Principle.
The amendment would address the basis on which the Secretary of State gives directions to UKRI. The suggestion of replacing “directions” with “recommendations” has come from other parties, but we are entirely happy with it. Our intention in tabling the amendment is to tease out whether the legislation is consistent with the so-called Haldane principle. Members will be familiar with the way in which, in Parliament, revered things that have a name attached to them are constantly prayed in aid. If anyone was going to ask “Who was Haldane?”, I will tell them.
The report on which the Haldane principle is based was published in the last year of the first world war. Richard, Viscount Haldane, had a distinguished career: he was Secretary of State for War, a politician, lawyer and philosopher. Eventually he did the right thing and moved over from being a radical Liberal to being the first Lord Chancellor in the first Labour Government—we must praise him for that if for nothing else. The Haldane principle is one of those arks of the covenant in academia: it is often cited, but we need to fillet it a little, because otherwise it might just become like the so-called Schleswig-Holstein question, about which I think it was Bismarck who said that only two people understood it and one of them was dead and the other had gone mad. [Interruption.] Three people—that probably included Bismarck, of course.
Whatever the Haldane principle is, it has been understood as the principle that the Government should not interfere in decisions about the allocation of expenditure for grants. The reasons for that are fairly simple and can perhaps be seen from diverse Administrations in other parts of the world where the pork barrel principle sometimes holds sway. It is welcome that the Government have considered the Haldane principle when drafting the Bill, but it is also important that we get a little more definition. There is considerable concern outside this place, particularly because of the phraseology. The Council for the Defence of British Universities, among others, has expressed particular concerns about clauses 93 and 94:
“There is serious concern that the understanding of the Haldane Principle among Government Ministers and their advisers has been narrowed in recent years, and that this is endangering the scope for academics to exercise their own judgement as to what kinds of research should be pursued.”
It expresses further concern about clause 87’s requirement for research councils to
“have regard to the desirability of…(a) contributing to economic growth in the United Kingdom, and (b) improving quality of life”.
We have debated that and I do not intend to go into again now, but the CDBU makes the point that:
“The protection for academic freedom…that was written into the Further and Higher Education Act of 1992 took the form of prohibiting the Secretary of State from placing terms and conditions on grants to HEFCE with reference to particular programmes of research—but HEFCE is about to be abolished under the new Bill. It is also unclear whether the wording in clauses 93 (2) and 94 (2) of the Bill, which is taken over from section 68 of the Further and Higher Education Act 1992…provides adequate protection for academic freedom from the effects of directions issued by the Secretary of State.”
The CDBU regards that as a reasonable basis for raising concerns.
The same is true of the Royal Society. Concerns have been expressed in the media and the society is keen to make the point that it is seeking clarification from the Government of how the Secretary of State’s proposed powers are consistent with the Haldane principle, and how the Government intend that to operate. Again, the factsheet says:
“Government is fully committed to the principle that funding decisions should be taken by experts in their relevant areas and we have ensured this is reflected in the design of UKRI.”
Our understanding is that the power to give direction is rarely invoked, but it is frequently included in legislation to allow the Government to take control in exceptional circumstances.
I have mentioned the nudge principle more than once during the passage of the Bill. We all know that the power that Governments exert over legislatures and over academics are not necessarily powers that they either have to execute or would have to execute, but the uncertainty around powers that they might have to execute often concentrates the mind of those people against, shall we say, strong, independent action, rather than towards it, so it is an important principle to tease out.
In the run-up to the passage of Bill and subsequently, there have been a number of important commentaries on that. Nick Hillman, who is the director of the Higher Education Policy Institute, has already expressed concerns that the Government’s
“desire to reduce the number of arms-length bodies is being put above the importance of maintaining the independence of our research funding structures.”
The then chair of the Select Committee on Science and Technology, the hon. Member for Oxford West and Abingdon (Nicola Blackwood), who is now a ministerial colleague of the Minister in another Department, said:
“I…welcome the restatement of the Haldane principle and the Government’s intention to enshrine the dual support system into law, but bringing all funding into UK Research and Innovation—UKRI—will require a separation in practice as well as in principle if we are to preserve the excellence-based allocation on which our world-leading system is founded…We have to ensure that the structures we set in place safeguard the autonomy and the strong voices of our existing research councils while achieving the stated goal of better interdisciplinary working.”—[Official Report, 25 May 2016; Vol. 611, c. 580.]
There are voices who welcome the Government saying they will abide by the Haldane principle but who want a lot more detail at some point—hopefully we might get some today—as to how the Minister envisages that operating.
I will leave it there. I am glad to have enlightened people as to who Lord Haldane was. I hope his shade—who knows; it might be in one of the paintings down the corridor somewhere—will be looking on benignly but with a curious eye on the Minister as he attempts to explain the principle.
The Chair
I am grateful to the hon. Gentleman. In practice we cannot see the pictures in the Committee.
Joseph Johnson
I thank the hon. Member for Blackpool South for the opportunity to discuss Haldane. Let me reassure the Committee that this Government are fully committed to the fundamental principle that funding decisions should be taken by experts in their relevant areas. As my predecessor in this role, David Willetts, said in 2010:
“excellence is and must remain the driver of funding decisions, and it is only by funding excellent research that the maximum benefits will be secured for the nation.”—[Official Report, 20 December 2010; Vol. 520, c. 139WS.]
We have ensured that that principle is reflected in the design of UKRI.
The provisions in the Bill contain several measures to protect the Haldane principle, including that UKRI will be established as an arm’s length body independent of Whitehall; that UKRI will be required to devolve functions within specified fields of activity to its constituent councils, ensuring that individual funding decisions are made by relevant experts; and that subsidiarity in the design of UKRI will ensure that the councils take all scientific and other decisions in their area where expert knowledge is essential to driving excellence.
As hon. Members know, I published a fact sheet on 12 October that sets out more details of how the Bill protects the Haldane principle, which I hope has been helpful. I do not agree that the amendment would strengthen the Haldane principle in the Bill. I believe the unintended consequence would be to weaken significantly the safeguards on public funding within the legislative framework. The Secretary of State currently has an equivalent power of direction over research councils in section 2 of the Science and Technology Act 1965, and our proposals in clause 94 are intended to mirror that.
The rationale for this power relating to the money given to UKRI, which is at present upwards of £6 billion per annum, is that the Secretary of State can deal swiftly with any financial issues arising from, for example, mismanagement. That ensures the most effective safeguard for public finances. Such powers of direction are rarely used, but given the very large sums of public money for which UKRI will be accountable, they are proportionate. On that basis, I ask the hon. Gentleman to withdraw amendment 328.
Gordon Marsden
Again, I thank the Minister for using the opportunity of our probing amendment to say a little more about how he envisages the Haldane principle being enshrined in the Bill. That has been helpful. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment made: 265, in clause 94, page 56, line 25, at end insert—
‘( ) The Secretary of State may give a direction under this section in respect of functions exercisable by Research England pursuant to arrangements under section 89, only if —
(a) it relates to requirements to be met before financial support of a specified amount or of a specified description is given by Research England in respect of activities carried on by an institution, and
(b) it relates to every institution, or every institution within a specified description, in respect of whose activities that support may be provided.”—(Joseph Johnson.)
This amendment provides that the Secretary of State can only give a direction about the allocation of grants to UKRI in respect of the functions exercisable by Research England if the direction relates to requirements to be met before the financial support is given and if it relates to all institutions or institutions of a particular description.
Roger Mullin
I beg to move amendment 285, in clause 94, page 56, line 25, at end insert—
‘(1A) Within six months of this Act coming into force, the Secretary of State shall give a direction to UKRI to commission an independent evaluation of the matters under subsection (1B) and shall lay the report of the evaluation before the House of Commons.
(1B) The evaluation under subsection (1A) shall consider—
(a) the effect of the absence of post study work visas for persons graduating from higher education institutions in the United Kingdom to be granted leave to remain in the UK on completion of their studies to work for up to two years for an employer on—
(i) the economy, efficiency and effectiveness of the higher education sector, and
(ii) the UK economy, and
(b) how post study work visa arrangements, applying either broadly or to classes of students, disciplines and institutions, could operate in the UK and their effect of each on—
(i) the economy, efficiency and effectiveness of the higher education sector, and
(ii) the UK economy.”
This amendment would require the Secretary of State to commission research from UKRI on the effects of the absence of arrangements for post study work visas and how such arrangements could operate in the UK and their effect on the higher education sector and the UK economy.
I could easily spend the next two hours discussing this subject [Hon. Members: “Oh no!”]—but perhaps I will not. This is a probing amendment, but it is important none the less, particularly for Scottish representatives. It would require the Secretary of State to commission research from UKRI on the effects of the absence of arrangements for post-study work visas, how such arrangements could operate in the UK and their effect on the higher education sector and the UK economy.
If ever there were an issue before this Parliament that demonstrates the completely different economic and social priorities of Scotland and the rest of the UK, this is it. Historically, Scotland’s problem has been not immigration but emigration. In my own family, both my brother and sister emigrated many years ago. My brother could not find a job after graduating in the early 1960s, but by the age of 30 was secretary of the Science Council of Canada and went on to be vice-president of the International Development and Research Corporation. He wrote the first science and technology paper for the free Government in South Africa after meeting Nelson Mandela but could not find a job in his own land. He was only one of thousands of people over many generations who had to emigrate.
Joseph Johnson
I thank the hon. Gentleman for raising this important issue. International student migration and post-study working arrangements are important issues for the HE sector and the Government. Brain gain is definitely the key to our sustained success as a knowledge economy, but I do not believe that the Bill is the appropriate vehicle for commissioning research into post-study work. The Bill is focused on creating the necessary structures that will oversee higher education and research funding for many years to come. The amendment proposes a short-term piece of research on an element of migration policy, and that is not consistent with the scope and functions of UKRI. That said, I thank the hon. Gentleman for giving me the opportunity to explain briefly the Government’s approach to student migration and to post-study working arrangements for international students.
The Government greatly value the contribution that international students make to our universities, including those in Scotland. We want our top universities to continue to attract the best students from around the world. The UK has a generous post-study work offer for overseas students who graduate in the UK. International graduates can remain in the UK to work following their studies by switching to several existing routes. For example, if they get a graduate-level job, they can switch to a tier 2 skilled worker visa. If they start a business, they can move to a tier 1 entrepreneur or graduate entrepreneur visa, or they can do work experience under a tier 5 temporary worker visa. There is no cap, as we have discussed previously, on the number of students who can switch to a tier 2 skilled worker visa and all degree students are potentially eligible to stay on for post-study work.
Roger Mullin
The trouble is that the requirements and criteria set for graduate-level work might well be appropriate for the south of England, but looking at the recent case of the Brain family and the amount of work needed to allow that family from Australia to get a tier 2 visa and stay and contribute in Scotland—thanks to the work of my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford)—those requirements are not as suitable for our circumstances as the Government pretend. The Minister went on to talk about tier 1 visas; over the past year, in the region of 70% of applicants for tier 1 entrepreneurship visas have been rejected. It does not seem to me that that is adequate in providing for the future.
Joseph Johnson
We always want to ensure that our visa system is working well and we believe, with respect to people switching from tier 4—the student route—into tier 2, that it is working well at present. Certainly, at least looking at the numbers of people switching, under our current arrangements more than 6,000 international students switched from tier 4 into tier 2 in the UK in 2015; that is an increase from around 5,500 in 2014 and 4,000 in 2013. The hon. Gentleman mentioned tier 1 and the number of rejections. That reflects an element of abuse in the old tier 1 category, which was then the post-study work category, with a published Home Office assessment undertaken in October 2010 finding that three in five of the then tier 1 migrants were in unskilled work. That is the basis on which changes were made to our system.
Until 2012 there was a dedicated post-study work route under tier 1 of the visa system, as I just mentioned, which saw a significant number of fraudulent applications and graduates who were remaining unemployed or in low-skilled work. That is why we replaced it with a more selective system, as the hon. Gentleman mentioned. This reform to post-study work has not prevented the UK from attracting international students. Since 2010, applications to UK universities have gone up by about 14% and we remain the second most popular destination in the world after the US for international students.
I am therefore unconvinced that such research would add value, given that the current visa system provides generous post-study work opportunities and the Government will, in any case, shortly be consulting on these issues. As I have explained, the Bill is in any case not the appropriate mechanism for commissioning such research. On that basis, I ask the hon. Gentleman to withdraw the amendment.
Roger Mullin
I am happy to say I have made my point and I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: 266, in clause 94, page 56, line 26, leave out “But”.
This amendment is consequential on amendment 265.
Amendment 267, in clause 94, page 56, line 34, at end insert—
“( ) In this section “specified” means specified in the direction.”.—(Joseph Johnson.)
This amendment is consequential on amendment 265.
Clause 94, as amended, ordered to stand part of the Bill.
Clause 95
Balanced funding and advice from UKRI
Gordon Marsden
I beg to move amendment 329, in clause 95, page 57, line 4, leave out “reasonable”.
This amendment seeks to establish what a reasonable balance between Quality Related funding and project-specific funding is and to clarify how the dual support system will be protected by this legislation.
The amendment might seem perverse, but it is a mechanism to explore with the Government what a reasonable balance is between quality-related funding and project-specific funding, and to clarify how the dual support system will be protected by the legislation. Again, as with the Haldane principle, which we just discussed, the Bill seeks to enshrine dual support in legislation for the first time. This is welcome; it has been welcomed by many people in the sector. This is a probing amendment to clarify how it will be protected by the legislation or, in other words, to invite the Minister to comment on what he, his officials and any others who he would expect to make judgments would expect a reasonable balance actually to look like.
The dual support system underpins our excellent research base, and I will not go into all the ways in which it is disbursed—we have dealt with that previously—but it would be helpful to understand what would be a reasonable balance between the two funding streams.
As the hon. Member for Kirkcaldy and Cowdenbeath has asked, how will the principle operate in Scotland, Wales and Northern Ireland? The Government’s October paper on UKRI says:
“The Bill requires the Secretary of State to consider the balance between these two funding streams ensuring that the dynamic balance that stakeholders have supported is protected and preserved.”
That is an interesting phrase, “the dynamic balance”. I am not sure what I think it means, but I know that concerns have been expressed not about the enshrining of the duty in the Bill but about precisely what teeth the enshrinement will have.
Chris Hale, the director of policy at Universities UK, wrote “The Higher Education White Paper—all you need to know” in May 2016, in which he said:
“At face value we will see for the first time dual support enshrined in a legislative arrangement (to date dual support has been largely a matter of convention), but the critical question is does this go far enough? While the Secretary of State may have to consider the balance under this new duty, this provision does not necessarily secure the health and dynamism”—
that interesting phrase again—
“of dual support. This is one to watch carefully and there may be scope to strengthen this in the Bill.”
Similarly, the Council for the Defence of British Universities has said that
“while the White Paper contained an undertaking…the requirement in clause 95 of the Bill that the Secretary of State should ‘have regard to…the balanced funding principle’ appears vague”.
The CDBU refers to my right hon. Friend the Member for Oxford East (Mr Smith)—both Oxford constituencies are getting a mention today—and his excellent speech on Second Reading, in which he aired some of the concerns of his constituents and, if memory serves, although I stand to be corrected, the University of Oxford on how the principle will be enacted.
The Minister referred to the Stern review earlier, and the CDBU says:
“An approach to strengthening the wording in the Bill is suggested by a passage in the Stern Review of the REF…which states that, in addition to competitive grant funding, the capacity of universities to sustain excellent research depends on ‘a long-term, stable block grant that allows universities to invest strategically in research in ways which foster its future development’. If all funding streams are administered through one body (i.e. UKRI), as currently proposed, this endangers the separate purposes of the two funding streams.”
The Minister may or may not wish to dissent from that view, which is put another way by the Royal Society in its commentary. It says:
“The ‘balanced funding principle’ is the principle that it is necessary to ensure that a reasonable balance, suitable for maintaining the long-term excellence and efficiency of the UK research base, and preserving the values, customs, partnerships and practices that have underpinned these, including allocation based on both retrospective and prospective assessment is achieved in the allocation of funding…However, we are not convinced that the ‘balanced funding principle’ as currently defined in the Bill includes sufficient content to fully embody the dual support system. The ‘balanced funding principle’ should be defined to make it clear that it entails substantial portions of research funding being allocated both via the block grant and via Research Councils. We would suggest the definition of the principle of balanced funding should be strengthened to make explicit reference to maintaining the values and customs of the research base, including a balance of retrospective and prospective assessments.”
Those sentiments and that terminology are not far away from the concerns that the CDBU expressed or, indeed, that my right hon. Friend the Member for Oxford East mentioned on Second Reading.
I would be grateful if the Minister could muse—if that is the right word—on the appropriateness of the word “reasonable” and on what it means, and give us a bit more chapter and verse on how he envisages the dual support being carried out in practice through legislation, as opposed to the statement of good intent, which we welcome.
Joseph Johnson
I am pleased to have the opportunity to share with the Committee more detail about how the Government are setting out in legislation for the first time the dual support system for research and introducing, in legislation, the concept that the balance between the two funding streams is important. That is a significant enshrinement in law of one of the key features underpinning the success of our research system. Up until now, pretty much with the stroke of a pen at any fiscal event the dual support system could be done away with, and that will not be possible once the Bill receives Royal Assent.
Lord Stern’s recent review of the research excellence framework described the two strands of the dual support system as
“essential, intertwined and mutually supportive”
drivers of the UK’s success in research. Dual support combines project funding for excellent research proposals, which is forward looking, with formula-based block grant funding that rewards performance retrospectively. So one element is forward looking and the other is backward looking. In his report, Sir Paul Nurse described the system as
“one of the bedrocks of UK research”
that was identified as critical to the UK’s world-leading reputation. The legislation ensures that in the future it will be mandatory to provide support for the block grant provided by Research England, and for the funding provided by the research councils.
Clause 95 introduces an additional obligation to provide proportionate funding for each of the two parts of dual support, first to ensure that what constitutes a reasonable balance for dual support is considered carefully by the Secretary of State before grants to UKRI are made.
Joseph Johnson
I am just coming to the hon. Gentleman’s point—I am going to anticipate his question. Secondly, the Secretary of State must consider any advice from UKRI about what that reasonable balance may be.
Gordon Marsden
The Minister is semi-telepathic. I was going to touch on that point, but I was also going to touch on how he envisages the assessment being made. Ultimately, this is about sums of money and the balance between retrospective and prospective funding. Who, in that scenario, would make those sorts of decisions?
Joseph Johnson
The Secretary of State will be required to consider UKRI’s advice on the balance of funding. The new legal protections will apply to future Governments as much as to this one. We have already shown in our two previous spending reviews our consistent support for science funding and the dual support system, but we want the legislation to be sufficiently flexible for Governments to respond to the circumstances at the time, which is why we do not seek to fix a specific proportion for dual support in the Bill.
When considering what the balance of funding should be, we expect that the Secretary of State will, as now, consider issues such as the strategic priorities of the research base, the sustainability of higher education institutions, research capability and other research facilities supported through the UKRI budget. So balanced means taking into account the balance of those kinds of interests, which will determine how the Secretary of State will support the dual support system in his allocation decisions.
The Secretary of State will continue to allocate the councils’ budgets separately through an annual grant letter to UKRI. The allocations of the research councils on the one hand and Research England on the other will, as now, make up that dual support system.
Legislation must be sufficiently flexible for Governments to respond to circumstances at the time, but they will have to consider the balance of dual funding, unlike now, where no such protection exists. As the hon. Gentleman mentioned, this provision has been warmly welcomed by a huge number of key stakeholders across the sector. We have heard enough from several of them already, so I will not give them another outing; we do not need to rest on our laurels in that respect. To ensure that the new protection for dual support that is so welcomed by the research community is delivered through this legislation, I ask the hon. Gentleman to withdraw his amendment.
Gordon Marsden
I thank the Minister for his remarks. I only pause to reflect that in politics, there can never be too much gilding of the lily. I take the points he has made. His remarks are a helpful contribution to what I am sure will be a continuing discussion. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 95 ordered stand part of the Bill.
Clauses 96 to 98 ordered to stand part of the Bill.
Clause 99
Provision of research services
Amendment made: 268, in clause 99, page 58, line 5, leave out “in relation to” and insert “into”.—(Joseph Johnson.)
This is a drafting amendment to ensure that clause 99 is more consistent with other clauses in Part 3.
Clause 99, as amended, ordered to stand part of the Bill.
Clauses 100 and 101 ordered to stand part of the Bill.
Clause 102
Definitions
Amendment made: 269, in clause 102, page 59, line 4, leave out “social science” and insert “social sciences”.—(Joseph Johnson.)
This amendment amends the definition of “science” in Part 3 so that it includes social sciences and so ensures consistency with the language used in clause 87(1).
Clause 102, as amended, ordered to stand part of the Bill.
Clauses 103 and 104 ordered to stand part of the Bill.
Schedule 10
Transfer schemes
Joseph Johnson
I beg to move amendment 270, in schedule 10, page 98, line 13, after “means” insert “the Secretary of State or”.
This amendment enables the Secretary of State to be a “permitted transferor” for the purposes of a property transfer scheme or staff transfer scheme made under Schedule 10.
Joseph Johnson
These amendments provide additional, complementary powers to those already in the Bill, to enable an orderly and efficient transfer of staff, property and assets. We have reflected further on the Bill’s provisions as we prepare for transition, and the amendments are intended to help make the transition planning more straightforward.
Amendment 270 empowers the Secretary of State to be a permitted transferor alongside HEFCE, OFFA, Innovate UK and the research councils. That will mean, for example, that when the Department for Education stops regulating what are currently known as alternative providers and the OFS becomes responsible for regulating all providers, there will be an option to transfer DFE resources to the OFS to support that where appropriate.
Amendment 271 creates a standard provision consistent with precedent transfer scheme powers in other legislation, such as the Public Bodies Act 2011. It enables modifications to be made to transfer schemes so that the changes have effect as if they had been in place at the original date of the scheme. That is the most efficient way to enable tidying-up exercises where, for example, the destination or arrangements relating to staff or assets might for legitimate reasons be reassessed during the transition process.
Amendment 270 agreed to.
Amendment made: 271, in schedule 10, page 99, line 14, leave out from “provide” to end of line 15 and insert—
“(a) for the scheme to be modified by agreement after it comes into effect, and
(b) for any such modifications to have effect from the date when the original scheme comes into effect.”—(Joseph Johnson.)
This amendment makes it clear that modifications to a property transfer scheme or staff transfer scheme under Schedule 10 can be made so as to have effect from the date on which the scheme came into effect.
Schedule 10, as amended, agreed to.
Clause 105
Power to make consequential provision etc
Question proposed, That the clause stand part of the Bill.
Gordon Marsden
I am sorry if I have delayed a bundling up of clauses.
The power to make consequential provision of one sort or another often appears in Bills. It is a phrase that slips off the tongue and sometimes down the gullet rather too easily. I want to draw the Committee’s attention to the implications of subsection (2), which reads:
“(2) The power conferred by subsection (1) includes power to amend, repeal, revoke or otherwise modify—
(a) primary or secondary legislation passed or made before this Act or in the same Session as this Act, or
(b) subject to subsection (3), a Royal Charter granted before this Act is passed or in the same Session as this Act.”
Those anodyne phrases, which have been polished over many years by parliamentary draftspeople, can often pass by unnoticed, but in this context it is worth debating for a few moments the propriety of the Secretary of State being given such powers when we are told that they will involve, for good or ill—people can make their own decision—the overturning of not 100 years but several centuries of custom and practice with royal charters. Some people believe that the Bill will also cause a major shift in the relationship between the higher education sector and the state—a relationship that anyone who is of an antiquarian disposition, or even just knows their history, will know goes back nearly 800 years. That is why several organisations have called for changes to be made to the Bill.
I am particularly unhappy about the complete removal of the powers of royal charters. We have debated that issue previously, and I do not intend to go over it again, but this clause is the practical expression of that airbrushing out of royal charters and a long-stop to the development of powers for the Office for Students. That is why Universities UK has called for a higher threshold of evidence to be required of the OFS before it can take sanctions against an institution. The University of Cambridge said in its evidence that the revocation of degree-awarding powers or university title
“is not a decision to be made without a high level of scrutiny and proper accountability.”
This is not simply an arcane argument among academics, because as the Opposition have endeavoured to emphasise, what affects universities, particularly in the 21st century, is not just what affects their students and academics but what affects the people who work in them, the local economies that are affected by them and so on. It is therefore not arcane or antiquarian to discuss whether the Government are going too far in this issue.
As it happens, two articles in the last couple of weeks—an editorial in Nature and an article in the Financial Times—have made the point that the Government need to be challenged closely on these issues, in a way that frankly we were not able to do on Second Reading. We have endeavoured to begin that process in Committee, but I suspect it will have to continue in another place. There is a fundamental question to be asked. If the Government answer it satisfactorily, with the right assurances that the powers that the clause gives the Secretary of State will be exercised judiciously and reasonably, perhaps everybody will close their books and say, “Well, there we are. We don’t have to worry about keeping royal charters and all the rest of it.” The onus is on the Government to make that demonstration, and I submit that they have not made that case very strongly so far in Committee.
Joseph Johnson
I say at the outset that the clause is an entirely standard provision; it is essential to be able to update previous legislation to bring it in line with the Bill. However, I am glad to have the chance to address the hon. Gentleman’s points.
Clause 105 enables the Secretary of State to make changes, by regulation, to other legislation, as a consequence of provision made by or under the Bill. Royal charters can be amended only in consequence of provision made by or under the clauses on degree-awarding powers or university title. The Bill provides that such changes be made by regulations that are subject to either the affirmative or the negative resolution procedure, depending on the nature of the changes. If they amend or repeal an Act of the UK Parliament or the Scottish Parliament, a Measure or Act of the National Assembly for Wales, Northern Ireland legislation or a royal charter, the regulations must follow the affirmative procedure; otherwise, the negative procedure is to be followed.
Let me provide some further colour to that rather technical description. We have long recognised that in order to be able to regulate the sector effectively, refined express powers to remove degree-awarding powers in very serious cases are vital. Those powers signal to the sector what is at stake if standards fall. A key focus of the new system will continue to be quality and the protection of the English higher education system. That would be undermined if a provider’s quality were to drop to unacceptable standards and it could none the less continue to award degrees or call itself a university. The Bill therefore includes express powers to vary and remove degree-awarding powers and to remove university title, giving the OFS the power to intervene where necessary, which will help to protect both students and the quality and reputation of English higher education.
The powers are intended to be applied only if other sanctions and interventions have failed to produce the necessary results. Some might say that the express powers are a risk to students, but the opposite is the case. If a provider was to lose its degree-awarding powers under the new system, we would expect student protection plans to come into force, enabling students to complete their degree. That is far less risky than asking students to stay with a poor provider and to continue to pay for poor provision.
Several higher education institutions have been established via royal charters. We do not propose to change that. The Bill does not revoke universities’ royal charters, and we envisage that powers to amend them will be used only in the rare circumstances where it may become necessary following the OFS’s removal of degree-awarding powers or university title enshrined in a royal charter. In such situations, and subject to parliamentary scrutiny, the Secretary of State will be able to amend royal charters. That power is explicitly limited and can only be used if appropriate and, importantly, in consequence of provisions that relate to degree-awarding powers and university title. The power is necessary to give seamless effect to the new powers to vary or remove degree-awarding powers and remove university title, and it will help create a level playing field for all new providers.
The powers in the clause are explicitly limited and can be used only if appropriate and in consequence of provisions that relate to degree-awarding powers and university title. We do not envisage a scenario where that would result in the revocation of an entire royal charter that established an institution. Importantly, there are safeguards in clauses 44, 45, 54 and 55, which apply to any decisions by the OFS to vary or revoke degree-awarding powers and university title. Those powers include the right of appeal to the first-tier tribunal, which is an important independent check that means that the OFS cannot just revoke degree-awarding powers and university title contained in a royal charter. The Secretary of State cannot make any consequential amendments to royal charters because of provisions in the Bill, or following the exercise of OFS’s powers, without parliamentary scrutiny.
The clause ensures that the provisions in the Bill work as intended, while preserving an appropriate level of parliamentary scrutiny for the legislative changes that need to be made. I commend it to the Committee.
Question put and agreed to.
Clause 105 accordingly ordered to stand part of the Bill.
Clauses 106 to 110 ordered to stand part of the Bill.
Schedule 11
Minor and consequential amendments relating to Part 1
Amendment made: 111, in schedule 11, page 102, line 30, at end insert—
“21A (1) Section 82 (joint exercise of functions) is amended as follows.
(2) Omit subsections (1) to (1B).
(3) In subsection (2), for “Great Britain” substitute “Wales and Scotland”.
(4) In subsection (2A), after “Scottish” insert “Further and”.
(5) In subsection (3)(a)—
(a) for “a higher education funding council” substitute “the HEFCW”,
(b) for “the National Assembly of Wales” substitute “the Welsh Ministers”,
(c) for “it is discharging its” substitute “they are discharging their”, and
(d) after “Scottish” insert “Further and”.”.—(Joseph Johnson.)
This amendment repeals subsections (1) to (1B) of section 82 of the Further and Higher Education Act 1992 in consequence of the provision made in amendment NC3. It also amends the remainder of that section to remove the Higher Education Funding Council for England from its provisions, to make consequential changes and to update references to the Scottish Higher Education Funding Council and the National Assembly for Wales.
Schedule 11, as amended, agreed to.
Schedule 12
Minor and consequential amendments relating to Part 3
Amendments made: 272, in schedule 12, page 109, line 24, at end insert—
“20A The Government of Wales Act 2006 is amended as follows.
20B (1) Schedule 3A (functions exercisable concurrently or jointly with the Welsh Ministers) (which is inserted by the Wales Act 2016) is amended as follows.
(2) In the Table in paragraph 1(2), in the entry relating to the Science and Technology Act 1965, in the column headed ‘Functions’, after ‘relating to’ insert ‘United Kingdom Research and Innovation and’.”
This amendment amends Schedule 3A to the Government of Wales Act 2006 (which is inserted by the Wales Bill) so that the functions of a Minister of the Crown under section 5 of the Science and Technology Act 1965 (powers to support research etc), so far as relating to UKRI, are not exercisable concurrently with the Welsh Ministers.
Amendment 273, in schedule 12, page 109, line 28, at end insert—
“21A (1) In Part 2 of Schedule 7A (specific reservations) (which is inserted by the Wales Act 2016), Section C11 (Research Councils) is amended as follows.
(2) In the heading, at the beginning insert ‘United Kingdom Research and Innovation and’.
(3) In paragraph 85—
(a) at the beginning insert ‘United Kingdom Research and Innovation (‘UKRI’), and’, and
(b) after ‘relating to’ insert ‘UKRI and’.
(4) In paragraph 86—
(a) omit ‘Arts and Humanities Research Council within the meaning of Part 1 of the Higher Education Act 2004, and the’,
(b) for ‘that Act’ substitute ‘the Higher Education Act 2004’, and
(c) for ‘that Council’ substitute ‘UKRI’.”.
This amendment amends the reservation regarding Research Councils in Schedule 7A to the Government of Wales Act 2006 (which is inserted by the Wales Bill) to ensure that UKRI (like Research Councils) is a reserved matter and to take account of the Arts and Humanities Research Council ceasing to exist under clause 101.
Amendment 274, in schedule 12, page 109, line 37, at beginning insert
“In the English language text,”.
This amendment and amendments 275, 276 and 278 ensure that both the English language text and the Welsh language text of the Welsh Language (Wales) Measure 2011 are amended by Schedule 12 to reflect the establishment of UKRI and the fact that its predecessor bodies cease to have effect.
Amendment 275, in schedule 12, page 110, line 4, at end insert—
“( ) In the Welsh language text, omit the entries relating to—
(a) Cyngor Cyfleusterau Gwyddoniaeth a Thechnoleg,
(b) Cyngor Ymchwil Biotechnoleg a Gwyddorau Biolegol,
(c) Y Cyngor Ymchwil Economaidd a Chymdeithasol,
(d) Y Cyngor Ymchwil Meddygol,
(e) Cyngor Ymchwil Peirianneg a Gwyddorau Ffisegol,
(f) Cyngor Ymchwil yr Amgylchedd Naturiol, and
(g) Y Cyngor Ymchwil i‘r Celfyddydau a‘r Dyniaethau.”
See the explanatory statement for amendment 274.
Amendment 276, in schedule 12, page 110, line 5, at beginning insert
“In the English language text,”.
See the explanatory statement for amendment 274.
Amendment 277, in schedule 12, page 110, line 7, in column 1 after “Innovation” insert
“(“Ymchwil ac Arloesedd y Deyrnas Unedig”)”.
This amendment inserts a reference to the Welsh name for “United Kingdom Research and Innovation” in an amendment made to the English language text of the Welsh Language (Wales) Measure 2011 by Schedule 12.
Amendment 278, in schedule 12, page 110, line 10, at end insert—
“( ) In the Welsh language text, insert at the appropriate place under the heading ‘cyffredinol’—
‘Ymchwil ac Arloesedd y Deyrnas Unedig (‘United Kingdom Research and Innovation’) | Safonau cyflenwi gwasanaethau |
Safonau llunio polisi | |
Safonau gweithredu | |
Safonau cadw cofnodion’”. |
—(Joseph Johnson.)
See the explanatory statement for amendment 274.
Joseph Johnson
I beg to move amendment 279, in schedule 12, page 110, line 12, leave out from “Crown)” to end of line 14 and insert—
“, in paragraph (a), for ‘the Natural Environment Research Council’ substitute ‘United Kingdom Research and Innovation’”.
This amendment amends the amendment made by paragraph 24 of Schedule 12 to section 10(4)(a) of the Antarctic Act 2013 to ensure that the reference in that provision to the British Antarctic Survey is retained.
Joseph Johnson
The amendments are all consequential amendments to other legislation. Amendments 279 and 280 are to schedule 12, and make a number of consequential amendments that reflect the impact of part 3 of the Bill on existing legislation. Paragraph 24 of schedule 12 is specifically directed at the Antarctic Act 2013. In making these changes, we wish to preserve a reference to the British Antarctic Survey, which is currently contained in section 10(4) of the Antarctic Act 2013. As originally drafted, paragraph 24 of schedule 12 did not achieve that objective. Amendment 279 ensures the correct change will be made to section 10(4) of the 2013 Act.
Amendment 280 is a technical amendment necessary to ensure that the territorial scope of the 2013 Act remains unchanged after it is amended to account for the creation of UKRI. Amendment 281 relates to clause 111, which sets out the territorial extent of the provisions of the Bill, some of which extend to the whole of the UK, and some of which extend only to England and Wales. Schedule 12 makes provision for minor and consequential amendments to existing legislation, including the Patents Act 1977. That Act also extends to the Isle of Man as well as the whole of the United Kingdom. This technical amendment ensures that the amendments and repeals made to section 41 of the Patents Act by schedule 12 will have the same extent as that section, which includes the Isle of Man.
Amendment 279 agreed to.
Amendments made: 280, in schedule 12, page 110, line 14, at end insert—
“(2) Subsections (2) and (3) of section 34 of the Antarctic Act 1994 (power to extend to the Channel Islands, Isle of Man and British overseas territories) apply in relation to section 10 of the Antarctic Act 2013 as amended by sub-paragraph (1).”.
The Antarctic Act 2013 confers a power to extend the provisions of Part 1 of that Act to the Channel Islands, Isle of Man and British overseas territories (see section 18 of that Act). This amendment provides that the power of extension can be used to extend section 10 of that Act as amended by the Bill to any of those jurisdictions.
Amendment 312, in schedule 12, page 110, line 18, leave out sub-paragraph (2).—(Joseph Johnson.)
This amendment means that pension schemes established for members or staff of an existing research council remain within Schedule 10 to the Public Service Pensions Act 2013 (and are therefore subject to the restrictions in section 31 of that Act).
Schedule 12, as amended, agreed to.
Clause 111
Extent
Amendments made: 112, in clause 111, page 61, line 23, at end insert—
“() section25 (rating the quality of, and standards applied to, higher education);”.
This amendment and amendment 113 are linked to amendment 40 and provide for clause 25 and clause 75 (which contains relevant definitions) to form part of the law of Scotland and of Northern Ireland (as well as the law of England and Wales) in light of the application of clause 25 to Welsh, Scottish and Northern Irish higher education providers as a result of amendment 40.
Amendment 113, in clause 111, page 61, line 25, at end insert—
“() section75 (meaning of ‘English higher education provider’ etc);”.
See the explanatory statement for amendment 112.
Amendment 281, in clause 111, page 61, line 37, at end insert—
“( ) Subsection (3) does not apply to the amendments and repeals made by paragraph 13 of Schedule 12 to section 41 of the Patents Act 1977 which have the same extent as that section.”.—(Joseph Johnson.)
This amendment ensures that the amendments and repeals made to section 41 of the Patents Act 1977 by Schedule 12 to the Bill have the same extent as that section - which includes the Isle of Man.
Clause 111, as amended, ordered to stand part of the Bill.
Clause 112
Commencement
Amendments made: 114, in clause 112, page 61, line 39, after “103” insert “and section (Joint working)”.
This amendment provides for NC3 to be commenced by regulations.
Amendment 115, in clause 112, page 61, line 39, after “103” insert—
“and section (Advice to Northern Ireland departments)”.—(Joseph Johnson.)
This amendment provides for NC17 to be commenced by regulations
Joseph Johnson
I beg to move amendment 313, in clause 112, page 61, line 39, after “103” insert “and section (Pre-commencement consultation)”.
This amendment provides for clause (Pre-commencement consultation) to be commenced by regulations.
The Chair
With this it will be convenient to discuss Government new clause 16—Pre-commencement consultation.
Joseph Johnson
I want to ensure that the OFS and UKRI, as new bodies, are in a strong position to make an impact from the outset, so it is essential we make provision for preparatory to work to begin ahead of them coming into being. The amendment will allow the OFS and UKRI to rely upon consultations carried out by the Secretary of State, the director of fair access, in the case of OFS’s, or HEFCE, before the consultation provisions of the Bill come into force, as if that consultation had been carried out by the OFS or UKRI under those provisions. That means that requirements on the OFS and UKRI to consult can be taken forward in advance on their behalf, so that planning can begin on the systems they will rely on. That will help to ensure a smooth and orderly transition. It also means the sector will not have to wait until the new bodies are in place before it can be legitimately consulted on key aspects of the reforms, such as registration conditions and the new regulatory framework.
Amendment 313 agreed to.
Amendment made: 282, in clause 112, page 61, line 40, at end insert—
“(1A) Sections 78, 79 and 80 come into force, so far as relating to a matter specified in an entry in column 1 of the following table, on such day as the person specified in the corresponding entry in column 2 of the table may by regulations made by statutory instrument appoint, after consulting the person (if any) specified in the corresponding entry in column 3 of the table.
TABLE
Matters: | Commencement by: | After consulting: |
Powers exercisable by the Welsh Ministers | The Welsh Ministers | |
Powers exercisable by the Secretary of State concurrently with the Welsh Ministers | The Secretary of State | The Welsh Ministers |
Powers exercisable by the Secretary of State in relation to Wales | The Secretary of State | The Welsh Ministers |
Other matters | The Secretary of State.” |
—(Joseph Johnson.)
This amendment provides for clauses 78, 79 and 80 (financial support for students) to be brought into force by the Welsh Ministers, so far as relating to powers exercisable by them; by the Secretary of State after consulting the Welsh Ministers, so far as relating to powers exercisable by the Secretary of State and Welsh Ministers concurrently, or by the Secretary of State in relation to Wales; and otherwise by the Secretary of State.
Joseph Johnson
I beg to move amendment 283, in clause 112, page 61, line 40, at end insert—
“(1A) Section(Amendments to powers to support research) comes into force at the end of the period of two months beginning with the day on which this Act is passed.”
This amendment provides for NC7 (which amends powers to support research under the Science and Technology Act 1965 and the Higher Education Act 2004) to come into force 2 months after the Bill is given Royal Assent.
The Chair
With this it will be convenient to discuss Government new clause 7—Amendments to powers to support research.
Joseph Johnson
The majority of research funding is administered by the seven research councils, HEFCE in England and equivalent bodies in the devolved Administrations. That will continue with the advent of UKRI. However, an additional proportion of research funding is allocated by Ministers through powers apportioned in section 5 of the Science and Technology Act 1965 and section 10 of the Higher Education Act 2004. It is under those powers that, for example, BEIS funds the UK Space Agency.
In this Bill, the powers of UKRI to fund research are defined as powers to make
“grants, loans or other payments”
and to set terms and conditions for those—for example, to charge interest. However, there is no equivalent clarity in the 1965 Act and 2004 Act on the funding powers of Ministers. The amendment will ensure there is equivalence between UKRI and Ministers’ powers under those Acts. It will also ensure that Ministers and UKRI are able to make grants, loans or other payments and to specify terms and conditions.
Amendment 283 agreed to.
Amendment made: 118, in clause 112, page 62, line 3, leave out subsection (3)—(Joseph Johnson.)
This amendment is consequential on amendment 282.
Clause 112, as amended, ordered to stand part of the Bill.
Clause 113 ordered to stand part of the Bill.
New Clause 2
Retention of fee related income
“(1) The OfS must pay its fee income to the Secretary of State except to the extent that the Secretary of State, with the consent of the Treasury, directs otherwise.
(2) “Fee income” means the sums received by the OfS by way of—
(a) fees charged under section 63 (registration fees) or 64 (other fees), or
(b) costs recovered by virtue of regulations made under section 63(2)(f) or 64(2)(g).
(3) The OfS must pay its other fee related income to the Secretary of State.
(4) “Other fee related income” means the sums received by the OfS by way of—
(a) penalties imposed by virtue of regulations made under section 63(2)(g) or 64(2)(h), or
(b) interest charged by virtue of regulations made under section 63(2)(i) or 64(2)(j).”—(Joseph Johnson.)
This clause, which is for insertion after clause 64, requires the OfS to pay the fees which it receives under clauses 63 and 64, and the costs which it recovers in recovering those fees, to the Secretary of State except to the extent that the Secretary of State, with the consent of the Treasury, directs otherwise. It also requires the OfS to pay the penalties and interest imposed under those clauses to the Secretary of State.
Brought up, read the First and Second time, and added to the Bill.
New Clause 3
Joint working
“(1) A relevant authority may exercise any of its functions jointly with another relevant authority if the condition in subsection (2) is met.
(2) The condition is that it appears to the relevant authorities concerned that exercising the function jointly—
(a) will be more efficient, or
(b) will enable them more effectively to exercise any of their functions.
(3) In this section “relevant authority” means—
(a) the OfS,
(b) UKRI, but only in relation to functions exercisable by Research England pursuant to arrangements made under section89,
(c) the Higher Education Funding Council for Wales,
(d) the Scottish Further and Higher Education Funding Council,
(e) the Secretary of State to the extent that the Secretary of State is exercising functions under section 14 of the Education Act 2002 (power to give financial assistance for purposes related to education or children etc),
(f) the Welsh Ministers to the extent that they are exercising their functions under Part 2 of the Learning and Skills Act 2000 (further and sixth form education in Wales), or
(a) the Department for the Economy in Northern Ireland, or the Department of Agriculture, Environment and Rural Affairs in Northern Ireland, in relation to funding higher education, or research, in Northern Ireland but only to the extent that the Department is exercising functions in connection with such funding.
(4) For the purposes of subsection (3)(g) “higher education” has the same meaning as in Article 2(2) of the Further Education (Northern Ireland) Order 1997 (S.I. 1997/1772 (N.I. 15)).”—(Joseph Johnson.)
This clause, which is for insertion in Part 4 of the Bill, allows relevant authorities to work together if it appears to them to be more efficient or would allow any of the authorities to exercise their functions more effectively.
Brought up, read the First and Second time, and added to the Bill.
New Clause 7
Amendments to powers to support research
“(1) In section 5 of the Science and Technology Act 1965 (further powers of Secretary of State), after subsection (1) insert—
‘(1ZA) The power to give financial support under subsection (1)(a) includes, in particular, power to make a grant, loan or other payment, on such terms and conditions as the relevant authority considers appropriate.
(1ZB) The terms and conditions may, in particular—
(a) enable the relevant authority to require the repayment, in whole or in part, of sums paid by it if any of the terms and conditions subject to which the sums were paid is not complied with,
(b) require the payment of interest in respect of any period during which a sum due to the relevant authority in accordance with any of the terms and conditions remains unpaid, and
(c) require a person to whom financial support is given to provide the relevant authority with any information it requests for the purpose of the exercise of any of its functions.
(1ZC) In subsections (1ZA) and (1ZB), ‘the relevant authority’ means—
(a) in the case of the power of the Secretary of State to give financial support under subsection (1)(a), the Secretary of State;
(b) in the case of the power of the Welsh Ministers to give financial support under subsection (1)(a), the Welsh Ministers;
(c) in the case of the power of the Scottish Ministers to give financial support under subsection (1)(a), the Scottish Ministers.’
(2) In section 10 of the Higher Education Act 2004 (research in arts and humanities), after subsection (4) insert—
‘(5) The powers under this section to give financial support include, in particular, power to make a grant, loan or other payment, on such terms and conditions as the relevant authority considers appropriate.
(6) The terms and conditions may, in particular—
(a) enable the relevant authority to require the repayment, in whole or in part, of sums paid by it if any of the terms and conditions subject to which the sums were paid is not complied with,
(b) require the payment of interest in respect of any period during which a sum due to the relevant authority in accordance with any of the terms and conditions remains unpaid, and
(c) require a person to whom financial support is given to provide the relevant authority with any information it requests for the purpose of the exercise of any of its functions.
(7) In subsections (5) and (6), ‘the relevant authority’ means—
(a) in the case of the power under subsection (1)(a), the Secretary of State;
(b) in the case of the power under subsection (2)(a), the Welsh Ministers;
(c) in the case of the power under subsection (3)(a), the Scottish Ministers;
(d) in the case of the power under subsection (4)(a), the Northern Ireland Department having responsibility for higher education.’”—(Joseph Johnson.)
This new clause, which is for insertion after clause 101, amends section 5 of the Science and Technology Act 1965 and section 10 of the Higher Education Act 2004 to make clear that the powers they contain to provide financial support for research include power to make grants, loans or other payments subject to terms and conditions - including those which may require the recipient of support to repay sums, pay interest and provide information.
Brought up, read the First and Second time, and added to the Bill.
New Clause 16
Pre-commencement consultation
“(1) Subsections (2) and (3) apply in relation to a provision of this Act under or by virtue of which the OfS has a function of consulting another person.
(2) At any time before the provision comes into force (and whether before or after the passing of this Act), the Secretary of State, the DFA or HEFCE or any of them acting jointly—
(a) may carry out any consultation that the OfS would have power or a duty to carry out after the provision comes into force, and
(b) for that purpose, may prepare drafts of any documents to which the consultation relates.
(3) At any time after the provision comes into force, the OfS may elect to treat any consultation carried out or other thing done under subsection (2) by the Secretary of State, the DFA or HEFCE (or any of them acting jointly) as carried out or done by the OfS.
(4) Subsections (5) and (6) apply in relation to a provision of this Act under or by virtue of which UKRI has a function of consulting another person.
(5) At any time before the provision comes into force (and whether before or after the passing of this Act), the Secretary of State or HEFCE or the Secretary of State and HEFCE acting jointly—
(a) may carry out any consultation that UKRI would have power or a duty to carry out after the provision comes into force, and
(b) for that purpose, may prepare drafts of any documents to which the consultation relates.
(6) At any time after the provision comes into force, UKRI may elect to treat any consultation carried out or other thing done under subsection (5) by the Secretary of State or HEFCE (or the Secretary of State and HEFCE acting jointly) as carried out or done by UKRI.
(7) In this section—
‘the DFA’ means the Director of Fair Access to Higher Education;
‘HEFCE’ means the Higher Education Funding Council for England.”—(Joseph Johnson.)
This clause, which is for insertion after clause 106, enables the OfS to rely upon consultation carried out by the Secretary of State, the DFA or HEFCE before the consultation provisions of the Bill come into force as if that consultation were carried out by the OfS under those provisions. It also enables UKRI to rely upon consultation carried out by the Secretary of State or HEFCE before the consultation provisions come into force as if the consultation were carried out by UKRI.
Brought up, read the First and Second time, and added to the Bill.
New Clause 17
Advice to Northern Ireland departments
“(1) The OfS and UKRI may provide such advisory services as the Department for the Economy in Northern Ireland or the Department of Agriculture, Environment and Rural Affairs in Northern Ireland may require in connection with the discharge of the Department’s functions relating to higher education in Northern Ireland.
(2) The services may be provided on such terms as may be agreed.
(3) For the purposes of this section ‘higher education’ has the same meaning as in Article 2(2) of the Further Education (Northern Ireland) Order 1997 (S.I. 1997/1772 (N.I. 15)).”—(Joseph Johnson.)
This clause, which is for insertion in Part 4 of the Bill, makes provision for the OfS and UKRI similar to the provision made in section 69(3) of the Further and Higher Education Act 1992 regarding the Higher Education Funding Council for England and allows for the provision of advice to the Department for the Economy in Northern Ireland or the Department of Agriculture, Environment and Rural Affairs in Northern Ireland.
Brought up, read the First and Second time, and added to the Bill.
New Clause 5
De-registration: notification of students
“(1) The governing body of a higher education provider must inform all students enrolled on a course if it—
(a) is notified by the OfS of its intention to suspend the provider’s registration under section 17(1),
(b) is notified by the OfS of its intention to remove it from the register under section 19(1),
(c) is notified by the OfS that it will refuse to approve a new access and participation plan under section 21(2), or
(d) has applied to be removed from the register under section 22(1),
(2) The governing body of an institution must notify students under subsection (1) by the date on which—
(a) the suspension takes effect,
(b) the de-registration takes effect, whether enforced or voluntary, or
(c) the expiry date of any existing access and participation plan that will not be renewed and the period of time for which approval of a new plan will be refused, whichever is applicable”—(Gordon Marsden.)
This amendment would require that any students still undertaking courses at that provider are notified if the provider becomes deregistered.
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Paul Blomfield
I beg to move, That the clause be read a Second time.
This may be the last topic we debate as part of our proceedings, but it is by no means the least. If carried, the new clause would not affect many people, but it would have a profound impact on those who were affected. It would allow all refugees resettled to the UK, as well as those young people who, having made an application for asylum, are granted a form of leave other than refugee status, to access student finance and home fees. That would be of particular benefit to the Syrian refugees who are being resettled in this country under the Government’s own plans. Only small numbers are affected, but those of us who represent universities will have dealt with cases in which people have tragically been denied opportunities to fulfil their potential in our university system. The provision would have a huge impact on individuals.
Let me explain the context. Currently, individuals with refugee status are able to access student finance and to qualify for home fees status from the moment they are awarded their protection. However, those with the slightly different status of humanitarian protection are treated differently. To receive financial support they have to be able to show that they have been ordinarily resident for at least three years at the start of the academic year. The group most affected are the Syrian refugees currently being resettled in the UK under the vulnerable person resettlement programme, because they are granted humanitarian protection rather than refugee status.
The result of the current position is that a young Syrian refugee arriving in the UK today does not qualify for student finance until the start of the 2020 academic year. The only exception is if they are resettled in Scotland, where the Scottish Government have introduced a special fees status for resettled Syrians, which allows them immediately to access student support. I commend them for that. Subsection (2)(a) of the new clause would ensure that all resettled refugees, no matter what status they are given or which nation of the UK they live in, would be able to access student support immediately. Subsection (2)(b) would make student finance available for those granted humanitarian protection after making an application for asylum.
As set out in the immigration rules, humanitarian protection is granted to people who would face a real risk of suffering harm if they were to return to their home country, including the risks of death, torture and inhumane treatment, or their life being at risk due to armed conflict. The future of those granted humanitarian protection after applying for asylum is clearly in the UK—this is where they will build their lives—so they should be allowed to access university education, not simply so that they can build their lives here but so that they can contribute fully to the society of which they will be part.
Subsection (2)(b) would also provide access to student finance and home fees status to people who have applied for asylum and then been granted another form of immigration leave. In such cases, the Government have accepted that the immediate future of those individuals is in the UK. They should be given every opportunity to contribute and to develop, yet they currently face significant hurdles in doing so because in 2012 the Government changed the rules so that potential university students in that situation could no longer get the student finance they had previously been able to access. They were also reclassified as international students, meaning that they would face—and have faced—much higher fees.
The Supreme Court found the rules discriminatory and as a result a new criterion of long residence was introduced. However, young people who have gone through the asylum process, including those who arrived as unaccompanied asylum-seeking children, are unlikely to meet the long residence criterion and will have to watch while their school peers go off to university, leaving them behind with no opportunities. New clause 12 is not about creating special circumstances for refugees and other young people who have arrived in the UK seeking asylum. It would simply remove existing barriers that prevent young people who come to the UK seeking protection and who are capable of attending university from fulfilling their potential. It is a wrong we should right.
Roger Mullin
I would like to say a few words in praise of the new clause. I have moved 10 amendments today. Many dozens of amendments have been tabled, but I think this is the most important one we face, because this is the one that speaks to who we are as a community and as a people. I would like to praise and thank the hon. Gentleman for his recognition of the work the Scottish Government have done in this field. I hope that any civilised society would see the need to support this measure.
Joseph Johnson
I also thank the hon. Member for Sheffield Central for tabling this new clause, which relates to access to support for students recognised as needing protection. I agree with the hon. Member for Kirkcaldy and Cowdenbeath and recognise his commitment to this issue. It is one that is already addressed, however, within the student support regulations.
I am pleased to say that those who come to this country and obtain international protection are already able to access student support. Our regulations have for some time included provision for those granted refugee status or humanitarian protection and their family members. In addition, we have recently amended the regulations to allow those who have been in the UK as a matter of fact for at least half their lives or at least 20 years to access student support after three years of lawful residence.
Those persons entering the UK under the Syrian vulnerable persons relocation scheme and granted humanitarian protection will be eligible, like UK nationals, to obtain student support and home fees status after only three years’ residence in the UK. Those with refugee status are uniquely allowed to access student support immediately—a privilege not afforded to UK nationals or those granted other forms of leave. There is a distinction in international law between such status and those in need of humanitarian protection.
Recently the Supreme Court upheld the Government’s policy of requiring most persons, including UK citizens, to be ordinarily lawfully resident in the UK for at least three years immediately prior to starting their course in order to be eligible for student support. That important rule establishes that generally the student has a solid connection with the UK before they are entitled to support and home fee rates. The second part of the amendment would, in effect, break that long-established policy by extending support to asylum seekers who have been granted temporary leave to remain only and who have only a recently established and potentially temporary connection to the UK. I therefore ask that the hon. Member for Sheffield Central withdraw the motion.
Paul Blomfield
I am disappointed by the Government’s response. The Minister accurately described the position, which is that those who are granted refugee status gain eligibility from day one and those granted humanitarian protection have to wait three years. Until recently, the UK gave very few people humanitarian protection. The default option was refugee status. However, when the Government introduced the Syrian resettlement programme, they decided to give people five years’ humanitarian protection instead of refugee status, with the rights that that would previously have given them. The Government have never explained why. Humanitarian protection is usually given to those who do not quite meet the strict criteria of the refugee convention, but for whom it is not safe to return home. It cannot be the case that that applies to people brought here under the Government’s own programme for Syrian refugees.
Wes Streeting (Ilford North) (Lab)
Does my hon. Friend agree that the three-year rule not only holds up the educational progress of people who have often fled some of the most unimaginable situations but is no good for the UK? While their lives are on hold and they are unable to progress through education, they are not able to give something back, so this approach is self-defeating for the UK as well as for the individuals concerned.
Paul Blomfield
I very much agree: it is completely self-defeating. These are people who are going to make their lives here. The sooner they can start that process, the better. If it had not been for the Government’s move away from granting them refugee status, which in the past would have been the default norm, we would not be facing this problem.
Dr Roberta Blackman-Woods (City of Durham) (Lab)
My hon. Friend makes a really important point. Some of these young people have had their education disrupted, tragically, by the whole conflict situation, and the sooner they can get back into full-time education, the better—not only for them, but for us as a country.
Paul Blomfield
My hon. Friend is absolutely right. We are not talking about very many people at all. It is a tiny number, but the opportunity to rebuild their lives after the tragedies they have lived through is extremely important to them.
Gordon Marsden
I place on record the Opposition’s support for my hon. Friend’s proposal and for the measured and dignified way in which he introduced it. I have no doubt that he could have cited a number of other harrowing stories. Does he share my distress at the Minister simply repeating what he said about leaving people in limbo, potentially for three years? Have the Minister and his officials nothing else to suggest to assist these young people to continue their education?
Paul Blomfield
My hon. Friend is right. This limbo situation serves nobody. I would be happy to withdraw the new clause if the Minister could show us a different way forward that would address our concerns, but I am disappointed to hear the Government say simply that that limbo—that three-year delay, that position imposed on people simply because they have been given a technical classification of humanitarian protection rather than refugee status—is acceptable. I do not know whether the Minister wishes to intervene to suggest any movement on the issue.
Paul Blomfield
The Minister is shaking his head. I therefore wish to press new clause 12 to a vote.
Question put, That the Clause be read a Second time.
The Chair
That brings us to the end of the Committee’s consideration. My final duty is to report the Bill, as amended, to the House.
Joseph Johnson
On a point of order, Mr Hanson. My Department has today provided the Committee with an assessment of the implications of amendments made during Committee for the territorial extent and application of the Bill and for how it relates to the legislative competence of the devolved Administrations.
I also want to say that I am very pleased that the Bill has been scrutinised so thoroughly and in such a collegiate and generally good-humoured fashion. We sat a little late on Tuesday 11 October but adjourned early on Thursday 13 October and we have now completed the proceedings with four or five minutes to spare.
I thank Committee members personally for giving so much of their time and energy to the scrutiny of the Bill and for the constructive way in which they have engaged in debate. We have been listening carefully to all the points made during the Bill’s passage through Committee and are grateful for all the observations, comments and proposed amendments, even if we were not able to accept all of them—
Joseph Johnson
Or indeed any.
We have had a robust and well informed consideration of every part of the Bill, and the Committee has been admirably steered by you, Mr Hanson, and by the other Chairs, particularly Sir Edward Leigh. I pay tribute to the usual channels for the way in which they have co-ordinated our work and ensured that there was proper time for us to scrutinise all the Bill’s provisions fully and carefully.
Lastly, I thank and recognise the hard work of Hansard in recording our deliberations; the Clerks for their advice throughout the Committee stage; and my very hard-working and brilliant officials in the Department for Education and the Department for Business, Energy and Industrial Strategy. Last, but by no means least, I thank the Doorkeepers for helping to keep us all in good order.
Gordon Marsden
Further to that point of order, Mr Hanson. I associate myself and my hon. Friends with, if not all the Minister’s comments, certainly those in respect of you and your fellow Chairs. We had an appearance from Mr Christopher Chope as well as seeing Sir Edward, of course.
I pay tribute to the Public Bill Office. Members will know—or might want to take note, because one of these days they might be on the Opposition Benches—that, for the Opposition and Government, the progress of Bill Committees is often like David versus Goliath in terms of the resources available. The Public Bill Office have been scrupulously fair and helpful in that respect, so I pay tribute to its staff.
I also pay tribute to the fantastic contribution of all my hon. Friends among the Opposition and, indeed, to the contribution of the Scottish National party Members, which has been important. We have endeavoured to scrutinise you—not you, Mr Hanson, but the Government, within an inch of their nine lives. We will continue to do so as the Bill progresses through Parliament.
I associate myself with what the Minister said about the efficiency and efficacy of the usual channels. I will not be quoting Enoch Powell’s statement about the Whips. I particularly thank our colleagues from Hansard and the Doorkeepers.
The Chair
On behalf of Sir Edward Leigh, Mr Christopher Chope and myself, I thank colleagues for their good humour during the Committee. I particularly thank the Clerks who have supported the Committee, the Hansard reporters and the Doorkeepers.
Bill, as amended, to be reported.
Digital Economy Bill (Fourth sitting)
Tuesday 18th October 2016
(7 years, 6 months ago)
Public Bill CommitteesRead Full debate Digital Economy Act 2017 View all Digital Economy Act 2017 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 18 October 2016 - (18 Oct 2016)
The Committee divided: - Ayes: 8 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 10 - Question accordingly negatived.
The Chair
Colleagues, today we begin line-by-line consideration of the Bill. Before we start, I repeat that Members may, if they wish, remove their jackets during Committee meetings. Will everyone ensure that all electronic devices are turned off or switched to silent mode?
The selection list for today’s sitting is available in the room. It shows how selected amendments have been grouped together for debate. Amendments grouped together are generally on the same or similar issues. The Member who has put their name to the leading amendment in a group is called first. Other Members are then free to catch my eye to speak on all or any of the amendments in that group. A Member may speak more than once in a single debate, and I will work on the assumption that the Minister wishes the Committee to reach a decision on all Government amendments.
Please note that decisions on amendments do not take place in the order in which the amendments are debated, but in the order in which they appear on the amendment paper. In other words, debate occurs according to the selection and grouping list, and decisions are taken when we come to the clause that the amendment affects. I hope that explanation is helpful.
We are still waiting for Mr Hancock, but we will continue. I will use my discretion to decide whether to allow a separate stand part debate on individual clauses and schedules following debates on relevant amendments. [Interruption.] The Minister has arrived.
Ordered,
That the Order of the Committee of 11 October be amended as follows: in paragraph (1)(c), leave out the words “and 2.00 pm”.—(Matt Hancock.)
Kevin Brennan (Cardiff West) (Lab)
We have no objection to the change, although I hope the Minister is a bit more punctual in future and takes more note of what the programme motion says, since we are supposed to start at 9.25 am and he has just arrived at 9.27 am.
The Chair
Thank you. This is not a flying start, colleagues. I am sure we can up our game as we move on. There will be no meeting of the Committee this afternoon. The Committee will next meet on Thursday at 11.30 am.
Clause 1
Universal service broadband obligations
Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)
I beg to move amendment 56, in clause 1, page 1, line 14, after “the” insert “upload and download”.
The Chair
With this it will be convenient to discuss amendment 83, in clause 1, page 1, line 15, after “services” insert “and mobile network coverage”.
Calum Kerr
I welcome the opportunity as a new boy in the Bill Committee process to go first. This is the first time I have spoken in this place with my jacket off.
We support the universal service obligation and think it is a positive move, but one of our concerns is the lack of detail on it. The document put out by the Government last week was welcome and provided more context. However, something that is continually missing when talking about speed is that speed is about not just download but upload. We are trying to make that more explicit. The amendment is a small word change, but it is required as we start to recognise what broadband and connectivity is all about. It is more than just the headline speed at which we can download at certain times of the day.
Louise Haigh (Sheffield, Heeley) (Lab)
I rise to support amendment 83, which stands in the name of my hon. Friend the Member for Cardiff West and I, and amendment 56, tabled by the hon. Member for Berwickshire, Roxburgh and Selkirk.
All members of the Committee agree that we must do everything we can to ensure that individuals have access to superfast and, soon, ultrafast broadband. It is not only important but, in an ever more connected age, an absolute necessity for both businesses and residences. That is why we support the Government’s tacit aim to designate broadband effectively as a utility in the same way that water and energy are classed as a must-have in the modern world.
We will speak later about our concerns about the universal service obligation, but broadly we believe that there is coalition of support for a much more ambitious USO. That is why we were pleased to hear that the USO can be amended in secondary legislation later when it becomes outdated. However, I fear that, by the time it is introduced, it will already be becoming seriously outdated and, indeed, by 2020, it may feel like a relic of a bygone age when superfast and ultrafast broadband, even in rural areas, will be readily accessible. That is the subject of our new clause, which we will consider shortly.
On amendment 56, it is absolutely right to specify upload and download in the Bill. As we have seen all too often, businesses and residences see a particular speed advertised with no correlation between what they can download and upload. For someone with a business and working from home, accessing online services and transferring files to them can take a lot of time if the upload speed is not up to scratch. That is an obvious cost to businesses. It is not merely an irritant, but a loss in pounds and pence, and in productivity to the UK economy.
There is no mention in the Bill of upload speeds in the USO. That leads to a broader problem of lack of ambition throughout the Bill. Factors such as distance from the telephone exchange and other considerations such as old household wiring can slow down speed. That is why the USO, although welcome, will seem extraordinarily dated in just half a decade, when the roll-out of the USO will have been completed and there will be little appetite for providers or the Government to return to those hard-to-reach places for some time.
On tackling upload and download speeds, we would have preferred the USO to be under the superfast designations from the beginning. An example of the impact of superfast roll-out on one small business demonstrates this perfectly. Within the first year of having superfast broadband, the business reported a 30% increase in sales. We should be ambitious for our small businesses. Instead, this USO potentially condemns them to distinctly average speeds for a decade.
Amendment 83 is a probing amendment to test the Government’s ambition, which certainly needs to be tested throughout the Bill. It is based on a simple principle. We are at the start of a digital revolution that will transform how we work and how we communicate and interact with one another. Access to water and electricity in the home bookmarked our evolution to a more civilised society, so the essentials of the modern era should be similarly guaranteed. The Bill does that in part for broadband and we strongly believe it should cement further ways to roll out universal or near universal coverage for mobile communication.
We broadly support the changes to clause 2 and the amendments to the electronic communications code. Assisting mobile network operators in some of the challenges facing them is obviously important. That includes access to land and knocking down some of the absurd hurdles they must jump through to make what most people would consider sensible adjustments to infrastructure to update existing technology with little visual impact.
The Bill contains changes to a highly complex piece of legislation, which the industry has been seeking to change for some time. Indeed, the Law Commission commented that the legislation is not one of Parliament’s finest efforts. We recognise that. It clearly is not. However, although simplification and amendments to the code are important, there can be little doubt that mobile network operators will receive a substantial boon. That is why this amendment is so important and it is puzzling that the Government did not include it.
Evidence to the Committee suggested that the Bill could reduce the cost of site rental for mobile network operators, which make up a substantial portion of their costs at 40%. With the operators receiving effectively all they have asked for—no one blames them with such a complex and restrictive code—it is clear that our sights must be set firmly on delivery and the Government should not set their ambitions too low. That is what our probing amendment covers and why it is important that, during the passage of the Bill, we receive at least some commitment to improved targets on mobile network coverage.
We are slightly dismayed that the industry will benefit from such a clearly beneficial piece of legislation and that the Government will impose few or no conditions on them beyond what has already been agreed. We are aware that the £5 billion investment and the statutory target were tied to changes to the code, but we are not convinced that the benefits for consumers are greater than the benefits that are being approved for mobile network operators and we would certainly welcome greater reassurance on that from the Minister.
Let us look quickly at the targets set out in the binding agreement in 2014, signed by the then Culture Secretary, the right hon. Member for Bromsgrove (Sajid Javid). They were: guaranteed voice and text coverage by each operator to 90% of the population and full coverage to 85% by 2017. Currently, only 46% of premises have access to 4G from all mobile network operators and a substantial 7% of the population—1.5 million homes nationwide—do not have basic voice or text coverage across the three networks.
The failed Mobile Infrastructure Project, supposed to reach the final notspots, closed in 2015-16. It had erected only 76 of 100 masts, leaving a substantial number of homes without the prospect of having complete voice and text coverage. Given that 71% of businesses rated mobile network access as “critical” or “very important” to their business we believe that mobile network coverage, as broadband is tacitly designated in this Bill, should also be considered a utility. That is what our probing amendment seeks to test.
Clearly, everyone in the country, if asked, would agree. Businesses that rely on mobile networks, local authorities and individuals that use them to communicate would welcome a right to have mobile network coverage within their place of work or at home. This is extremely achievable but the Opposition are concerned that institutional defensiveness from the major network operators is getting in the way of full or near universal coverage for consumers. More than 99% of residents in the UK have access to 2G or 3G of some kind and 90% have access to 4G of one kind. However, for all operators, the figure drops to just 46%.
The infrastructure is in place and it understandably infuriates people working in an office or at home when their colleagues can get network coverage and access to data services while they cannot. While we recognise the concerns around commercial incentive, surely it is right that, once the current phase of the roll-out is complete and significant gaps in full coverage across all mobile network providers still remain, we at least reconsider the case for national roaming and national infrastructure, as is commonplace on the continent.
We are a relatively small island and it should not be the case that commercial defensiveness makes the aspiration of near universal coverage far from a reality. That is why we will table another new clause relating to this part of the Bill to test it before the whole House. It will establish a review of the roll-out of mobile network coverage, which is a critical piece of infrastructure for businesses, residents, and emergency services. As yet, due to what appears to be institutional wrangling and commercial defensiveness, this coverage is not being extended to the entire population in a way they would expect.
As we know from evidence given to the Committee last week, currently more than 60% of communications towers globally are held in an entity separate from the networks that use them. The review will have to take another look at greater diversity in mobile infrastructure and national roaming in order to deliver a universal service. In countries such as the United States, the figure for independent infrastructure is more like 90%. In the United Kingdom, as the Committee knows, it is more likely that that infrastructure is erected on an economic case for the network and operated for the benefit of the network that makes the investment. That is fine up to a point, in that it undoubtedly encourages competition among network providers in areas where they can receive a substantial return, but it makes universal network coverage more difficult to achieve when there is 90% of coverage for 4G of some kind, but only 46% for all kinds.
Our review will also look at open data and how, by routinely publishing costs, location of masts, service quality and plans for roll-out, consumers, particularly in rural areas, but also in urban “nearly and notspots” can make better decisions about which network operator to use.
Throughout the Bill, Labour Members will look to the Government to turn the £l billion concession, however welcome, for the mobile industry into something approaching a near universal service for the country. We should be ambitious about the kind of mobile network coverage we can deliver and not shy away from the challenge.
The Minister for Digital and Culture (Matt Hancock)
It is a pleasure to get going on the Bill proper and to respond to the first amendments. It is undoubtedly true that reliable fast broadband is now seen as the norm and not the nice-to-have—that unites the whole Committee. We are committed to ensuring that everyone can enjoy the benefits of decent broadband connectivity. It was in our manifesto and it is one of the core purposes of the Bill.
Amendment 56 seeks to ensure that the guidance around the characteristics of the connection is in the Bill—for instance, that the USO can include both upload and download speeds. I entirely understand the intent and the clause as drafted is sufficiently flexible to allow for that. The statement of intent that the hon. Member for Berwickshire, Roxburgh and Selkirk referred to, which was shared with the Committee last week, outlines a broad range of factors that need to be considered in designing the USO, including the level of service. That includes not just download and upload speeds, but the appropriateness and level of other parameters such as latency and capacity—and potentially customer service.
Ofcom has been commissioned to provide detailed technical analysis and recommendations to support decision making on the design of the broadband USO. Allowing Ofcom to do that work and ensuring that it is specified in detail is better than putting that on the face of the Bill, because it will allow us precisely to future-proof the design of the USO in the way that the hon. Gentleman demands. The decisions on the scope of the USO, the technical specifications, including download and upload speeds, and any service standards need to be taken in the light of Ofcom’s advice, which is to be provided by the end of this year, before the Bill concludes all its stages.
Amendment 83 seeks to include mobile coverage within the scope of the guidance on the broadband USO. The hon. Member for Sheffield, Heeley made many good points and put them eloquently and powerfully. The position is that the universal service directive, which currently provides the regulatory framework for the broadband USO, is about the provision of a fixed internet connection of an appropriate speed to a fixed location. Depending on who is designated as the universal service provider or providers, and on the specification of the USO, there is scope for the USO connection to be provided using mobile technology. However, the directive does not require the USO to include mobile geographic coverage.
In any event, as the hon. Lady said, through the use of licence conditions we have delivered on a commitment to near universal mobile coverage. I would question, therefore, whether there is a case for a USO for mobile, because of those commitments. The licence obligations to which the hon. Lady correctly referred are part and parcel of a deal that included the reform to the electronic communications code—so everything that she asks for was covered in that deal. It is precisely because the two are linked that they are fair, both to the industry and, more importantly, to consumers. As she said, the mobile network operator roll-out plans provide for £5 billion of investment, as a result of that deal and commitment.
Christian Matheson (City of Chester) (Lab)
When we talk about notspots, we are not just talking about parts of the highlands of Scotland. Indeed, parts of rural Cheshire, just a few miles from Chester, are not covered. Does the Minister honestly think that the deal he is talking about is working well?
Matt Hancock
The deal is to be delivered by the end of 2017. We will hold the MNO’s feet to the fire, because it has a legal and contractual requirement to deliver on that by the end of next year. I know the area of the country that the hon. Member talks about very well—it is where I spent the first 18 years of my life. There are some parts where the mobile signal is no better now than it was back then. In Suffolk this weekend, I found large swathes of my own constituency to be without a mobile signal, so I feel the hon. Gentleman’s pain. That is why delivery on this commitment by the MNOs is so important. The deal as agreed, which is a legally binding commitment, will result in nearly 100% of UK premises receiving 3G/4G data coverage, and 98% coverage to the UK landmass by the end of 2017.
That includes the new emergency services contract, which is being delivered by EE. That has to have a huge spread over the geography of the UK, and the same infrastructure will be available to customers of that provider. The deal sufficiently provides for the demands that were eloquently put by Opposition Front Benchers and, more importantly, clause 10 will enhance Ofcom’s powers to enforce the licence conditions, which we all agree are sensible, against the MNOs.
Calum Kerr
We welcome anything that increases mobile coverage commitments. The Government have done a deal with mobile operators for increased coverage, but the people who will pay for that increased coverage are the local authorities, the Forestry Commission and the landowners—they will suddenly find their rents drop through the floor to nothing. The Government could have revisited the annual licence fees that they collect from the mobile operators and done a deal on that basis, rather than making someone else pay for the increased coverage.
Matt Hancock
The hon. Gentleman leaps ahead to the next clause, and no doubt we will have that debate, but I think it is entirely fair for landowners and those on whose land the infrastructure is provided to get a similar return on the value of the land to them, rather than on the value once the land has this infrastructure. That is the change that we will be making because, ultimately, we have put in place a deal to get better service for customers, to get more geographic coverage and to reduce the costs of rolling that out, which is the right deal for the country.
As the hon. Member for Sheffield, Heeley calls for exactly what is to be delivered and as there are other clauses in the Bill to ensure that that delivery happens, I hope that the hon. Member for Berwickshire, Roxburgh and Selkirk will withdraw his amendment.
Calum Kerr
I am willing to withdraw the amendment because the document that came out last week provides a level of clarity. There remains a concern that the Bill is light and passes off the detail, which is both an opportunity and disconcerting. This is an opportunity to do something transformational with broadband, but the Bill is not transformational in itself. It will come down to the detail. We were keen to see more specific clarification in the document, but I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Calum Kerr
I beg to move amendment 57, in clause 1, page 2, line 4, at end insert—
“(4A) In subsection (4) after “OFCOM” insert “, the devolved administrations in Scotland, Wales and Northern Ireland,”
The Chair
With this it will be convenient to discuss new clause 10—Procurement process—
“(1) The Secretary of State must ensure an open procurement process is held in respect of the allocation of the universal service order.
(2) The Secretary of State must appoint a body to undertake an alternative dispute resolution role to arbitrate in instances of disagreement over designation.”
Calum Kerr
We have discussed the USO and what it could mean, particularly in last week’s evidence sessions, but there is an opportunity to go further. If the USO is simply passed over to BT because it is willing to provide 10 megabits to everybody by 2020, I am afraid that 10 megabits will be the ceiling rather than the floor. We should be considering how we facilitate a USO that empowers communities and devolved Administrations to go further. The Scottish Government have made a commitment to reach 30 megabits over the course of the Parliament, by 2021, and a flexible USO—particularly a voucher scheme, rather than a monetary or contractual agreement with the likes of BT—could help them to deliver.
Through our amendment we seek to ensure proper consultation and the involvement of not only the Scottish Government but all the devolved Administrations. Previous dialogue has been largely tokenistic, so we need to set it out in the Bill and insist that there is proper consultation that empowers the regions of the UK to take the USO as a platform, as a floor of their ambition, rather than as a ceiling.
Louise Haigh
New clause 10 would require the Secretary of State to ensure that there is a completely open procurement process, and an alternative dispute resolution role to arbitrate in instances of disagreement over the designation.
We welcome the Minister’s clarification last Wednesday about the statement of intent in relation to the USO. However, we want to mention—I am sure it will not be the first time in this Committee—how rushed and unsatisfactory the publication of Bill documents has been. Some of the documents that should accompany the Bill are yet to be published. I know from talking to people in the industry that that is their concern as well.
I was pleased to note from the statement of intent that the Minister intends the USO to act as an effective complement to commercial, community and publicly-funded roll-outs of broadband, and that it will not displace any planned roll-out of higher speed broadband. There is an argument that there should be a combination of the USO and Broadband Delivery UK to fulfil the last 5%, given that the work of BDUK is still ongoing.
The industry has raised concerns that a USO could risk distorting the UK’s broadband market and potentially hamper the goal of universally available good quality broadband access, if it is not designed in the right way, with the industry and consumers in mind. I note what the Minister said earlier about Ofcom’s being better situated for future-proofing, and I agree. I will discuss that on clause 1 stand part if that is acceptable, Mr Streeter. It is important that there should be parliamentary scrutiny of Ofcom’s role in the consultation.
The USO should not displace any planned roll-out of higher speed broadband. I mentioned the industry’s concerns that it could distort the UK broadband market. If it is done badly, there is a risk that it will undermine commercial investment, in hard-to-reach areas where industry is able profitably to deliver good quality broadband at competitive prices, or by passing on to existing users any rising costs that come about as a result of the USO.
For example, TechUK has argued that the Government should strictly limit the USO to the most remote areas of the UK. Failure to limit the availability of a USO tightly means there is a risk that commercial investment will be diverted, and that there will be wasteful intervention. It is suggested that urban areas, and any rural areas where there is a prospect of market investment, should be explicitly excluded from the USO. It would be helpful to hear the Minister’s thoughts on that and on how Ofcom will take forward the consultation.
Furthermore, satellite connectivity should be considered in scope for the most remote households. It is already available to virtually all households in the UK, and it can be the most cost-effective route to providing superfast broadband. Essentially, we believe—and I hope that this is the Government’s intention—that the USO should be seen as a safety net to prevent social exclusion, facilitate access to online public services, and encourage social and economic development.
The question is whether we need a more transparent and competitive regime for that to happen. Smaller providers are currently put off, because they do not know whether BT currently has plans for, or is working in, any place at any given time. There are allegations from other players in the industry that when smaller providers move into areas where BT is not investing or working, it swoops in, purely to crowd out the competition.
The Government’s statement of intent cites thinkbroadband estimates that suggest about 4% of premises are unable to receive speeds above 10 megabits per second. That really should be open data available to the public and all service providers. We clearly need to know where the assets are, who can do the work and where the cabinets are. There should be a register that contains all that information and is available to make the market more competitive and efficient.
For the process to be trusted, transparent and fair, all the information should be in the open and part of the procurement process, allowing as many providers as possible to participate to ensure that the playing field is as level as possible. It was therefore also welcome that the Government’s statement of intent included consideration of different types of providers, such as regional providers and smaller ones using innovative technologies.
Clearly, it was less than desirable that the BDUK process ended up with only one contractor. We do not believe that we can lay the blame for that entirely on the design of the contracting process, but we think that much greater care needs to be given in the future to ensuring that a richer diversity of providers is catered for in the process.
We should also ensure that the Government are not effectively blackmailed by providers to protect their market position. The mess-up around the procurement process for the roll-out of the broadband framework in 2012 left BT as the only supplier, after Fujitsu pulled out. That was condemned by the Public Accounts Committee for failing to deliver meaningful competition or value for money.
It is also important that the Government consider different tenders for the different problems we are faced with in the last few per cent. For example, we could have one contractor for the rural areas and another for the inner-city areas, as they obviously present different challenges. We could do with some further clarity from the Minister on that.
The amendment is merely designed to be probing. Does the Minister genuinely envisage that anyone other than BT will implement the universal service obligation? How will the tender process be designed? Given the Government’s commitment to encouraging SMEs and community providers to tender, will the likes of Broadband for the Rural North be considered? If the Minister can provide some clarity on that either now or later in writing, I will not press the new clause to a vote.
Matt Hancock
I will try to respond to all the points as briefly as I can, because the hon. Lady in particular raised a huge number of pertinent points. The two Front Bench teams are very much on the same side on this matter, so I want to give her the reassurance I can, but as quickly as I can, given that she asked a huge number of very good questions.
First, amendment 57 is about ensuring that devolved Administrations are consulted. Section 65(4) of the Communications Act 2003 already imposes a requirement to consult with Ofcom and other such persons as the Secretary of State considers appropriate. Since the broadband USO is an extremely important consumer measure that will benefit all parts of the United Kingdom, I cannot conceive of a situation where the devolved Administrations would not be consulted as plans to introduce a broadband USO are put in place, so I do not think the amendment is necessary. We would expect wide and extensive consultation across a wide cross-section of stakeholders.
We will consult on proposals for secondary legislation once we have considered Ofcom’s report. The second consultation will cover the detail of the USO and provide an opportunity to comment on the design of the USO and how it is implemented. I hope that that takes into account the concerns of the hon. Member for Berwickshire, Roxburgh and Selkirk.
New clause 10 would require the Secretary of State to ensure that there is an open procurement process for the designation of universal service providers. Again, that is covered under section 66 of the 2003 Act, which enables Ofcom to set out the procedure for designation in regulations and requires that the procedure
“be efficient, objective and transparent; and…not to involve, or to tend to give rise to, any undue discrimination against any person”.
I think that addresses the concerns as directly set out in the new clause.
It was music to my ears to hear a Labour Front Bencher talk about the need for a competitive regime, which clearly puts her at odds with her leadership. I agree in principle that the USO is designed as a safety net. Some people want much greater broadband speeds and connectivity, and it is not unreasonable for people to pay if they want very high connectivity speeds, but we believe there is a public service in having a universal service so that everyone is given the opportunity to have decent connectivity on which to live their lives. As the hon. Lady said, that could involve communicating with the Government, which is increasingly done online, or engaging in communications around healthcare and basic banking, and 10 megabits per second allows for that.
The hon. Lady mentioned satellite technology. Satellite is in scope—in fact, all technologies are in scope. The legislation is purposely designed to be technology blind. What people care about is connectivity. The technology is for the implementation, the policy makers and the engineers. Citizens care about how good, reliable and quick their connectivity is.
The hon. Lady made one error and I want to bring her up to speed. It is not true that there is just one contract in BDUK. Its open competitions have now been won by BT, Gigaclear, Call Flow Solutions, Airband, UK Broadband and Cotswolds Broadband. There has been progress since the Public Accounts Committee report that she mentioned and a whole plethora of providers have now successfully bid into the BDUK contracts.
Louise Haigh
I am aware that in phase 2 other providers have been successful in tendering, but in phase 1, as the Minister is well aware, there were problems and Fujitsu pulled out, leaving BT as the only contractor. That is why our new clause goes further than the law currently enables Ofcom to go, by ensuring the appointment of a body to undertake an alternative dispute resolution role, so that we can learn the lessons from BDUK. I appreciate that the Minister may not be able to commit to that today, but will he at least take it away and consider it for the USO?
Matt Hancock
I think that those lessons were learned about three or four years ago, so I do not think that the new clause is needed. That is why, in the second phase of the BDUK contracts, we managed to succeed in getting six different providers to bid successfully, precisely because we learned the lessons from what I agree was an unsatisfactory outcome of the first contract. So the hon. Lady is right; it is just that I think that that work has been done and so it is not necessary to legislate on it.
The hon. Lady also made the point about open data on where cabinets have been put in place and part-fibre broadband or superfast broadband has been delivered. BT has given me a commitment that it will make those data openly available. I have yet to see them, but I look forward very much to their being made public very soon; I was given that commitment some weeks ago by BT and I am surprised that they are not yet public. I will take that up with BT immediately after this—I wonder whether it might have heard what I have just said.
Given those assurances both on consultation with the devolved Administrations and on delivery of a competitive regime, with distortions to competition taken into account by Ofcom, I hope that hon. Members will withdraw or not press the amendments.
Calum Kerr
I thank the Minister for his words and I take on board his comments, but I will not withdraw the amendment. The challenge is the degree to which consultation is effective and actually feeds into the process. I know from personal experience, having met Ofcom and spoken to the Scottish Government, that much of the engagement to date between the Scottish Government and Ofcom on areas such as the USO has been tokenistic. It needs to go much further.
I have myself facilitated a workshop with the Scottish Government, the Scottish Futures Trust and Ofcom. Sharon White has met Fergus Ewing, the Minister responsible for these matters in Scotland. I think that we have to be far more explicit in legislation, because that will ensure not just a tokenistic consultation but proper engagement in the process so that in areas where the Scottish Government have set a higher target—30 megabits, superfast, for 100% of the Scottish population—the USO is designed in a way that supports and helps that. If it is done in a UK-wide, pragmatic sense, that will not help, so I will press the amendment to a vote.
Question put, That the amendment be made.
Calum Kerr
I beg to move amendment 58, in clause 1, page 2, line 13, leave out “The Secretary of State may” and insert—
“Within 12 months of this Act coming into force, the Secretary of State shall”.
The Chair
With this, it will be convenient to discuss the following: amendment 59, in clause 1, page 2, line 16, at end insert—
‘(1A) The report shall consider the comparative costs of introducing the universal service order in rural and urban areas, and identify measures to ensure costs in rural areas are not disproportionately higher than in urban areas.”
Amendment 82, in clause 1, page 2, line 21, at end insert—
“72B Universal service order: annual report
(1) The Secretary of State must lay before each House of Parliament an annual report about the implementation of the universal service order for all areas pursuant to the provisions of this Act.
(2) The annual report must include information on—
(a) the number of premises that have been supplied with the minimum download speed as specified in the USO secondary legislation
(b) the number of premises that have been required to cover some of the cost of connection,
(c) of the premises in (b) the average cost of connection per premises covered by residents, disaggregated by local authority area,
(d) the number of premises that have chosen not to be connected via the universal service order after being provided with an estimate, and
(e) the amount of time on average it takes to provide an estimate and connect a premise, disaggregated by local authority area.
(3) The annual report must be laid before each House of Parliament as soon as practicable after 31 March each year.”
New clause 9—Review of broadband delivery UK—
‘(1) The Secretary of State shall commission an independent evaluation of the delivery of superfast broadband by Broadband Delivery UK.
(2) The evaluation under subsection (1) shall consider—
(a) The financial impact on customers of a single provider delivering superfast broadband;
(b) Value-for-money for the taxpayer, and
(c) Competition in the delivery of superfast broadband.
(3) The Secretary of State shall lay the report of the review before each House of Parliament by 1 July 2018.”
Calum Kerr
That Division was rather exciting; it woke everybody up and got them away from their iPhones and iPads.
Inevitably, the focus of this first part of the Bill is on the USO, trying to make it fit for purpose and ensuring that we get the outcome that I believe we all want: better connectivity all across the country.
Amendments 58 and 59 would put into the Bill something ensuring a proper evaluation of how this USO is implemented and how it is borne out. There is a real concern that, as I have heard, the USO could follow similar lines to the telephony USO. If we remember what the telephony USO is, people have the right to demand a phone line up to a certain cost; I think it is £3,400, but I stand to be corrected if that is wrong. Thereafter, they pay the difference.
If we really mean universal broadband, what we must not have is a scenario whereby, although there is a USO, people in rural areas still end up paying more for a lesser service, which is what we have today. I am sure that we have all had complaints from constituents that, “I pay the same amount per month as someone else in an urban area for an on-the-surface 10 meg service, but I get only 1.5 or 2 meg.”
Let us accept that that is the reality on the ground—that people pay different amounts for different levels of service—but let us also put something in the Bill that actually means that stock is taken and a review is conducted. It should seek to ensure that in the future such problems do not happen and that people in rural areas—in fact, any people with a poor broadband service—get a fair speed with a fair price and all the other measures that the Government are introducing, as a result of the USO.
I should say at this point that we also support amendment 82, which puts rather more meat on those bones that I have just outlined.
Louise Haigh
We have had quite an exciting start to the Committee. The Minister turned up late; one Government Member went astray; and we nearly had a Government rebellion from the new PPS in the voting. [Laughter.] I hope that we continue in this vein. I also hope that the Minister is sensitive with his brand new PPS; I hope that she is not up for the chop this early in their relationship.
I will speak to amendment 82 and new clause 9, which would place a requirement on the Secretary of State to lay an annual report before Parliament on progress of the USO and to commission an independent review of the progress of BDUK respectively. As we have said, we very much welcome the USO. It could be somewhat more ambitious and it should extend to mobile, but we believe that it is an important step in the right direction. The purpose of these amendments is for Parliament to be kept abreast of progress, both on the USO and on the continued roll-out by BDUK.
Clearly, there have been issues with the roll-out of BDUK, not least the fact that, as we have just discussed, BT was the sole beneficiary of the contract in phase 1. If we are to avoid a repeat of that, we need to ensure not only that the procurement process is right but that Parliament takes a proper oversight role in assessing the performance and whether it is on target.
For example, we heard on multiple occasions last week about the problems around the fact that business parks have not been connected to superfast broadband, let alone ultrafast broadband. Similarly, we have heard of issues around local authorities being threatened with legal action should they so much as discuss procurement with a supplier other than the official one.
MPs’ mailbags are full of correspondence on issues about Openreach and about broadband more generally, so it is only right that they should have full disclosure on progress on an annual basis.
The first phase of the procurement process for BDUK included a mandatory requirement for copper local loop access rather than fibre, which meant old and outdated technology was being used and paid for with taxpayers’ money, entrenching the problems with existing infrastructure and holding back the future-proofing of the network.
There was also a requirement in that procurement process for the use of open access networks, which are the slowest option available, as opposed to local access networks which are much faster. It is good to see Ofcom consulting on the design of the USO over the next couple of months, and I am sure that they will learn from these mistakes. It is vital that this process is as transparent as possible, to ensure the best structure and outcome for consumers across the country.
On Second Reading the Minister called on Members to promote the take-up of broadband in areas where BDUK is providing access to broadband, so that local communities could benefit from the gainshare. That is absolutely right, and I am confident that relevant Members will be doing just that, but what are the Government doing to promote this? Are they, for example, paying for advertising and promotional materials? Is the Minister confident that access is the same as capacity, and that there is sufficient capacity in the cabinets in those areas where BDUK has been rolled out to allow take-up?
A very compelling case was put forward on Second Reading by the hon. Member for North Swindon, who described the problems he had with his local council and the lack of availability for his constituents even after BT had ticked all the boxes in that area under the BDUK contract. It seems to us that common sense dictates that BDUK should be measured on take-up rather than simply access to broadband. This is so that areas can be assured of their return from the gainshare, and also so that we can be absolutely sure that residents are able to use the broadband in practice rather than having access to it only in theory.
It is also important that we have a review of the progress of BDUK to consider whether they should be given any further direction or powers in relation to accessing land or infrastructure, for example. The statement of intent published last week references the question of how often, and on what basis, a USO may need to be reviewed. Again, we would have liked to see that in the Bill. I hope we can have clarity from the Minister on that because, as we all know, the minimum speed and quality of access that we all require are travelling in one direction only and at an exponential rate. It is difficult to imagine that 10 megabits will still be considered acceptable in 2020, let alone 2025, given that superfast is now defined as 24 megabits. The European Commission is hoping to set a new target for broadband and mobile coverage, which will aim to ensure that all European households can get a minimum internet download speed of 100 megabits per second by 2025.
The existing digital agenda for Europe programme currently seeks to ensure that every home in the EU can access a 30 megabits-plus capable, next generation access, superfast broadband connection, with 50% subscribed to a 100 megabits-plus service by the year 2020. At present it is widely expected that BT’s commercial G.fast roll-out, which will commence from next summer, and Virgin Media’s ongoing cable network expansion should bring broadband speeds of around 100 to 300 megabits to most of the UK, around 60% to 70%.
Calum Kerr
The hon. Lady is making some excellent points. The EU, which has apparently been holding us back for so long, is now leaving us behind as they run off to 100 megabits by 2025 while we set our ambition at 10 megabits by 2020. That is an excellent point. It comes back to the critical importance of how this USO is designed. Simply allowing BT to continue with more of the same, stretching their copper assets further, is not going to hit the long-term vision that is required. That is what this Government need to do. They need to set a target for fibre. I hope that when the Minister speaks tomorrow morning at the broadband convention he will say more about that, because we need to show far more ambition.
Louise Haigh
I absolutely agree with the hon. Member for Berwickshire, Roxburgh and Selkirk. Several issues relating to our withdrawal from the European Union will affect not only the measures in the Bill—particularly on spectrum divergence—but the UK digital economy as a whole. I know that the industry is extremely concerned about the implications of Brexit.
BT has also promised to extend G.fast to most UK homes by 2025, but this is unlikely to push the overall coverage figure much beyond 60% to 70% as by then Virgin Media will have already been able to deliver into much of the same areas. That goes to the point made by the hon. Gentleman, because it leaves the final third who are still out of the loop. On top of that, 5G-based mobile broadband should also be able to deliver 100 megabits-plus, and that will play a role, although mobile performance is notoriously variable and delivers much slower speeds outside urban areas. Once again, the challenge will be to bring ultrafast speeds to the final third, which would probably require a repeat of the Broadband Delivery UK programme, albeit with G.fast instead of VDSL as the main technology, and another round of public funding. That is why we need those commitments to fibre and other technologies. The former Digital Economy Minister has already hinted at that.
Christian Matheson
It is a great pleasure to see you in the chair this morning, Mr Streeter. May I also say what a pleasure it is to see the Minister for Digital and Culture. I think it is the first time we have served together. He is of course a Cheshire man like me, and we are all very proud of him in Cheshire. Indeed, when I met headmaster Chris Ramsay of King’s school recently, he asked me to urge the right hon. Gentleman to come back and visit his alma mater. I encourage him to do so, though he might not want to do any political campaigning while he is there.
I rise in support of amendment 82 in the name of my hon. Friend the Member for Sheffield, Heeley. It is absolutely right that what is becoming a piece of essential national infrastructure, and one which is developing all the time, should come under the purview of Parliament. My view on the roll-out of broadband, which is not shared by all hon. Members, is that BT has done a very good job of getting a decent proportion of the country up to a decent standard fairly quickly, using existing infrastructure. However, as we have seen, the continued reliance on copper local links can hold back the development of that infrastructure. There has been very little scrutiny of that infrastructure development in Parliament. It is good to see my fellow members of the Select Committee on Culture, Media and Sport, the hon. Members for Mid Worcestershire and for Selby and Ainsty, in this Committee. Our Select Committee’s report was one of the few areas where Parliament has been able to scrutinise the development of broadband, and scrutinise we did, strictly and fairly, as I am sure the hon. Gentlemen would agree.
Calum Kerr
I feel somewhat left out because the hon. Gentleman does not know where I went to school, but never mind. He is making an excellent speech on this whole area of BT and its contract. I agree with him. It is very easy to kick BT, but it is delivering on its contract and what it has been asked to do. Does he agree with me, though, that as we set a 10 megabits objective, it is important also to consider the future, because if BT continues to sweat copper assets we are going to come unstuck at some point. Simply going for now and not thinking about tomorrow is too short-sighted and it is catching up with us already.
Christian Matheson
I absolutely agree with that suggestion. BT has used copper assets well to manage to get a large proportion of the country up to a decent standard quickly. The Minister made a good point in the evidence sessions when he challenged the BT director of strategy on the number of premises that were connected to fibre, by suggesting that in fact those premises were all connected not by fibre, but by copper loop to a box that was connected by fibre. The Minister was absolutely right to make that proposal. My hon. Friend the Member for Sheffield, Heeley made an extremely valuable point about the controversies that continue within the telecoms industry. It is not an industry that sits comfortably with itself; everyone seems to be at each other’s throats. There is competition, there is healthy competition and there are outright dog-eat-dog hostilities. I wonder whether they fight too much among themselves and take their eyes off the ball when it comes to serving the consumer. A proper, annual parliamentary process that can focus the attention of the industry, as well as of Ministers, and give Parliament the chance to consider how this important and critical piece of national infrastructure is rolling out would be extremely valuable. To quote the Minister, it would hold the industry’s feet to the fire annually.
The hon. Member for Berwickshire, Roxburgh and Selkirk is right: we should not be limiting our ambition. The amendment proposes an annual review to see how far we can take our ambition in the forthcoming period. I hope to see—as the hon. Gentleman suggests—a roll-out of fibre to premises as the baseline standard in coming years. The one concern I have about the industry, which the amendment touches on, is that we will be driving forward with higher capacity and capability standards across 80% of the country, but those areas that are currently notspots will remain notspots. I hope that will be covered by other parts of the Bill, and that the Minister will address that. This amendment, though, will focus the attention of the industry on delivery by requiring it to report annually to Parliament via Ministers and via Ofcom. We can see who is delivering and who is not, and why not. It is an excellent amendment, and I am pleased to support my hon. Friend.
Claire Perry (Devizes) (Con)
I sympathise with many of the things that the hon. Member for the City of Chester has said. I cannot promise that I will not visit during a political campaign, because it is a seat I would like to see returned to the fold, despite his good efforts.
While I understand the spirit in which amendment 82 and new clause 9 have been tabled, I reject their premise. We heard clearly in the evidence sessions what is wrong with the Government—and, indeed, one provider—trying to over-specify and push out a solution. I know from my own constituency that, although there has been decent progress, it has not gone far enough—I absolutely agree with the hon. Gentleman on that. There are specific communities—for instance Shalbourne, a beautiful village—where there are insoluble notspots. These houses seem unable to be connected to the exchange because they connect to a Hampshire exchange, not a Wiltshire one, so all the good work Wiltshire council has done putting in local taxpayers’ money and working with BT Openreach is of no benefit whatsoever to those constituents. In Worton, where we actually had the discussion with BT, there is a dividing line right down a street: some houses are connected and some are not. We all know that that is increasingly very bad for house prices and really does affect people’s mindset when they move into the constituency. In my area, the Lydeway business park, which includes a very fine farm shop and other small businesses, is desperate to get better broadband connectivity, but we cannot seem to get it.
We heard from TalkTalk and other witnesses that the job is not to specify what the solution should look like and have lots of arduous burdens on Government to report back, but to empower consumers to say, “Let’s go out and talk to Gigaclear.” Or we could look at what has been done in a part of Cumbria, represented by one of my hon. Friends, where communities have come together, worked with farmers to waive fees for crossing land and come up with a community-led solution.
Empowering consumers, as the Bill will do, would enable them to demand a legal right to a decent level of broadband connectivity. I accept that 10 megabits per second is an aspiration for many premises already—they do not get anything like it—and I completely accept the point that that may not be enough in future.
We also heard in the witness sessions that technology in terms of compressing more and more data and information down existing fibre or copper is improving all the time. It might actually be sufficient for some families. I have managed to upgrade with the cabinet in Upavon to about 15 down and 10 up. It is nowhere near enough when all the kids are home and they are on Netflix and other things but it is not bad. If I yell at them loudly enough to get off the wi-fi, I can actually get my constituency work done, albeit from home.
I contrast that with what it was like before when, if the hamsters pedalled fast enough, I might have been able to send one email an hour. It is a massive improvement to productivity in the Perry household.
Calum Kerr
I hope the hon. Lady would not yell at me to get off the wi-fi. She is making some good points but I would try to draw her back to the substance of the amendments. There is no focus on technology. We want to ensure that the USO is delivering for all our constituents. All we want is a review to monitor progress and ensure that the design is fit for purpose. It is not about technology so I urge the hon. Lady to think again.
Claire Perry
I accept the spirit of what the hon. Gentleman is saying, but I did sit until recently on the inter-ministerial Committee looking at how to upgrade the digital services right across the country.
It is clear that Ofcom is taking its responsibilities very seriously, both to report on the number of premises that are connected and to tighten up on some of the issues where broadband companies advertise the maximum speed a customer might ever get if connected rather than the average speed. Ofcom is a very good regulator under Ms White’s chairmanship and it is absolutely stepping up to the plate.
I am afraid that I cannot support the amendment or the new clause because they are stuck in the past, looking at how we push out a good solution rather than empowering consumers to pull through the best solution that works for them. That solution might look very different in my constituency of Devizes from how it might in Cheshire or the highlands of Scotland. We have made decent progress but it is not far enough. I applaud the Government for bringing forward both the USO as an underlying obligation and the flexibility to amend that as technology changes.
Thangam Debbonaire (Bristol West) (Lab)
I rise to support the amendments under discussion and thank my hon. Friend the Member for Sheffield, Heeley for an excellent speech and for leading the debate, particularly on amendment 82.
I want to ask this of the Committee. Do we want to be ambitious? For me, this is about ambition. Do we want an economy that has the nuts and bolts, the things we require, to make it fit for the 21st century and the challenges it is already throwing up? Do we want our tech and creative industries, such as those that operate in my constituency of Bristol West, to be able to perform their functions, or do we want them to move away?
Nigel Huddleston (Mid Worcestershire) (Con)
I hope the hon. Lady does not mean to talk down the UK digital success story of 12.4% of GDP. I am sure she is aware that that is the largest in the G20 and compares with a European average of just 5.7%. We need to keep the progress going but we already have huge achievements, have we not?
Thangam Debbonaire
Yes, of course, I agree but I do not want that to slow down. I am ambitious because of that record and want it to continue, if possible, at an exponential rate of growth. Having such a low level of ambition in the USO will, I think, hold back the success stories that the hon. Gentleman so rightly talks about and that I have in my constituency. The medical and university sectors and researchers throughout industry all say to me that the issue is both upload and download speeds, as well as ensuring that they can compete with their competitors in Europe and beyond. As my hon. Friend the Member for Sheffield, Heeley said, the European ambition is for 100 megabits per second—10 megabits is just a fraction of that.
Claire Perry
If the hon. Lady knows my beautiful constituency, she is always welcome to come and have a cup of coffee and admire it. The last time it was anything other than Conservative was 1921, so she is welcome to visit but not to campaign. Surely she, like me, welcomes Wiltshire Council’s commitment of taxpayers’ money to the programme and the fact that 91% of premises have now been passed by the BT programme. We are not there yet, but we have made enormous progress.
The Chair
Although the Committee is going really well and everyone is doing great, we are now straying slightly into Second Reading territory. Let us keep our comments focused on the amendments and new clause in hand and we will all get along swimmingly.
Thangam Debbonaire
Thank you, Mr Streeter. I do not have much else to say, but I say to the hon. Lady that I do indeed know her constituency well because one of my sisters was born in Devizes. She mentions 91% and Wiltshire Council’s excellent commitment, but what about the other 9%?
Before I sit down, I refer briefly to what Vodafone’s Paul Morris said in one of the oral evidence sessions last week. He said:
“I do not think that 10 megabits is enough for most small businesses”.––[Official Report, Digital Economy Public Bill Committee, 11 October 2016; c. 16, Q26.]
If it is not enough—if a telecoms provider acknowledges that it is not enough, and if tech companies in the creative industries and others in my constituency are telling me that it is not enough—I do not understand what would be so wrong with having an annual report to measure how we are doing. I thank you for allowing me the time to make that point, Mr Streeter, and I commend the amendment to the Committee.
Nigel Adams (Selby and Ainsty) (Con)
Before I make a brief remark, I draw the Committee’s attention to my entry in the Register of Members’ Financial Interests.
I fully support the spirit of the amendments and new clause, but I am not entirely sure whether the Committee should support it. Surely it is the Culture, Media and Sport Committee’s job to hold BDUK and the Department to account for their progress. I told you I would be brief, Mr Streeter.
Matt Hancock
We have had support of spirit throughout this sitting. The amendments and the new clause are all about reviews of and reports on progress. I have reviewed my broadband this weekend, and I can report that while I was looking at myself discussing the importance of broadband in East Anglia on a local TV programme, I was actually under my desk because my broadband went down. I know how frustrating it is when one’s broadband goes wrong. I am very grateful to the BT engineers who are working to fix it right now. That is my report.
The best comment was made by my hon. Friend the Member for Selby and Ainsty about the Select Committee. Reports and reviews are important, but the Select Committee is there to ensure that Parliament has its say. More than that, as Ofcom carries out its consultations, it will of course report on progress.
I wish to pick up on a few of the comments that were made. The hon. Member for City of Chester, which is a great city and the city of my birth—the Bill is all about connectivity and we have been making all sorts of connections in this sitting—made the argument very strongly for the importance of not only getting better connectivity, but describing it right. I will have no truck with people who say they are providing a fibre solution when, in fact, it is a part-fibre solution. Fibre-to-the-cabinet is not fibre and anybody who says so is taking people for fools. We should talk about fibre when we mean a full fibre connection that goes all the way from the fibre backbone into the premises. Anything short of that is merely part-fibre.
That point demonstrated some of the confusion from Opposition Front Benchers and shows why it is so important to get these things right, instead of just calling for a report when that is already going to happen. The hon. Member for Sheffield, Heeley called for use of G.fast, which is an important interim technology. However, she then said, “and therefore, it is important we have more fibre.” G.fast is not a fibre technology; it is a copper-based technology. While it is important and useful interim technology that will undoubtedly increase speeds, it is not full fibre.
Calum Kerr
The Minister is slightly taking liberties there. The reality is that G.fast is distance-constrained to about 300 to 400 metres, so fibre will have to be pushed much further. I am sure that the hon. Member for Sheffield, Heeley is aware of at. It comes ack to the same principles: we need more ambition and we need to push fibre further. Yes, G.fast will have a place, but it will not fix my or my colleagues’ rural challenges.
Matt Hancock
Exactly, absolutely right. We are seeing the long-feared Labour-SNP alliance in action. The hon. Gentleman is right that G.fast is a useful technology but it is not a full fibre technology and is, by physics, distance-constrained, although BT continues to do important work on driving as much delivery out of copper as possible.
There is one other point that it is important for the Committee to consider: there was a simultaneous call from the Opposition for the statement of intent to be included in the Bill and for there to be flexibility in the speed of the USO. These two things are inconsistent; it takes time to change primary legislation. It is incredibly important that we can revise the USO potentially—and hopefully—upwards. It is wrong to set a USO speed now for several years hence. I think we agree on that. We should not, therefore, put the speed on the face of the Bill.
The Scottish Government have said they want 30 megabits per second by 2021. We, of course, want the USO before then and we want the speed to reflect the reality of the time. Demands are increasing very quickly, so I would not want to put a figure on it for five years hence, as the Scottish Government have done. That is a mistake and it is far better to do it as we are planning in this Bill.
Louise Haigh
The Minister is slightly misinterpreting what I said, which is particularly cruel given that I have only been a week in the job. I did not say G.fast was equivalent to fibre. I said that BT would be pushing it out to 60% to 70% and that was why we need much more ambitious targets from the Government on fibre for that final third, in order to deliver coverage for the entire UK.
With regard to the statement of intent, I have said several times that we support its being in secondary legislation, but we want to see elements of it, including the design of the USO, the procurement process and review, to be in the Bill, to avoid being asked to vote blindly on details we do not yet have.
Matt Hancock
I am delighted to have that clarification. I am also glad that the hon. Lady welcomed the fact that Ofcom is doing the consultation, which is necessary before we can put those details in place. The way the provisions are structured in the Bill is the right way to proceed.
In ensuring that we get the best possible broadband connectivity, we must make sure that we have both a vision of the future with high-speed and superfast—and then ultrafast—connectivity, and flexibility to get there in the most cost-efficient way possible. That unites the Committee in purpose, and the Bill as it stands provides for it.
Finally, following the mention of the Labour Government by the Opposition, I will not rise to any partisan points other than to note that in 2003, the then Labour Government legislated to set a USO. They set the USO in stone in legislation and instead of including a review clause, they set it at 28 kilobits per second. Let that be a lesson to anyone who wants to put more on the face of the Bill. It is far better to ensure that we can constantly keep pace with technology, as the Bill does.
Calum Kerr
I am enjoying this; the debate is getting a little more spirited. I hope that some Government Committee members will vote the wrong way for their party and the right way for the people of this country and their connectivity. We are not advocating that a figure is put in the Bill. At no point have we suggested that. We have been advocating greater ambition and a desire to ensure that the USO is designed and rolled out to meet the demands of our constituents and the expectations of the country. Unless the Minister or anyone else can tell me that this place is particularly good at doing perfect legislation that always gets the desired outcome, it seems eminently sensible that we put in place a review process. On that basis, I am happy to withdraw the amendment and instead support amendment 82.
Louise Haigh
We have heard support for the spirit of the amendment and for the Select Committee to review the progress of the USO. The amendment certainly does not specify to which element of Parliament the report should go. We would be satisfied with progress being reported to the Select Committee. Government Committee members will be interested in, and their mailbags will be full of concerns on the progress of the USO, so they should have the ability to review that. Also, I was not old enough to vote in 2003, so I do not think I can be held responsible for decisions made then.
Calum Kerr
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 82, in clause 1, page 2, line 21, at end insert—
“72B Universal service order: annual report
(1) The Secretary of State must lay before each House of Parliament an annual report about the implementation of the universal service order for all areas pursuant to the provisions of this Act.
(2) The annual report must include information on—
(a) the number of premises that have been supplied with the minimum download speed as specified in the USO secondary legislation
(b) the number of premises that have been required to cover some of the cost of connection,
(c) of the premises in (b) the average cost of connection per premises covered by residents, disaggregated by local authority area,
(d) the number of premises that have chosen not to be connected via the universal service order after being provided with an estimate, and
(e) the amount of time on average it takes to provide an estimate and connect a premise, disaggregated by local authority area.
(3) The annual report must be laid before each House of Parliament as soon as practicable after 31 March each year.”—(Louise Haigh.)
Question put, That the amendment be made.
Louise Haigh
I know that we covered this issue on Second Reading, but I was not the shadow Minister at the time. This legislation is not a Bill for the digital economy. The tech sector has been waiting for some time for the Government’s digital strategy and vision for this crucial area of our economy; to say that it is disappointed with the lack of ambition and strategic direction in the Bill would be a gross understatement.
We heard a damning indictment from one witness last week. He described his business as a tech start-up in Canary Wharf, and said that the Bill would do absolutely nothing to help it. To call it the “Digital Economy Bill” is quite insulting given that it is actually a collection of disparate measures—a mixture of amendments from across a range of Departments vaguely tied together using the word “digital”. Over the next few sittings we will focus on where the Bill could be improved, and I am sure that on Report we will return to what the Bill requires if it is genuinely to aid, boost and improve the digital economy.
On clause 1, we need to do much more than produce a mere headline USO. If we are talking about access to digital services, what are we prepared to do to support that access? Does that support simply cover subsidies on infrastructure in more remote areas, or should it also cover education? If it is more than just enabling access, we need to make sure digital skills and knowledge are embedded in our education system as well as providing for the older generation.
Similarly, as we discussed earlier, we need to think beyond mere access and ask ourselves what sort of targets we want on usage. What goals follow the strategy of the USO? It is brilliant if everyone has 10 megabits per second, but how many people are able to use the internet? How many young people are studying IT or related classes? What percentage of the workforce are in technical-related roles? The fact is that not only is the USO unambiguous, but it is long overdue. As I said earlier, Labour left fully costed plans to deliver superfast by 2012.
In 50% of rural premises the infrastructure is simply not there to carry more than 10 megabits, and for one in five premises it will not carry more than 5 megabits. It was suggested to us by a couple of witnesses that the USO was simply in line with BT’s proposed business plan. The chief executive of BT confirmed this to us: they can implement the USO by 2020 without any further public money, with 24 megabits to 97% or 98% of the country, fixed broadband of 10 megabits to 99%, and the last 1% likely to be done by 4G or satellite. The question is, therefore, why this legislation is necessary. One witness explicitly said:
“I think you should be very worried when you hear large incumbents saying, “Set up a universal service obligation but don’t let it get too far ahead of what we’ve got in our business case.” That is not what business should be doing. Businesses will invest more if they are scared their customers will go elsewhere, not because they have been given a promise by Government”.––[Official Report, Digital Economy Bill Public Bill Committee, 11 October 2016; c. 10, Q14.]
If we are really to tackle the issues in our broadband market, the evidence we have seen suggests that the USO is—at best—nice to have, but at worst it is a serious market distortion. In fact, the Government should be considering much deeper issues such as the structure of the market, much-needed investment in infrastructure, the need for planning reform to enable the roll-out of 5G and the need to be much more imaginative around future licence auctions. For example, as we have heard time and again, there is the German model to license outwards-in so that those who are missed out on previous rounds are serviced first.
Furthermore, we have heard in one form or another that all roads lead back to Openreach, and the Bill really could have been an opportunity to reflect on that. Baroness Harding believed that
“competition will do the majority of this, and we should try our damnedest to make the private sector fund most of this through competition”.
She concluded that,
“the solution is to separate Openreach completely and put a universal service obligation on an independent Openreach”. ––[Official Report, Digital Economy Bill Public Bill Committee, 11 October 2016; c. 6, Q4.]
We heard in evidence that Openreach could and should be much more ambitious, deliver a better service and be in control of its own board, but evidence was given that, to achieve that, Openreach needs to be completely independent. It was argued that we have not been able to see how far a competitive commercial roll-out can go because we do not currently have a competitive commercial market, and we cannot have that market reform until, at the very least, we separate out Openreach.
One witness said:
“if we are going to be ambitious, to enable companies like ours to continue to grow, invest and innovate, we need a national solution, and a national solution will depend upon the national network owner, which is Openreach...That is why the structure of the industry does matter; the ability to get capital into the industry to invest in the kinds of future networks we need is critical”.––[Official Report, Digital Economy Bill Public Bill Committee, 11 October 2016; c. 19, Q31.]
Ofcom has been unambiguous in saying that network competition—having multiple network operators on the ground and available to consumers—is the best driver of investment incentives, of superfast broadband penetration and of consumer outcomes. We would like the Minister to set a clear timeframe today for the response to the Ofcom consultation on Openreach. The consultation closed two weeks ago and, as I understand it, Ofcom are now in private consultation with BT. The public and Parliament need to know when we can expect the Ofcom response and what the next steps in the process will be.
Christian Matheson
Does my hon. Friend agree that one of the problems with Openreach is that, because it does not have a customer-facing aspect, its customer service and consequently its reputation have been extremely poor?
Louise Haigh
That is certainly one of the issues. I personally have poor experience with Openreach and I am sure many members of the Committee and their constituents will have, too. Public satisfaction with Openreach customer service is incredibly low and needs urgent investigation. However, we need more detail on some areas that have not been put in the Bill, but which were included in the statement of intent, as mentioned earlier.
An example is the fact that connections will be subject to a cost threshold, above which consumers will still have the right to fast, reliable broadband, but may have to contribute to the cost of connection. That is not much of a surprise, as it happens with the USO for telephone lines. There, the cost threshold is £3,400. Is it possible for the Minister to provide any guesstimate about the threshold for the broadband USO? Once again, we are being asked to vote on legislation that does not include vital details that could make the entire proposal almost completely useless. If the threshold is set too low, the right will essentially be meaningless for the vast majority of consumers, who already miss out, are on unacceptably low broadband speeds and are forced to pay unacceptably high prices. Will the threshold have any form of parliamentary scrutiny, or is this really enabling legislation that will allow the Minister to get his head around the details after the fact?
As we have discussed, we do not believe that the headline figure of 10 megabits is sufficiently ambitious, and nor is a headline speed sufficient when considering the quality of broadband available to the population as a whole. That point was raised by several hon. Members on Second Reading, and by the hon. Member for Mid Worcestershire in evidence sittings. It is a source of great frustration in rural areas, in particular when customers are promised mobile coverage or broadband speed that are not delivered. The Bill does little to correct that. Yes, it provides for automatic compensation, but I am confident that customers would much rather have coverage—and reliability of coverage—than recompense.
The Minister did not answer questions about BDUK earlier, so I will put them again, if that is all right, Mr Streeter. Is the Minister confident that access is the same as capacity, and that there is sufficient capacity in the cabinets in areas where BDUK has been rolled out to allow take-up? Does he believe that BDUK should be measured on take-up rather than access to broadband? I should be grateful if the Minister also updated the Committee on conversations with the Advertising Standards Authority about its code, so that companies can advertise a certain speed only when a certain percentage of their customers in that area get that speed. The ASA and its committees have been looking at that issue for some time, but surely the Bill is the perfect opportunity to speed up the process and provide much needed certainty and lower prices for rural customers.
Finally, we welcome plans to deliver superfast broadband connection to sites with more than 100 homes from January. That was raised time and again on Second Reading. It is absurd not to have minimum levels of broadband in new homes when we would never consider not connecting water or electricity to any new home, regardless of the numbers on the site. As the Countryside Alliance pointed out, the figure of 100 is too urban-centric, as rural areas are moving towards small-scale developments. I hope that the Government will keep the commitment under review and ensure that the figure is reduced in future, if necessary.
We must absolutely not let the USO get in the way of investment in developing super and ultrafast capabilities across the whole UK. We heard evidence stressing the threat that communities that might be pleased with 10 megabits today will be furious about not having 1 gigabit in three or four, or potentially 10 years’ time. Indeed, providers such as Virgin, and even smaller ones, such as Gigaclear, are now building proper fibre to the premises, providing up to 1 gig in extremely rural areas; so I fear that the target will quickly become completely outdated, even given the flexibility built into secondary legislation.
Overall, the Opposition support the commitment, with all the caveats I have outlined, and I am happy to support clause 1 to stand part of the Bill.
Rishi Sunak (Richmond (Yorks)) (Con)
Ninety per cent. of UK households can access superfast broadband this year, and that number is set to improve in the next 12 months. However, many of the households that do not have access are in places such as my constituency in rural North Yorkshire, creating a digital divide between those who have access and those who do not. On behalf of my constituents, I welcome clause 1, which provides a safety net so that on reasonable request and at an affordable price they will have access to some measure of broadband connectivity.
Week in, week out, while I am doing my job, I see the benefits that that will bring, and the problems experienced today. Of course, economic development is important. My area is known for its tourism, but when I speak to the owners of holiday cottages or bed-and-breakfast accommodation, they tell me they must advertise across the world on the internet. When people come to visit the beautiful Yorkshire dales, when they have finished their day’s walking in the beauty and splendour of Swaledale, they want to come home and check their emails. It is important that my owners can provide that service.
I was at a school last weekend talking to a group of young pupils who are embracing a new course on coding. Obviously, we are not blessed with Silicon Valley yet in the Yorkshire dales, but they were accessing the resources of Code Academy online at school and wanted to continue that at home in the evening.
Beyond that, the internet keeps families together—not just grandparents who want to see their new grandchildren living abroad on Skype, but also a father to whom I spoke the other weekend who is unfortunately going through a difficult divorce. He told me that his children, with whom he was desperate to maintain a good relationship, were less keen to spend the weekend at his house because of his poor broadband connection.
The Government are moving to a “digital by default” approach to delivering public services, which is commendable, but it is important that everybody, especially farmers in rural areas, have the means to access those Government services.
For all those reasons—the tangible differences that the Bill will make to people’s lives—I welcome the Government’s delivering on their manifesto commitment to put in place the universal service obligation. The Government have the view that this should be an economy and society that works for everyone. Providing good digital connectivity to everybody is certainly part of making that aspiration a reality. On behalf of my constituents, I wholeheartedly welcome and support the measures in clause 1.
Calum Kerr
We also support clause 1. I will not repeat the points I made during the debate, but I want to bring a couple to the fore and ask the Minister one specific question, which I hope he will answer. We should not just be looking at closing the divide in the short term; we should be looking at a longer-term fix. We should consider what a minimum speed is today, but we should also be looking to what that might become in the future.
The hon. Member for Sheffield, Heeley pointed out that the EU target is 100 megabits per second by 2025. While we can aim for 10 megabits per second, if we do not set a horizon of where we want the target to go, we risk putting sticking plasters all over the country and getting solutions that will have no lifespan. We will all be back here in a few years’ time, saying, “I wish we’d listened to the hon. Member for Sheffield, Heeley who wanted an annual review.” We would know that this provision had not been delivered.
Let us try to avoid that scenario and ensure that as the USO goes through the process, what Ofcom designs not only looks at where we are today, but where we want to go in the future. When the Minister gives the main event speech tomorrow at the INCA event, which is advocating a strategy for gigabit Britain, he should set forward a truly ambitious vision of what the UK can offer in this space. Perhaps his response will provide me with some reassurance.
As we have looked at amendments, I have tried to ensure that not only have the Scottish Government and other Administrations been consulted, but they are part of the formulation of the USO. Consultation can be tokenistic or it can be fully engaged and evolved. We need to be fully involved in the design of this process, so that where we set an ambition, a target of 30 megabits per second, the USO supports it—for example, through foundational funding through a voucher scheme. Where any one of the regional councils want to do the same and set an ambitious higher target, the USO should support that, rather than offer a solution that forces them into a corner.
Will the Minister reassure me that the USO designed by his Government with Ofcom will support devolved Administrations and regions and provide foundational funding—not just 10 megabits, take it or leave it?
Nigel Huddleston
There is obviously a growing consensus and recognition of the importance to all our constituents of the universal service obligation. As always, the devil is in the detail. I understand that some of those details will be provided or revealed in secondary legislation. I do not buy some of the concerns expressed today about a possible lack of scrutiny in the progress of the USO. As a member of the Culture, Media and Sport Committee, alongside other members of this Committee, I am confident that we will continue to do that job robustly and effectively to raise issues and concerns.
I cannot imagine how many times we have heard issues related to broadband and mobile brought up in the Chamber, in Westminster Hall and elsewhere in this place, so we can scrutinise in multiple ways. We also have to be careful that we do not constrain our ambition by thinking of current technology and current speeds. It is important that we go with the flow and update our ambitions accordingly as technology develops.
Matt Hancock
We all agree that broadband is a modern necessity, and I am delighted at the Committee’s tone in supporting the goals we have set out to drive connectivity across the whole of Britain. The legal framework for introducing a USO seems to have been warmly received on both sides of the Committee. I will respond to the individual points that have been made.
First, on the ambition, thankfully we now have a Bill to introduce the framework for delivering the high level of connectivity that we need. Baroness Harding told us in our first evidence session that
“I think it is a great thing.”––[Official Report, Digital Economy Public Bill Committee, 11 October 2016; c. 10, Q15.]
We also heard the Bill described as an “incredibly important step”. As Pete Moorey from Which? said:
“There are critical things in the Bill that will start to bring the telecoms sector kicking and screaming into the 21st century.”––[Official Report, Digital Economy Public Bill Committee, 11 October 2016; c. 24, Q47.]
That is support for the importance and direction of the Bill.
On the specific point, Ofcom’s consultation on the market structure, which the hon. Member for Sheffield, Heeley mentioned, closed on 4 October and Ofcom will respond shortly. The timing is a matter for Ofcom, and it would be improper of me to pre-empt it. She is right that the threshold will be determined by the consultation, and it is wrong to try to pre-empt that consultation process. Instead, we should do things properly.
The hon. Lady will no doubt welcome an update on new homes. We have a new commitment that any development of more than 30 homes, rather than more than 100 homes, will have fibre connections and, as of 1 January, building regulations will require superfast connections in new buildings. The sensible suggestion from both sides of the House that new houses should be built with what is needed for the future has now been enacted.
Christian Matheson
I am pleased to hear that building regulations are changing. Will the Minister also have conversations with his colleagues in the Department for Communities and Local Government to change planning regulations so that newly built premises, properties and estates are ducted and cabled ready for connection?
Matt Hancock
I will look into that. I will be surprised if that does not happen already, but I will take it up.
Claire Perry
Will the Minister make representations that the threshold of 100 houses for the mandatory provision is perhaps a little high, certainly for those of us in rural constituencies?
Matt Hancock
I repeat what I have just said: the floor of 100 homes has come down to 30 homes for fibre connections, but all new buildings will be required to have access to a superfast connection from 1 January. Those points have been taken on board.
Calum Kerr
Will the Minister clarify, especially given his comments earlier about what fibre means, whether that is fibre to the premises or access to superfast over copper?
Matt Hancock
To channel the Prime Minister, fibre means fibre. If hon. Members want to know what fibre means, it means fibre.
On the point about measuring BT and BDUK on take-up not access, both BT and BDUK are measured on take-up as well as access. Both are important. In fact, the contracts have take-up embedded in them, because the clawback from higher take-up allows money to be spent on further roll-out. The contracts that are being rolled out at the moment are from that clawback. The hon. Lady is therefore absolutely right that both take-up and access are important, and in the county-by-county figures from BDUK we have both take-up and access.
I also strongly agree with the hon. Lady on advertising. The Advertising Standards Authority has consulted for some time on descriptions of both “up to” speeds and pricing arrangements, both of which can be wholly misleading. I very much hope that the ASA will come out with new rules shortly—it has been working on that for some time. However, advertising is policed on a non-statutory basis and I think it would be a significant step for us to legislate on that matter because we do not want political interference in the rules around advertising. That is a step that I do not want to take. I do want the ASA to come to its conclusions as soon as possible. I hope that that answers all the questions that were asked on that point.
Louise Haigh
I appreciate that the Minister may not want to pre-empt the Ofcom consultation, but will there be any parliamentary scrutiny of the proposals that Ofcom will bring forward, or will we leave it to Ofcom and accept what it brings forward in terms of design, cost threshold and everything else we have debated this morning?
Matt Hancock
Of course there will be parliamentary scrutiny, because the Bill provides for the USO details to be put in place via secondary legislation. There will be scrutiny then and, as my hon. Friend the Member for Selby and Ainsty pointed out, there will also be the opportunity for Select Committees to scrutinise in their usual way. I hope that without reading the rest of my speech, which is all about how important and wonderful broadband is, the Committee will accept what I have said as a full response.
Calum Kerr
Perhaps the Minister missed my request. Will he reassure me that the schemes put in place will be designed to support national commitments such as the Scottish Government’s 30 megabits and other regional commitments? The issue is all down to how the USO is designed. If it is simply put out as a 10 megabit service—take it or leave it—it will not help, whereas a regional, flexible model such as the voucher scheme that BDUK has done before could provide the foundational funding.
Matt Hancock
In short, although the precise design is subject to the Ofcom consultation, my view is that the potential in the Bill for the USO is more ambitious than the Scottish Government’s, because theirs is to be delivered later and has already specified a speed. Instead, we have proposals coming in sooner and with uprating built in from the start.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clause 2
General conditions: switching communications provider
Question proposed, That the clause stand part of the Bill.
Louise Haigh
The Opposition are happy to support the clause. As we know, there are currently extremely low levels of switching in the market, with 5.9 million mobile users having never switched owing to concerns with the process and 2.5 million people saying they have experienced a major difficulty such as the amount of time it took or loss of their number. Every year, more than a million people are either double-billed or lose service in attempts to switch.
I understand that Ofcom has been considering how to make switching work for over eight years, and I am informed that the decision on switching has been delayed because of previous appeals and the current appeal regime, which we will come on to later in the Bill.
The powers for Ofcom to introduce gainer provider-led switching are welcomed by Opposition Members, as the figures clearly show there is little appetite to switch mobile provider at present, despite the clear lack of trust in mobile service providers themselves. In the last year, almost half of consumers have not switched providers; of those who have switched, 46% of them did so more than a year ago.
As Members are aware, at the moment switching providers is beyond arduous. Individuals have to contact their own provider and then the provider they wish to switch to. They have to terminate their old contract and then activate their new contract. This creates additional costs, time and hassle, and means that consumers are not able to compare all the deals available to them easily.
These proposals are welcome, but do the Government intend gainer provider-led switching to cover both mobiles and bundles? Clearly, many mobile networks also operate in other areas, such as internet and television, so would it not make it even easier for consumers if they could switch all at once if a better offer was provided? We look forward to hearing the Minister’s comments on that.
It would also be helpful if the Minister could put on the record what discussions he has had with Ofcom and mobile providers about the range and depth of information that will be available. Clearly, the lack of open data in this market holds back switching, but as we discussed earlier it also holds back investment and competition. It is very welcome to hear that BT has offered that information, but we would be grateful to hear exactly what data it is making available. Data on internet availability—such as costs, product offerings, location of cabinets and masts, access method, service quality, service faults, and planned network upgrade and dates—would all be enormously beneficial if they were published as open data.
That would be a considerable step towards creating a more effective market. It would not only help with switching but would enable an operator, community group or local authority to decide whether to build a new network for an area if there were no other plans to do so.
Nevertheless, these measures are very welcome and we on the Labour Benches are pleased to support them.
Matt Hancock
Consumers should be able to benefit from choice and competition in the UK communications markets, and I am very grateful for the cross-party support for these measures.
The central case is that changing suppliers should be quick and easy, and can benefit all. However, the reality is that no matter how attractive a deal may look, or how dissatisfied a customer may be with their current service, the rigmarole or the perceived rigmarole involved in changing provider deters switching. This clause makes it explicit that Ofcom has powers to facilitate easier switching in the communications sector.
It will be for Ofcom to consult on and define which communication services will be subject to switching processes. Ofcom is consulting on triple play—so fixed line, broadband and pay TV switching—with a view to simplifying the processes to switch multiple services as well. The clause will help to cement Ofcom’s power and will put in place processes to instil in consumers the confidence to shop around. That is the purpose of the clause.
There are ongoing discussions with Ofcom about the range and depth of information that is provided. Of course, the measure complements the information powers given to Ofcom in part 6 of the Bill, which we will come on to. So, once consumers have better information to hand about the services on offer, they can then switch to the service that is most suitable for them with confidence and the minimum of fuss.
Ofcom has existing powers to set conditions on electronic communication service providers, and this clause makes it explicit that Ofcom may set general conditions to facilitate switching. Such conditions could require providers to comply with defined processes, such as gaining provider-led switching. This approach would mean that consumers would no longer need to contact their existing provider when they want to move, and of course the gaining provider has the incentive to make these things as easy as possible.
I hope that all these things will help to boost switching and therefore make this market more competitive.
I beg to move that the clause stand part of the Bill.
Question put and agreed to.
Clause 2 accordingly ordered to stand part of the Bill.
Clause 3
Automatic compensation for failure to meet performance standards
Calum Kerr
I beg to move amendment 60, in clause 3, page 2, line 35, at end insert—
“(db) require a communications provider to allow an end-user to terminate a contract on repeatedly failing to meet a specific standard or obligation;”.
The Chair
With this it will be convenient to discuss the following:
Amendment 84, in clause 3, page 2, line 35, after “obligation”, insert “within reasonable timescales”.
New clause 2—Ability of end-user to cancel telephone contract in event of lack of signal at residence—
“A telecommunications service provider must allow an end-user to cancel a contract relating to a hand-held mobile telephone if, at any point during the contract term, the mobile telephone is consistently unable to obtain a signal when located at the end-user’s main residence.”.
Calum Kerr
The area of compensation is one that we have all probably been hearing about from our constituents for quite some time. Before speaking to the amendments, which are about mobile coverage, let me first welcome the important move in the Bill that not only puts compensation in place but makes it automatic. Telecoms and connectivity can feel like the dark arts to some of our constituents and it is important that whatever is put in place does not depend on their understanding the details of what they are entitled to. However, the point has already been made today that when people sign up for a broadband service, there should be far clearer, granular detail on what they should expect. We have wrestled today with what a USO should be; we have talked about download; we have talked about upload; the Minister rightly mentioned other areas such as latency and data limits; and of course cost comes into it.
In terms of compensation, it is important to recognise that broadband is different from telephony. Telephony is fairly binary—it is on or off. It works or it does not. There might be some interference, but it remains a fairly binary service. Broadband, however, is defined by many different characteristics.
As we look at a compensation regime, we need to look at the speed expectations. When someone signs up for a broadband service, they sign up for a service that is, by definition, contended. It is shared, which is why, as those who have ever been at home when the kids all get home from school, broadband speeds sometimes plummet. That is the reality of the service that is signed up for and that reality has to be accepted on a contended service—those who want a less contended service need to sign up for an appropriate service with BT or another provider—but there should still be levels of expectation. There should be a top-line download speed, an average speed and, in my view, a baseline speed, below which the service does not drop.
As we look at compensation, I would like to see some flexibility. Given the complete lack of information in the Bill—in keeping with the earlier clauses—there is the ability here for Ofcom to show flexibility and design an appropriate system. The telecoms providers all have huge challenges to face on their performance standards—the digital communications review called them out. BT was singled out, but it was not the only one. They all have a way to go in improving their service standards, so a compensation regime should be designed to incentivise them. We have to remember that this is about incentivising good performance, not about penalising bad performance, although the two obviously go side by side. We should design a scheme that is automatic and ensures people are compensated but that, most importantly allows people to get the service that they are promised and the providers are contracted for. That is important.
My hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey instigated work on the areas addressed in amendment 60 and new clause 2 some time ago. There are huge chunks of the country, not least the highlands but also the equally beautiful Scottish borders in my constituency, where there are notspots—in fact, it feels like there are more notspots than onspots most of the time, as I found on my summer tour. My hon. Friend brought forward proposals, which were put to the then Minister and Ofcom, to allow individuals who have signed up for a mobile service and then found that they cannot get proper service at home to be allowed out of their contract. Some providers—I think Vodafone was mentioned in the evidence session—have started to offer that. I hope that—hope is not a strategy, as we always used to say, but sometimes it is all we have—the Government will accept the sense of the amendment and new clause and put it in the legislation, to make it absolutely clear that, if I sign up for a mobile service and cannot use my device in my home, I am entitled to cancel that contract.
Louise Haigh
I rise to support the amendment in my name and the name of my hon. Friend the Member for Cardiff West. I also support the amendments tabled in the name of the hon. Member for Berwickshire, Roxburgh and Selkirk. I understand from the debate and the statement of intent that the baseline speed mentioned—10 megabits per second, as the Minister clarified—is the absolute minimum. The Opposition welcome the Government’s proposals to amend the requirements on automatic compensation, which will bring broadband services in line with other essential services such as energy and water. That recognition naturally extends to a form of automatic redress when things go wrong.
Calum Kerr
I am sorry to intervene so quickly, but this is an area where we need a bit of clarity. We have said that 10 megabits per second is a minimum, but as I understand it, it is a minimum maximum speed. It does not mean that under the USO, users will always get 10 megabits per second; it means that they sign up for a service where the maximum is 10 megabits per second. I think that is an important point to clarify.
Louise Haigh
We look forward to the Minister’s clarification.
More than 13 million households suffer from some form of broadband problem. It is about time that automatic compensation was introduced. As we know, seeking redress and compensation is often difficult for consumers, and brings little reward; many simply give up. Currently, users must lodge a formal complaint with their provider, then escalate that complaint to the ombudsman after eight weeks if they are not happy with the response. The onus certainly should not be on the customer to prove that they have lost service or that the service has not met the standard required. Where possible, automatic compensation should be made when a service provider becomes aware of a possible loss or reduction in service.
However, as has been mentioned, the legislation is not entirely clear on how the provision will be enforced, although we welcome the broad powers given to Ofcom. For example, if the fault is with the service provided to the retailer by Openreach, will the retailer pass on the compensation to the consumer who has been affected? How much will then reach the consumer? What will the level of compensation be? Which? has called for households to get £75 in compensation each time their broadband connection goes down, in line with compensation levels for power cuts. Will there be separate levels of compensation for broadband being slow or not working at all? Will the compensation cover planned network outages? Will the new regime come into effect on Royal Assent? Has Ofcom now completed all necessary consultation work?
Our amendment simply seeks to provide compensation within reasonable timescales. Consumers certainly would not want compensation payouts to drag on and on or broadband providers to drag their feet when there has been a clear outage and they are entitled to compensation. The automatic compensation model for the energy market is that it should be paid within 10 days of the customer claiming, or within 10 days of the end of the power cut if they are being paid automatically. That seems reasonable, but the Minister and Ofcom might have other ideas about what is reasonable.
Either way, we believe that it is important to set a clear timescale to ensure that consumers know exactly what they are entitled to, when they are entitled to it and how to go about claiming it if it is not forthcoming. We welcome the provisions and the recognition that consumers have a right to broadband and therefore a right to compensation if it goes wrong, but we would like assurances written into the Bill that compensation will be paid quickly.
The Chair
Order. We will adjourn in about two minutes, but let us hear from Mr Hendry before we continue on Thursday.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
I commend my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk on his comments about the need for proper compensation, particularly for those promised services either explicitly or through advertising that has led them to believe that they will get those services. It is incumbent on us to do something about advertising that promises people broadband “up to” speeds that have no chance of being delivered, when they cannot even get reasonable speeds in their area. As a result, rural areas can suffer a double effect; they are over-promised and then drastically under-delivered.
I am wary of the time, so I will speak briefly in support of the new clause. Residents of Fort Augustus in my constituency went for three months without the mobile signal that they were contracted to receive, without any compensation, redress or ability to change to another provider during that time. This should be an easy aspect for the Government to sign up to. I hope that the Minister will follow on from his predecessor.
Neighbourhood Planning Bill (First sitting)
Tuesday 18th October 2016
(7 years, 6 months ago)
Public Bill CommitteesRead Full debate Neighbourhood Planning Act 2017 View all Neighbourhood Planning Act 2017 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 18 October 2016 - (18 Oct 2016)
The Chair
Before we begin, I have a few preliminary announcements. Please switch off electronic devices, or turn them to silent. Teas and coffees are not allowed as props during sittings. We will first consider the programme motion. We will then consider a motion to allow us to deliberate in private about our questions before the oral evidence session and a motion to enable the reporting of written evidence for publication. In view of the time available, I hope that we can take those matters formally, without debate.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 18 October) meet—
(a) at 2.00 pm on Tuesday 18 October;
(b) at 11.30 am and 2.00 pm on Thursday 20 October;
(c) at 9.25 am and 2.00 pm on Tuesday 25 October;
(d) at 11.30 am and 2.00 pm on Thursday 27 October;
(e) at 9.25 am and 2.00 pm on Tuesday 1 November;
(2) the Committee shall hear oral evidence in accordance with the following Table:
Date | Time | Witness |
|---|---|---|
Tuesday 18 October | Until no later than 10.30 am | British Property Federation Federation of Master Builders Home Builders Federation Country Land and Business Association |
Tuesday 18 October | Until no later than 11.25 am | Local Government Association Historic England National Infrastructure Planning Association Town and Country Planning Association |
Tuesday 18 October | Until no later than 2.30 pm | National Association of Local Councils Royal Institute of British Architects |
Tuesday 18 October | Until no later than 3.00 pm | Locality Campaign to Protect Rural England |
Tuesday 18 October | Until no later than 4.00 pm | Compulsory Purchase Association Royal Institution of Chartered Surveyors Law Society Royal Town Planning Institute |
Tuesday 18 October | Until no later than 4.45 pm | Department for Communities and Local Government |
(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 3; Schedule 1; Clauses 4 to 7; Schedule 2; Clauses 8 to 36; new Clauses; new Schedules; remaining proceedings on the Bill;
(4) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Tuesday 1 November.—(Jackie Doyle-Price.)
Resolved,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Gavin Barwell.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Gavin Barwell.)
The Chair
Copies of written evidence that the Committee receives will be made available in the Committee room. We will now go into private session to discuss lines of questioning.
The Chair
Before we start hearing from the witnesses, do any Members wish to make declarations of interest?
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
I think I probably need to do so, because I still have shares in a company called Polity Communications, which gives advice to developers on how to get planning permission. I have in the past done work on opposing things with community groups as well.
Helen Hayes (Dulwich and West Norwood) (Lab)
I should mention that I employ a local authority council member in my parliamentary team.
Chris Philp (Croydon South) (Con)
I should draw colleagues’ attention to my entry in the Register of Members’ Financial Interests. I am a shareholder in a business that provides finance for construction projects.
Kit Malthouse (North West Hampshire) (Con)
I draw the Committee’s attention to my entry in the Register of Members’ Financial Interests. I am the majority shareholder of a company that provides finance for construction equipment.
The Minister for Housing and Planning (Gavin Barwell)
I employ two local authority members in my parliamentary and constituency office. For the record, I should probably also say that one of the witnesses is the leader of the council in my local area.
Examination of Witnesses
Andrew Whitaker, Roy Pinnock, Andrew Dixon and Ross Murray gave evidence.
The Chair
We will now hear oral evidence from the British Property Federation, the Federation of Master Builders, the Home Builders Federation and the Country Land and Business Association.
Before calling the first Member to ask a question, I remind all Members that questions should be limited to matters within the scope of the Bill, and that we must stick to the timings in the programme order. The Committee has agreed that, for this session, we have until 10.30 am. Welcome, witnesses. Would you introduce yourselves, from left to right?
Andrew Whitaker: Certainly, sir. I am Andrew Whitaker. I am the planning director at the Home Builders Federation.
Roy Pinnock: I am Roy Pinnock. I am a solicitor and partner at the law firm Dentons, and I am here on behalf of the British Property Federation.
Andrew Dixon: I am Andrew Dixon. I am head of policy at the Federation of Master Builders.
Ross Murray: Chairman, good morning. I am Ross Murray. I am president of the Country Land and Business Association, representing the rural interest and the rural economy.
Dr Roberta Blackman-Woods (City of Durham) (Lab)
Q Thank you, Mr Bone. Good morning. It is a pleasure to see some of you again. We have been around the houses a bit on planning and housing Bills.
I will start with the most contentious part of the Bill for the Labour party, which is the changes to pre-commencement planning conditions. What evidence is there to suggest that pre-commencement conditions are overused and cause delays in planning processes? It would be helpful if you could give some examples to help us understand the issue.
Andrew Whitaker: Obviously, anything that prevents somebody from getting on site and starting implementation of their planning permission is a delay to implementation. Any condition on a planning permission that says that you have to do something before you can commence that development is an obvious delay. Therefore, by very definition, pre-commencement conditions are a delay. However, I want to make it very clear that we are not against pre-commencement conditions per se. They perform a valuable role and are a valuable tool in allowing permission to be granted subject to various things that still need to be sorted out. Therefore, we are supportive of the provision in the Bill.
We want to see greater dialogue between local planning authorities and applicants about the kind of conditions that they believe are necessary on their permission and the timing of those conditions. At the moment, the default for those conditions is to make them pre-commencement, rather than to have a discussion with the applicant about the most appropriate time for those conditions to be discharged in the development process.
We accept that some very important conditions must be discharged before the commencement of development but, similarly, we believe that a lot of unnecessary pre-commencement conditions are put on planning applications that, by definition, delay implementation.
Roy Pinnock: I will address the question in relation to the number of instances of those conditions. The Killian Pretty review, which reported eight years ago almost to the day, conducted research that identified an average of eight pre-commencement conditions. I am not sure which sample of consents it looked at, because now the number of pre-commencement conditions could range up to as many as 22.
In my experience as a practitioner, you would be lucky these days to get away with eight pre-commencement conditions; 22 is more likely to be the norm. That is a lot to work through to get on site, particularly when there is an effect on the ability to fund schemes, to get them across the line and to get them moving in a period where there may be uncertainty. The BPF’s position, to reflect Mr Whitaker’s points, is that pre-commencement conditions play an important role. They often reflect the choices made when applying for consent, and do not provide detail or engage in fully detailing some of the plans and costs before consent is granted. But pre-commencement conditions are often imposed in a way that is arbitrary, unnecessary and indiscriminate. The British Property Federation would support greater use of model conditions backed by a system for being able to seek determination of whether it is appropriate to use those model conditions and modifications to the proposed section 100ZA, which is proposed by clause 7(5). I would be happy to outline the BPF’s proposals for those amendments in due course.
Andrew Dixon: Those of our members who are small-scale house builders consistently tell us that the number of planning conditions they are facing has increased very significantly in recent years. Our 2016 House Builders’ Survey asked a question as to which of a number of different causes of delays within the planning application system—
The Chair
I am sorry to interrupt. It may be that I am going deaf, but the volume seems a little low in here today. I do not know if anyone can flick a switch or something to try to get it turned up, or perhaps the witnesses could speak closer to the microphone. It was just a little difficult to hear at this end.
Andrew Dixon: I may have been mumbling—I apologise. I was saying that our latest House Builders’ Survey asked a question as to what our members saw as the most significant causes of delay within the planning application process, and the signing off of planning conditions came at No. 2 out of six, I think, just behind the under-resourcing of local planning departments and ahead of things like negotiations and signing off of section 106 and delays caused by statutory consultees that have traditionally been seen as major causes of delay and stasis within the system. There is some evidence there. As the last two speakers have said, our members report this is a problem.
Dr Blackman-Woods
Q I am sorry to interrupt you, Andrew. You said there is evidence there. Actually, what you have collected is the opinions of your members. Did they provide examples to demonstrate what was actually causing the delays?
Andrew Dixon: In terms of what causes the delays, it is not just undertaking the actions specified in the conditions but the delays in signing off those conditions. It is the delays in having those conditions discharged. Unfortunately, quite significant delays in signing off conditions are, we think, the norm.
There are any number of reasons for that, but I think one of them is that the incentives within the system for local authorities are to process applications within a given period of time and, to some extent, to have permissions in place, but the strong perception from our members is that once the permission is granted, the impetus from the local authority’s point of view goes out of the window. Quite reasonably, their priorities then may be elsewhere. That is the fault within the system that leads to conditions causing unnecessary delays.
Ross Murray: The Country Land and Business Association carried out a survey of its members this summer, in July, and over half said they wished to partake in provision of more rural housing, which we thought was very encouraging. But a third of them said that they are frustrated in making these investments because of the planning system in general. This is not specific to your question, but we also provide our 32,000 members with an advisory service and by far the largest call on advice was to do with planning: roughly 4,000 inquiries a year are to do with planning, of which a proportion—I cannot give an exact amount—relate to conditionality.
Dr Blackman-Woods
Q Are the measures in the Bill sufficient to speed up the whole pre-commencement planning conditions issue, so that you will get quicker agreement on what needs to be done by your members and in the discharge?
Ross Murray: No, not at all. In my experience, the problem with the whole planning process is that the potato stamp comes out from the harassed officer who is dealing with the application, and the first time the applicant generally sees the conditions is when the report goes to committee and becomes public five days before committee hearing. Best practice would suggest that actually the planning officer should negotiate and discuss with the applicant pre-commencement conditions during the process of assessing the application, but in reality I do not believe that happens. So the problem is that the applicant, if he is successful when the committee has passed the application, has then got to deal with pre-commencement conditions that might not accord with section 206 of the national planning policy framework, in that they are unreasonable or whatever.
Andrew Whitaker: We actually think that it will help. We have tried to get local authorities to have a conversation with applicants about the conditions they wish to place on planning applications in order to grant permission, and it has just not happened. Good practice has not worked, so using legislation appears to be the only way we will be able to get local authorities and applicants to have a dialogue about what conditions are being imposed on the decision, which of those should rightly be pre-commencement and which should be discharged further in the development process.
Roy Pinnock: Could I put forward a middle way in that context? The BPF’s position is that it has concerns that the measures as put forward under section 100ZA(5) would not deliver a faster outcome for applicants. That is because where applicants disagree with the draft conditions, the only recourse they have is the recourse they have already got, which is ineffective given the time and cost implications of pursuing a full-blown planning appeal. So it leads us no further forward, but we have introduced a further layer of complexity to the planning onion for people to talk about.
Although I agree with Mr Whitaker’s comments and the other comments that have been made about the need for dialogue and the need to promote that dialogue—where that is done, it can lead to some quite good results—the difficulty, in particular in the context of local authority resourcing, which we might come on to later, is that those authorities simply do not have the capability, the capacity and, I stress, in a few cases, the competence to deal with it now, because they have been totally denuded of that. So the ability to actually deliver what the Government are seeking is under huge pressure.
The BPF’s proposal is that there is a specific right of appeal under section 100ZA, so that if a consent is refused or has to be appealed solely because of a failure to reach agreement in relation to pre-commencement conditions—where peace has been given a chance—it should be possible to appeal and to appeal on that point alone. That appeal is then dealt with on a constrained basis, so that, rather than a wholescale reconsideration of the application de novo, only the issues relevant to the condition itself are considered. Obviously, as you know, applications to vary existing planning conditions under section 73 of the Town and Country Planning Act 1990 are already dealt with on that basis, so there is already a clear legal framework, both in terms of statute and case law, for dealing with appeals on that narrow basis. How narrow it is—and the law confirms—depends on the nature of the condition.
My last point on that is that that appeal system should provide for a fast-track written reps appeal process. That was done for the section 106BC appeal route that was provided for under the Growth and Infrastructure Act 2013. It was very successful in terms of timescale, and there is absolutely no reason why that could not be done here, subject to resources being available within the Planning Inspectorate to deal with it. Given that it should reduce the overall burden on the inspectorate in relation to appeals, one would hope that a fast-track system would actually deliver something. We are hearing that it is required, ultimately, and sometimes it would be inevitable that it would be. The BPF’s position is that costs should sit squarely and clearly from the outset with the party that fails. The BPF’s position is simply that in using the legislation—the levers Government have—there can be changes, like section 96A and other changes that have been introduced, that drive a cultural change quickly, so that people do not constantly need to have recourse to legislation to effect what we are trying to achieve on delivery.
Oliver Colvile
Q Thank you very much, gentlemen, for giving up your time to come and have a chat with us. Before I was elected to this place, I did a lot of work in the development industry, giving advice to developers on how to manage community consultations and stuff like that. A number of my clients would have said that every time the Government get involved in producing another piece of planning law, frankly, that delays everything. I would be interested in your comments.
Turning to preconditions, I am very keen to make sure that local communities are absolutely and utterly involved in the whole decision-making process and feel that they should have their say. How do you think we can ensure that the preconditions are also considered by local communities in the process?
Andrew Whitaker: I do not think there is any doubt that local communities are involved in the planning process and in the planning application process. Therefore, the discussion over the determination of the planning application should involve whether things about the planning application need to be sorted out at a later date, and therefore communities should be expressing those concerns in their representations as part of the planning process. They are represented by elected members at a local level, so I have no worries that local communities are not involved in the determination of a planning application as it proceeds through all the legal procedures. Whether to place a condition on that planning permission is part of the determination process, so whether or not as a community you agree that condition or that the condition should be pre-commencement, it is possible to raise that through the normal procedure, rather than as a discussion on the particular schedule of those conditions. That is a technical process as to whether you need the condition in the first place.
Andrew Dixon: We would very much agree with that. We do not see this as in any way reducing the extent to which local communities and local residents can be involved in the process or can have their say on particular applications. Broadly speaking, the Federation of Master Builders is positive about the provisions on conditions in the Bill because we think that they would institute an earlier conversation about which conditions are necessary, which need to be pre-commencement conditions and which do not, and which can perhaps be pre-occupation conditions, but none of that precludes those conditions being in place or those issues being tackled in some other way. It should serve to institute an earlier conversation about how best to deal with those issues.
Helen Hayes
Q Mr Whitaker, you mentioned a couple of times that it is best practice for conditions to be agreed in discussion between the local authority and the applicant, and I agree with you. The Bill proposes a much more formal process than that through an exchange of letters between an applicant and the local authority to agree the conditions. The mechanisms in the Bill for resolving a dispute, when that process can be resolved through an exchange of letters, are pretty blunt: the rejection of the application wholesale, and the developer is then left in the position of going to appeal. Notwithstanding what you said about the system not working so well at the moment, can you comment on whether this will help to further encourage best practice, or whether formalising the process in the way proposed in the Bill might have unintended consequences?
Andrew Whitaker: Formalising the discussion in writing—of course, that does not mean by post these days—is reasonable. It makes it very clear what people have and have not agreed to, and one can go back and check that that is the case. We would agree with the BPF’s proposal that a fast-track appeal mechanism when disagreement continues would be a good idea, because that would sort out some of the potential further delay that this provision would introduce.
In terms of whether this is a blunt sword—a blunt instrument—the whole point is that one is not supposed to hold the other party to ransom. The applicant is not going to say, “I am not going to accept any pre-commencement conditions on my planning decision at all,” because then it might be perfectly right for the local planning authority to say, “In which case we will refuse your application, on the basis that you haven’t sorted out a particular detail that you could do via condition, so long as you do it prior to commencement of your application.” Or they have to think to themselves, “Would we be happy defending that at an appeal when the only thing we are concerned about is not whether this particular issue can be dealt with via condition but whether it needs to be worded as a pre-commencement condition, rather than as a condition that can be discharged at a different stage in the development process?”
There are lots of trigger points in a development, the most obvious of which is prior to the occupation of a dwelling. You are allowed to do all the groundwork—to slab level, as we call it—so you can word conditions like that. You do not need to agree everything prior to commencement, and we believe that that discussion will be able to focus minds and, ultimately, will lead to the best practice that we all seek.
Roy Pinnock: I have just two points on that in relation to the discussion and dialogue, and the role of the planning onion—we just add another layer to it and make things more complex, rather than less complex. I think that is in part your point: do we add to the systemic complexity that we already have in this regime, which is already a series of layers? As I have already said, the BPF’s position is that there is an opportunity here to do something that is quick, clear and effective, which is where a measure that has real teeth tends to drive cultural changes.
I go back to the question on whether more legislation can really achieve anything in the planning world. Section 96A is a really good example of that. It is a very small amendment to the Town and Country Planning Act 1990 that has had a great impact on the day-to-day lives of practitioners by making things a lot easier, and it has driven a cultural change without people having to rely too heavily on legalistic points.
The second point is in relation to how we actually speed up the dialogue and use this as a tool. In part, the solution may be to have greater use of model conditions, which the Planning Inspectorate used to promote. We feel there is an opportunity for the Government to be much clearer about what their model conditions are, using working groups from industry and the government sector to say, “This should be the starting point. This should be when these kinds of conditions are imposed. We shouldn’t be asking for details of windows when you are decontaminating a site or knocking buildings down. This is the form of the conditions imposed.” By doing that we would drain away a lot of the administrative tasks that planning officers, of whom there are too few, are being required to do. They can rely on those model conditions and say, “We have done our job and have justified departures from them because we think it’s important to local people on this particular issue. We are prepared”—as Mr Whitaker said—“to justify that in front of an inspector, and we think they will reach the same decision.”
Helen Hayes
Q I am a member of the Select Committee on Communities and Local Government, and yesterday we heard evidence from a range of witnesses within the sector, including from the Federation of Master Builders and the Home Builders Federation, about the lack of resource and capacity in local authority planning departments. It was suggested in that evidence session that the reported overuse of pre-commencement planning conditions is a symptom of a lack of resource in planning departments, rather than a wilful misuse of pre-commencement conditions on the part of local authorities. Will you comment on your experience of the resourcing issues in local authority planning departments?
Andrew Dixon: We would certainly agree that under-resourcing is one of the major drivers behind the high level of use of planning conditions. The strong perception among our members is that planning conditions are often being used to limit the necessity of engaging in detail with a full application. Among the things that often arise from that are planning conditions that have actually been covered in the full application. An example of that would be landscaping. I have heard a number of our members say that detailed landscaping plans were included in their full application but that there did not seem to be any engagement with it, there then being a condition to bring forward those details. Under-resourcing is a major issue that causes numerous hold-ups within the system, and we think it is one of the drivers behind the excessive use of conditions.
Ross Murray: This is very profound in rural planning authorities, which are significantly under-resourced in planning. Our members around the country see that all the time. The Committee must also have a mind to the resource of the applicant and the risks within the process. We should do anything that we can to provide certainty of process after the application has been determined, and when an applicant finds that the pre-commencement conditions just do not work for him. In a rural context, these are often low-return projects, and the planning process is the highest risk point at the start of the process.
Andrew Whitaker: It is very much a chicken-and-egg situation. If local authorities do not put enough resources into determining a planning application, the temptation is—rather lazily, in my opinion—to deal with everything via condition, rather than as part of the primary application. If authorities focused their resources on what needed to be done as part of the application, they would need to condition less. That would relieve them of having to discharge conditions, which can take just as many resources as the primary application. Therefore, we think that local authorities should reassess their systems and processes to focus their limited resources into the right parts of the process.
Chris Philp
Q I would like to continue the line of questioning on resourcing and planning departments that Helen Hayes started. Mr Dixon, you said earlier that the lack of resourcing in planning departments was the No. 1 impediment to getting more applications. Will you confirm that that was the case?
Andrew Dixon: That was the case.
Chris Philp
Q Mr Murray said that certainty of process was the most important thing. Would your members or the development community be willing to pay for further resources in local authority planning departments by way of higher planning fees if, in exchange, they had guaranteed service levels—that is, the extra planning fee would be refundable if the service level was not met? Are you willing to pay to remedy the problem you are highlighting?
Andrew Dixon: The overwhelming feeling of our members is that they are quite happy to pay a higher application fee as long as those resources are ring-fenced and go into a demonstrably improved service. There would be very little resistance to that.
Chris Philp
Q It is relatively rare to find people volunteering to pay more money.
Andrew Dixon: It is fairly standard in any walk of life that people are prepared to pay more for a better service. Our members are no different in that sense.
Ross Murray: From my perspective, I would agree. Delay is risk; risk is money.
Roy Pinnock: The BPF’s position is absolutely in agreement with that. It has set that out in its response to technical consultations. There are issues of how the application is structured, indexation, inflation, and the linking of that fee not just for authorities that are performing well, but for those that are under real pressure for other reasons. There is a general consensus, particularly among commercial development investors, that you get what you pay for. There is a completely profound lack of resource in authorities to deal with the situation in which we find ourselves. It is the single biggest brake on development, in terms of applications and starts on site, in my experience as a practitioner.
Chris Philp
Q What level of fee uplift, compared to today’s levels, would your members or the development community be willing to pay if a guaranteed service level—an application determined within x period—was associated with that fee uplift? Give us a feel for the quantum.
Roy Pinnock: I might just duck that question, like any true lawyer. The critical point is that we are very used to planning performance agreements, and to guaranteed service levels being offered and assumed, and then not being delivered. There is sympathy for the reasons for that, not least because applications are complex. Local people’s relationship with planning is complex, and quite rightly so, as we are making difficult decisions. Probably the worst thing, from an applicant’s point of view, is that a guaranteed committee date is set and you do not get that committee. You then go into the long grass, and that is used to ransom the applicant. Concessions are made throughout the application process to get to that committee.
Chris Philp
Q So if the fee uplift was refundable if the date got missed, would that give comfort?
Roy Pinnock: It would and the planning guarantee should achieve that currently. The BPF would support that planning guarantee being amended, which would require the application regulations to be changed. The original idea of the planning guarantee was that you should determine either way—refuse if it is a rubbish scheme or approve if it is a great scheme. Within 25 weeks there should be certainty. That certainty is crucial to everyone.
How the planning guarantee works at the moment is that where there is an agreed extension of time, it drops away entirely. It is not the case that if you agree to extend the time to enable a sensible dialogue about the detail of planning application matters, and then that extension fails to deliver a result, you go back to the position of being able to claw back the application fee. What happens, for no good reason, is that it kills off altogether the ability to rely on the planning guarantee. That is completely wrong and undermines the whole purpose and intended effect of the guarantee. In our view, that should be amended so that the system has real teeth.
Chris Philp
Q Am I right in thinking that the current planning agreements apply only to large applications? The planning agreements that can already be entered into do not currently help small applications, so one could also introduce that.
Roy Pinnock: Yes, although there is another resourcing issue around entering into and administering planning performance agreements. There is a cultural shift that needs to go on around how applications are project- managed. That is true of the commercial sector, in terms of how it approaches negotiating section 106 agreements, when it looks at conditions in the application process and how much it is prepared to take things on at the earliest stage.
There is also an issue around how to programme-manage people’s diaries. Within an authority, you need sign-off from transport, the education aspect of the authority and housing officers. At the moment, you cannot get a meeting. I have waited three months for an authority to sit down. We said, “Look, there’s no point us sending ping-pong emails on this agreement because you keep telling us everything is not agreed. We just want to sit around the table with everyone and understand your views.” That is impossible, and it is partly due to the chaos, unfortunately, that is going on because of the multiple restructurings and the lack of resource.
Chris Philp
Q Are you satisfied that section 106 agreements, which are currently entered into after planning permission is granted, are adequate? It can take a long time to agree them. Are you satisfied that they are adequately addressed by the Bill or not? Do you think that they can still be a source of delay?
Roy Pinnock: They can be a source of delay, but equally, they are highly sophisticated tools for development. I will give you one example: the North Greenwich peninsula. There are 15,000 new homes approved on public land, despite the number of parties involved: the Greater London Authority, the developer and the Royal Borough of Greenwich. That took place within three months of the planning board.
There are other examples. I have just done two schemes further south and west in the country, and it has taken more than a year to get from committee resolution to approval to planning consent. It depends very much how that is approached, but fundamentally, far too much is in section 106 agreements. Much more should be in planning conditions. The Housing and Planning Act 2016 provides a mechanism for a dispute resolution service. We think that should be used in the same way as the appeal that we have spoken about in relation to section 100ZA to provide recourse where planning obligations are used unnecessarily.
Chris Philp
Q Should we make section 106 part of the main planning application so that the whole thing gets dealt with in an expeditious fashion in one go?
Roy Pinnock: The difficulty with that, from a practical point of view, is that there should be dialogue about what needs to go into that agreement. It is fine to do a first draft, but there is a dialogue in planning applications. Other witnesses will have a contribution on this as well.
Chris Philp
Q Yes, but dialogue can happen in pre-app.
Roy Pinnock: Yes. No plan survives contact with reality. There is always dialogue. There should be dialogue in planning; it is fundamental. I think BPF members value pre-application discussions but recognise that once you are in the mix, having submitted the application, the most important thing is how you project and programme-manage those discussions so that you know when local authority resources are available. The crucial thing is that we preserve the ability to have a sensible dialogue about quality, but drain off some of the issues involving technical things, which can be addressed by model planning obligations and model conditions.
Andrew Dixon: Just to pick up on a couple of points, you asked about the use of PPAs on small sites. They are not normally used on small sites—they are probably too clunky and an inappropriate tool for small sites—but we think there would be value in a standard, very basic, perhaps one-page agreement for covering small sites that would perform the role of some kind of service level agreement against which the applicant can hold the planning authority.
Chris Philp
Q So if I pay a higher fee, then this is a service I get in return?
Andrew Dixon: You could have that range or, whatever fee you pay, you could have an agreed service level that the planning authority has to meet—
Chris Philp
Q Without extra resources, there will not be any extra service, and extra resources mean more money.
Andrew Dixon: No, and in response to your other question, I cannot put a figure on how much more our members would be prepared to pay, but the planning application fee is a fairly small proportion of the total cost of moving forward a planning application. For an improved service, they would be prepared to pay more.
Chris Philp
Excellent.
Ross Murray: Can I take the Committee on a journey from the Greenwich peninsula, with applications for 15,000 homes, to the barn conversion, which is my members’ domain? The concept that someone would instruct lawyers, pay for the authority’s legal department and negotiate a section 106 agreement for a very small, low-value application beforehand is just not practical. There is not time and it will load risk and cost on to the applicant, so I think there are probably circumstances when the section 106 agreement will follow after the determination of the resolution to grant.
Chris Philp
Q Finally, on the question of pre-commencements, are there any particular conditions or parts of the planning process that you think are particularly onerous or absurd and would like to draw the Committee’s attention to? It might be anything to do with great crested newts, for example, without wishing to lead the witnesses.
Andrew Whitaker: No. It is possible to discuss everything. It is right that we have conditions that control various things that are not controlled in the planning application, but as I said before, people should be focusing on what is in the application and what the applicant is going to do to mitigate all the concerns on any subject. We frequently find that the mitigation that is proposed in the planning application itself is ignored. A planning condition is placed on the decision notice and the applicant then resubmits the self-same evidence that they submitted as part of the planning application and it is approved under discharge of planning conditions. That is a total nonsense. It is absolutely right that we take a lot of things into account. A lot of people are engaged in the planning application process.
I am interested in the evidence from your questioning of the other witnesses in respect of whether people pay for a better service and whether they get one. Small applications already have a PPA. Those are statutory timetables within which local authorities need to determine a planning application, and they get a fee for that.
Chris Philp
Q If the LPA breaks that, no consequence flows from it, other than a bad statistic in its report.
Andrew Whitaker: Absolutely, and we have suggested in various documents that a staged payment process of all the planning application fees would be better, because the other thing that your questions draw attention to is that there are lots of stages of a development, and not just the tiny part that is the planning application and/or the conditioning of that planning decision. We are also talking about allocations of site in local plans and in neighbourhood plans—the other part of the Bill—and then pre-application discussions, the application discharge conditions and section 106 agreements. All those things need to be looked at in the round, rather than merely focusing on a tiny little part and asking, “Would you pay more for a planning application fee?”. It is a very simple approach but it does not have a very simple answer.
Roy Pinnock: Just to round that off, where those additional fees are ring-fenced for the planning service—either where they are going into a smaller application so that an officer who might be a specialist in the 15,000-unit scheme, but who is dealing with smaller but no less valuable schemes, is freed up, or where they are funding on a locum basis, or however we need to deal with this problem—we should use that fee. We should ring-fence it and use it to allocate resource. I think the industry would probably support that. You get what you pay for, in that sense, and I think that is more important than the idea that we have a specific set of milestones, which may well be missed, just because that’s life.
We need to know that we have someone dealing with the application, that they have read all the papers and are not going to get switched over, that they understand the ecological mitigation because they have read, unfortunately, the three habitat surveys that have been done, and that they can have that conviction, because it comes from a deep knowledge of these complex schemes. At the moment, we have a real crisis in dealing with these applications, because we do not have the deep knowledge available. Unfortunately, with the best will in the world, this is a resource issue.
Ross Murray: May I come back to your point about newts, Chair? Newts and bats are totemic in rural England and Wales in the planning process. I offer you a personal story about an application for a barn conversion. Thieves came and stole the slate roof. There was no roof and, therefore, there were no bats. The planning authority insisted on the bat survey—and there we were, £1,000 later.
Mrs Theresa Villiers (Chipping Barnet) (Con)
Q I possibly take a slightly different view from my colleague of newts and bats. There is some anxiety about the Bill, probably based on a misunderstanding of what the changes on pre-commencement conditions actually involve, so this discussion is very helpful from that point of view. I have constituents who are keen to see local authorities retain the power to ensure that proper surveys are done in relation to wildlife and archaeological heritage. From what I understand from the debate on Second Reading and from what you have said today, the planning authorities will retain the power to impose conditions of that kind; there will just be a change in how that is done to ensure that it involves the developer at an earlier stage and does not necessarily have to happen right at the start, before the whole process has begun.
Mr Whitaker, can you explain, in simple terms, at what stage of the process surveys of that kind can be required? I can then reassure my constituents that the Bill will not prevent an archaeological survey if it is necessary, and that the aim is to ensure that it happens in a way that causes less delay and cost to developments. It is obviously important to ensure that such work is done before a final decision is made on a planning application.
Andrew Whitaker: You are absolutely right and we agree with you. There are many stages in the planning process at which a local planning authority can reflect the community, in many instances, by asking what are the important things that need to be considered as part of the development of a site. They can do that when they allocate the site in a local plan—they can set out various matters that will need to be addressed as part of the development. That can be done by the community themselves at a neighbourhood plan level; it can be done as part of the pre-application and consultation discussion, with the potential applicant, of the issues that the local authority will want to be addressed via the planning application process; and it can then be discussed as part of the planning application process itself, prior to a decision being made. It can also be addressed as part of a planning condition attached to the planning permission.
At all those stages, one can quite legitimately raise any issue that one sees as being key to the planning decision, whether that is archaeology, bats and newts, or any other issue—for example, drainage is often seen as causing delay. Some of those issues will be so critical to whether the development is allowed to go ahead that they should, of course, be addressed very early on in the planning process.
If my local plan allocated a site but said, “This is a difficult site to drain. We will want to see all drainage details sorted out as part of the planning application. We are not going to leave this to a planning condition because it is fundamental to how much development you are allowed to put on the site, depending on your drainage scheme”, the developer would accept that as a constraint and would submit a detailed drainage scheme with their planning application. It is up to the local planning authority to then say, “Okay, this is an important issue for this site. Is the proposed drainage system capable of mitigating the drainage issues and should we approve the planning application on the basis of the scheme submitted with it?” The problem we see is that a lot of local authorities say, “We haven’t got time to do that now. We will make a planning condition that says that, prior to the commencement of the development, we want to agree a drainage system for the site.”
As I have previously explained, frequently, all that happens is that you submit exactly the same drainage system as was submitted with the planning application, or the same mitigation for wildlife, or the same detail that you knew was critical to the determination of your planning application later down the line as a pre-commencement planning condition, rather than it being sorted out as part of the original planning application. We think there are lots and lots of points along the planning journey at which the things that are key to the development of sites can be sorted out. The Bill does not change that at all.
Rebecca Pow (Taunton Deane) (Con)
Q I was pleased to hear that answer, Mr Whitaker, because that issue was on my mind as well. You suggested earlier that planners might focus on the essentials of preconditions. We have to be clear about who determines what the essentials are. For example, when is a bat more essential than a ditch? I think you have made it quite clear, and I do not think that those of our environmental colleagues who are listening will feel you are trying to steamroller over the environment. Can you just give me a yes or no?
Andrew Whitaker: Yes.
Roy Pinnock: He is not.
Rebecca Pow
Q You are not. Good. Then I would like to go on to my main question, which I put to Mr Murray first. If the local authority and the developer disagree on a pre-commencement condition, there is no recourse in the Bill other than to reject the application and to then appeal the whole thing. I wonder whether that puts off, in particular, rural folk from applying for planning conditions. Does the system put them off because it is too arduous if they fear being turned down the first time?
Ross Murray: They can be put off at two stages. They can be frightened by the whole prospect of a change of use and actually applying in the first place. In the post-common agricultural policy Brexit world, we know that the rural economy has got to diversify and we have got to reduce our reliance on agriculture, so there has to be development. I think if we have legislation that does not ease that process of the scrutiny of applications, it will put people off. It will also discourage people from actually going through with appeals. I have members who have applied for planning permission, and when the list of conditions comes out, even if it is passed, they know an appeal is not affordable. They are put off by the prospect of a very expensive appeal, because there is the prospect of the inspector opening up the whole principle of the application.
Rebecca Pow
Q They cannot just appeal on one of the small preconditions that was under debate, is that right?
Ross Murray: They cannot appeal just on that, or they are at risk of it being opened up. I must say I think clause 7 is almost there, but it could be bettered if you put in a simplified appeals process. We already have a simplified system for householder or advertisement development, which is eight weeks’ written representations rather than a full-blown appeal. There is a precedent there, and I think that would help.
Rebecca Pow
Q Do you think we would get more houses and more developments as a result of a small tweak like that?
Ross Murray: I think there is absolutely no doubt about that. If we get the legislation right with clause 7 and bring in a proposal like that, I think people will understand that the planning process is fairer, simpler and less costly.
Rebecca Pow
Q Shall we just put that to Mr Dixon? Do you think that would help small and medium-sized developers as well?
Andrew Dixon: Some kind of appeals process on the issue of pre-commencement conditions?
Rebecca Pow
Yes; making it simpler, rather than have to go through everything.
Andrew Dixon: It could be a useful addition to the system. By and large, and perhaps we are being too optimistic, we do not think it is very likely that there will be protracted negotiations about the use of pre-commencement conditions. The aim should be for some of those conversations to be conducted fairly simply and fairly quickly. We are perhaps a bit more optimistic, particularly around smaller applications, about the scope for huge controversy in those conversations. We think the most important thing is that that conversation takes place at an early point in the process.
Roy Pinnock: Just to be clear, the BPF’s perspective is that the clause, as it stands, will not achieve anything—that is to be somewhat bleak. It will leave applicants in the position they are already in, which is that, if they do not like their consent, they can appeal and have a de novo consideration by the Planning Inspectorate, which will take some time. That is very weak as a dialogue and as a negotiating position.
Oliver Colvile
Q Thank you for allowing me to have a second go, Mr Bone.
I have always thought very seriously that we should make sure we have master planning taking place at a very early stage as well, which would mean the local community could get very involved in it. I am also not going to miss an opportunity to talk about ecology and about making sure that we include hedgehog superhighways in the development, too. That is important, because it is something that does not often necessarily feature in the discussion that takes place with developers. It would be a really good thing if we could encourage that, in my view, because hedgehog numbers have declined by 50% over the past 15 years.
Roy Pinnock: Planning application resources have also declined by 50%, which I think was recently noted in the Communities and Local Government Committee’s evidence session on the local plans expert group. That is perhaps unrelated.
Gavin Barwell
Q Thank you, Mr Bone.
There are just three brief points I want to make, picking up on what a number of you have said. The first is a request of Mr Dixon. You referred to the survey you had done of your members. First, can you tell us how many members you had surveyed? Committee members might find it helpful to see a copy of the results of that survey.
Andrew Dixon: We are very happy to submit that information to the Committee. I understand that 108 SME housebuilders took part in that survey, so a not insignificant number.
Gavin Barwell
Q With all due respect to the HBF, I suspect there is a very strong consensus across the House that one of the things we want to do is to encourage more SME builders. If this is particularly a concern to that sector, it is highly relevant.
Mr Murray, if I understood you correctly, I think you were saying that you were not sure that these changes regarding pre-commencement conditions would achieve anything, because dialogue between applicants and planning committees was needed. I put it to you that surely that is what this change will require. Because it is going to stop local authorities imposing pre-commencement conditions without an applicant’s agreement, it will surely create the kind of dialogue you want to see.
Ross Murray: The proof will be in the pudding going forward. My principal concern about clause 7 is the process of appeal afterwards, if those conditions are not acceptable and not viable. Regarding the point we have just discussed, an appeal that focuses purely on the offending commencement condition would be beneficial to everybody, if the dialogue has not resolved it beforehand.
Gavin Barwell
Q Yes. I think we will go on to discuss this when we get to line-by-line consideration, but the difficulty is that when an inspector looks at a condition, it is difficult to judge it in the absence of the overall application, because the council would say that the condition is necessary to make the overall application acceptable. It is difficult to just look at one condition in the absence of the overall package.
My last question is for Mr Pinnock. I understand the point you are making that there will still be an issue if this Bill goes through as it stands. I want to challenge you on what you said, that people would be in no better a position at all. At the moment, as an applicant, if you do not like the conditions attached to your application, you can appeal. I would argue that there is a beneficial step here in that, now, authorities will not be able to attach conditions that you do not agree to. The authority would have to feel so strongly about one of these pre-commencement conditions as to turn down permission for the whole application. Do you not think that it is at least going to reduce the number of cases where there is a problem, even if it will not eliminate the problem altogether?
Roy Pinnock: It may do, but it is an uncertain position. The issue for investors and also for communities is about how we create a more certain pathway to the number of homes that need to be delivered, and the amount of supported development and infrastructure. It will stop local authorities granting planning permission. That is what clause 7 does at the moment, and the BPF is wary of any measure that arguably stops authorities granting consent. There is a real risk that it is in the “too difficult” box already, and in terms of that dialogue and that negotiation, the authority will just sit back and say, “We’ve got a load of other applications that have come in, and we’ve got to meet our deadlines on that. This one’s just gone straight into the ‘we’re under a statutory restriction to grant consent’ box, so come back to us in a few months’ time when you want to agree our pre-commencement condition,” which, probably, is what would happen. We would still have the delays of discharging the pre-commencement conditions.
A targeted, fair system that allows authorities to stand by their concerns and have those adjudicated by the planning inspector on the same basis as the section 73 consideration that is undertaken at the moment, which has opened out where a condition goes to other points of the application. Quite fairly, it is broadened out. If the majority could be dealt with by written representations, that would provide a real release valve.
Also, as I say, the key thing about any legal change is that it drives a cultural shift, rather than necessarily being something people rely on. The BPF’s view is that this must have teeth and must be speedy and deliver the ultimate objective of certainty for everyone, in order to be a meaningful provision.
Jim McMahon
Q This follows on from the Minister’s point about how you compile an application with conditions to make it acceptable to the local community and the design elements within that locality. We have heard a lot about bats and newts, and a bit about hedgehogs too. There have probably been more discussions on those than on people and community. I want to explore a bit more the points you were making about the type of conditions being put forward and how reasonable or unreasonable they were perceived to be. Let us use the example of landscaping, which has been used to say, “This is how ridiculous the system is.” Following on from the Minister’s point, the idea that landscaping—planting a few plants here and there—will somehow delay an important development could be the difference between whether an application is acceptable to the local community or not. If a development is alongside your house, the screening and treatment of that could be critical to whether you support it.
Equally, the idea of phasing elements, whereby some conditions could be delayed or brought further into the application—drainage was mentioned—was predicated on the view that costing delays mount up, and that it is better to crack on, get the site done and resolve those issues later. The counter-challenge is that if you are applying for plant equipment or site security, but you cannot get an agreement on drainage, surely there is an inherent cost with that proposal. I want to challenge that to try to get some balance. We are in danger of going from one extreme to the other, and the truth is always somewhere in the middle.
Andrew Whitaker: I do not think we are. We are obviously talking about something different. We appreciate that some conditions on a planning permission will have to be pre-commencement. They are right at the heart of the application, and all types of different conditions may well be at the heart of a particular application. We are not suggesting that all landscape conditions cannot be pre-commencement.
You are absolutely right that in some cases—few, I would suggest—the landscaping proposals might well be the fundamental determining issue of that application. In others, it will be other things. The whole point of this proposal is to have that dialogue so that applicants to local planning authorities can say, “Is this really fundamental to you granting me a planning consent, given what I have already put into my planning application proposal?”
To use your example, if I have already screened the neighbour using whatever it was we agreed at the pre-application discussion, it is there as part of the plans of my planning application, and all you need to do is grant me consent in accordance with the plans that I have already submitted to you. You do not need an unnecessary condition requiring further landscaping details to be submitted.
If we have that discussion, I can point out to you that I have already submitted what I believe to be an adequate landscaping scheme. You, as the local planning authority, must then tell me why that is not adequate, whether I could address it through amended plans and all sorts of things, rather than just using the potato stamp—I think we heard that term earlier—of saying, “There is a pre-commencement landscape condition. Let’s sort this out later.” That leads to the delay, but we could have had a discussion about it as part of the planning application or as part of the determination process.
Andrew Dixon: I mentioned landscaping, so I am keen to clarify that point. I was not for a second suggesting that landscaping is not a proper consideration within a planning application. Above all, I stress that we do not see the provisions as a means to exclude certain considerations from the planning process. This should be about rationalising when certain information is needed and the optimum point in the process for it to be submitted, so that the development can come forward as speedily and efficiently as possible. If we get that right, the gains are huge.
Roy Pinnock: I have one point to add. I have sympathy for authorities, in that they will raise the issue of monitoring. They can generally see, when site operations start, that they will receive pre-commencement discharges anyway. Sorry to hit on this point again, but it goes back to resourcing. They will say, “It is just too difficult for us to monitor, after commencement, what is going on at the site, so we need it to be pre-commencement to create certainty.” We always have to be sympathetic to real life, boots-on-the-ground planning where we understand what is happening with these sites.
Some thought needs to take place between the Government, the sector and the commercial sector as to how we can assist the process and set the right stage. There is a preoccupation with many things. There will be a genuine concern that that trigger is missed, that you then cannot evict people and that it is a weak trigger. Therefore, getting it right, and having examples, guidance and model conditions from the Government is important.
The Chair
We will have to end this session. We could have gone on for a lot longer, but 10.30 am is our limit. I thank all the witnesses. The conversation we have had today is most helpful, and undoubtedly will inform and help Members as we progress the Bill. Thank you.
Examination of Witnesses
Councillor Tony Newman, Duncan Wilson, Angus Walker and Hugh Ellis gave evidence.
The Chair
We now come to the second panel of witnesses. I refer Members to page 28 of the brief.
We will hear oral evidence from the Local Government Association, Historic England, National Infrastructure Planning Association and the Town and Country Planning Association. For this session we have until 11.25 am. I welcome the witnesses. Could you please introduce yourselves?
Councillor Newman: I am Councillor Tony Newman representing the Local Government Association. I am a member of the LGA’s Towns and Environment Board and also leader of the London Borough of Croydon.
Duncan Wilson: I am Duncan Wilson, chief executive of Historic England.
Hugh Ellis: I am Hugh Ellis, interim chief executive of the Town and Country Planning Association.
Angus Walker: I am Angus Walker, board chair of the National Infrastructure Planning Association.
The Chair
Does the shadow Minister want to go first on this one? We have already done declarations of interest so the Minister has made it clear, councillor, that he is going to be on his best behaviour.
Councillor Newman: Likewise.
Dr Blackman-Woods
Q Thank you and welcome everyone. We are going to continue the discussion on pre-commencement conditions. It would be helpful to hear your views on whether they are overused, whether they do in fact cause delays in the planning process and whether you have evidence to support that.
Councillor Newman: If you are looking at the whole of clause 7 of the Bill—the conditions and the pre-commencement—best practice is where there is a strong, well-resourced local government planning department, to use traditional language, working in partnership with developers. I know that is a view the British Property Federation share: two thirds of them support the LGA’s view that we should see well-resourced planning departments. The whole perspective of what I am seeing in the Bill looks very much like a sledgehammer to crack a nut approach—another layer of red tape. If you look at the actual outcomes in terms of local government and planning, nine out of 10 permissions are given, and 470,000 permissions are already granted for homes up and down the land that await development for various reasons.
I am not saying there is not room for improvement from an LGA perspective and from a planning perspective on how you conduct pre-commencement conversations or any other approach. There is always room for improvement, which I think the starting point of the clause—this is a huge issue that the LGA needs to address. There is a collective issue about how we genuinely work better.
On best practice, I am not here specifically to talk about Croydon, but there is an awful lot of development happening there. As the Minister would recognise, where there are strong relationships between a council and the developers, it is all about taking a strategic view—what is a sustainable position and what do you want to achieve for the wider community?—and coming up with really exciting plans that are actually happening. Where development becomes mired in red tape and becomes a legal battle, more often than not the end result, as we have seen in my borough in the past, is a piece of land that sits empty for years while legal wrangling takes place. This does feel like unnecessary red tape, I think.
Duncan Wilson: On behalf of Historic England, our primary concern is with archaeological investigation pre-commencement conditions. Essentially, we believe the current system works quite well. We understand that developers need certainty and the system provides for conditions relating to investigation of sensitive sites. Only about 2% of planning applications are covered by these archaeological pre-commencement conditions. Most developers want to know what is there.
I go back quite a way at English Heritage in a former existence and I remember the Rose theatre, where there was a lot of messing around that did not really suit the developer and did not necessarily provide the best archaeological outcome either. That was because there was no clear archaeology pre-condition. Afterwards PPG 16 was introduced and has worked quite well, we believe.
We are more than happy to discuss any perceived problems with the system or any real problems with the system. We are not actually aware that archaeology in particular is causing those problems. We think, on balance, the system as it exists works pretty well for developers because it is based on an investigation of what is actually there and an assessment of the risks. That relies on local authority expertise and resources to help make that assessment, and we have our part to play in that too. I suppose it would all depend on the regulations that came with the Bill, which we do not yet know about, as to whether archaeology was mentioned as something where a pre-commencement condition would normally be appropriate in a very small number of sites. In a sense, we would have to await that.
Hugh Ellis: From our point of view, the concern about conditions is that they are fairly crucial in delivering quality outcomes. The short answer to your question about whether we have evidence that conditions result in delay is that we do not. What we do have is a growing concern that planning has to strike the right balance between the efficiency of the system for applicants and outcomes for people. The evidence about outcomes is a bit more worrying, particularly in relation to things like quality design, flood risk and various other issues, which are often secured through conditions.
The reasons for that are complicated. The discussion about resources, though, is overwhelmingly crucial, because that really is about the expertise of setting conditions, ensuring that they deliver strong outcomes and, ultimately, ensuring that they deliver the objective of sustainable development in the round. The question is: how does this measure help us with that wider endeavour of planning and delivering sustainable development?
Angus Walker: I also cannot provide you with any evidence this morning. Indeed, my expertise is more in the national infrastructure planning system where all this will not apply, but I can see that there may be one or two unintended consequences of this clause when put into operation. It is clearly designed to eliminate the lazy application of conditions where the survey, as you heard earlier, is already in the application and all that sort of thing. I can see situations where more planning permissions are refused because the applicant and the planning authority cannot agree on whether to impose a condition. I can also see conditions being recast as not being pre-commencement conditions but as having the same effect later on—pre-operation conditions, if you like—so I am not sure whether this will work, essentially.
Dr Blackman-Woods
Q Do you think that the measures in the Bill change the balance of power more towards the developer, and what are the risks with that? We have not yet talked this morning of the risks, particularly in clause 7.
Hugh Ellis: Pursuing that point, it is an issue about whether you end up with a planning system whose primary purpose is the efficient allocation of units or a wider endeavour around place-making and inclusion. Although it seems like a good idea because it is difficult to defend inefficiency or apparent inefficiency when it is thrown up, really good place-making requires good dialogue with developers, but also strong control from local government and an empowered local government to ensure that community visions are truly delivered.
The system has been weakened—permitted development is one example of that—and the Bill needs to strike the right balance. I suppose that if it went forward, the safeguard would be, and would need to be in the wider system, the place-making objective, otherwise we would find a series of outcomes that potentially have very long-term and serious impacts on everything from public health to wider economic efficiency.
Councillor Newman: I agree with that. As I said earlier, the Bill would potentially build in a more confrontational approach, and we would lose that ability to have a place-making and sustainability overview of a development, along with the benefits and perhaps future development to come.
Somebody mentioned permitted development. We have certainly seen the flip-side of that. Where permitted development has sometimes let rip, we have seen poor-quality provision of homes—perhaps people do not have any choice in a market such as London. Permitted development has proved not to be the answer. At one point, I think, half the permitted development in London was happening in Croydon. We got an article 4 direction for Croydon town centre, and we were able to protect what is now thriving business use and office space, so permitted development was not only delivering poor-quality planning outcomes but threating our local economy by damaging a space that is now at a premium for investment in jobs.
All that would reinforce my view that you need a holistic approach where possible. That is not to be naïve—there will always be confrontation in the system, but to build it in at the start seems to me to be the wrong approach, and in the LGA’s view it is an unnecessary further layer of legislation or red tape in the process.
Duncan Wilson: It seems to me that there are two issues. One is the imposition of unnecessary conditions and the other is the time taken to discharge conditions. I have been on the other side of the table too as, in effect, the developer of a number of major heritage schemes in London, and inasmuch as we had any trouble, it was to do with the time taken to discharge conditions, which was largely related to the people and resource within the local authority—it is simply a matter of getting people up to the place to tick the box and see that we had done what was required of us. The same applies to a whole load of other things such as building regulations.
On the imposition of unnecessary conditions, the local authority has to be reasonable already—if it is felt that unnecessary conditions are being imposed, it is challengeable. I worry that the proposed new system will lead the local authority to have to make a choice early on as to whether it wants to impose a condition that would be challenged—the application could be turned down and the condition challenged again. That whole system would surely take longer than arguing about the condition and determining whether to impose it at the beginning.
Angus Walker: In line with the other speakers, I think that the planning system is a balance. Although economic growth is important and development contributes to that, it still has to be in the right context and have regard to social and environmental factors.
I can see that, if an applicant and a local planning authority cannot agree on a condition, in some cases the planning authority will refuse permission, which may be appealed and then allowed. In others, the authority will agree the application without the condition in it, even though it might have been one that ought to have been imposed. In answer to your question, it seems to me that there is a slight increase in the balance being weighed towards applicants by the measure.
Chris Philp
Q Good morning. One of the speakers briefly touched on this. What is the panellists’ opinion about whether planning departments in local authorities are adequately resourced to deal with the kind of issues we are discussing—pre-commencement conditions and the determination of applications?
Councillor Newman: Local government has taken more than its fair share of efficiency savings in the past few years and has faced serious cuts. Planning has to be properly resourced: the LGA would put forward the figure of £150 million a year for the planning department, which is effectively subsidised by the council tax payer. The British Property Federation—two thirds of it anyway—supports the view that they would rather see a contribution that meant it was properly resourced and not subsidised by the taxpayer, and there are always issues around recruitment. Many planning departments work well but are stretched to the limit. There are extra pressures and other challenges in growth areas. I do not just want to sit here and say that more resources are needed, but local government is operating on tight budgets after year-on-year decreases in our budgets.
Chris Philp
Q Will other members of the panel comment on the resourcing question: do you think local authority planning departments are adequately resourced bearing in mind the demands being placed on them?
Duncan Wilson: In relation to archaeology, it very much depends on the archaeological advice rather than the planning department. Some local authorities have that advice, but in the past few years there has been a reduction of around 30% in the volume of archaeological advice directly available to local authorities. There is no straight-line relationship between the quality of the advice, its timeliness and the number of hours that the local authority has, but obviously there is a relationship. There is also the question of conservation offices, which is another specialist area where there has been a significant decline in local authority resources. It would be counterintuitive to suggest that there is no relationship between the volume of resources available to the local authority in terms of its planning department and conservation and archaeological advice, and the timeliness of turning casework around, but it is not quite as simple as that.
Hugh Ellis: I am trying to choose my words carefully based on research we have just carried out on the production of local plans. The research showed that planning teams had fallen below the critical mass capable of delivering a local plan effectively in the rural areas that we looked at that were at severe risk of flooding. In some of those authorities we visited, we found 1.2 full-time equivalent members of staff were working on a local plan process, which I found quite shocking. There is no fixed limit for how many people you need in a planning department, but minimum service levels are a critical issue, both establishing them effectively and resourcing them properly.
What struck me about your discussion with previous witnesses was that, while fees could be increased—that is an option—there are low-demand areas where not many applications are submitted. Those applications would not attract much fee income but would require significant planning services, particularly in those areas trying to deal with the aftermath of significant severe weather and flood risk. Cumbria is one of those places.
There is a crisis in the planning service—it is not everywhere because some urban areas have sustained resource—that overwhelmingly affects efficiency and the quality of neighbourhood planning service that the community receives. That is probably the single biggest thing for us as an organisation presented to us by applicants and communities about the state of the modern local planning process in England.
Angus Walker: I do not think there is any question that a large number of local authorities are not adequately resourced in their planning departments.
Chris Philp
Sorry, can you say that again?
Angus Walker: A large number of local authorities—perhaps not all—are not adequately resourced.
Chris Philp
Q The previous group of witnesses, who by and large represented the property development industry, appeared unanimously to support the idea of paying higher planning fees for some kind of guaranteed service level—for a determination within a particular time. If that target was not met, the extra planning fee might be refunded. Do panel members think that that might be one way of getting extra financial resources into local authority planning departments? If one proposed that idea, the Chancellor would probably say—I am putting words in his mouth—“The danger is that you put the extra money into the planning department, and the council reduces its subsidy, to spend it on something else, so the total amount of money stays the same; it just comes from applicants, rather than the subsidy.” If you do think extra planning fees for a guaranteed service is a good idea, how do you prevent existing resource being diverted to another part of the council’s activities? I suppose that is a question for Councillor Newman.
Councillor Newman: As you alluded to, if there was a different planning fee, there would be some relationship with, or expectation relating to, the outcome. I think what you are asking is whether it would be ring-fenced. There is a way of doing that without getting into the ring-fenced budget piece. The other position on that, the LGA would say—I welcome the question in that sense—is to have locally set planning fees. That would involve people who know an area, know what the demand is, and know what the recruitment issues are for the planning department in one area, vis-à-vis another. Then it would be for the local authority to justify both the fees it charges and the outcomes of the service it offers. Locally set planning fees and, related to them, performance indicators on how the process works—that is something that should be explored.
Chris Philp
Q Would you support the specific idea of extra planning fees conditional on service delivery?
Councillor Newman: I have to be careful what I support. I represent LGA policy here. There is a principle in the line of questioning you are asking. I think there is a way forward around locally set planning fees related to an expectation of the service one gets. That would be a step forward in terms of localism, and democratic accountability locally for the performance of the planning department.
Chris Philp
Q Do you accept that there is a danger that if you allowed local authorities to charge higher planning fees, you would at the same time have to stop them from simply diverting existing financial resources elsewhere, in order to make sure that you got an increase in total resource level in the planning department?
Councillor Newman: I do not think it would be beyond somebody to construct the model, but the key test would be the outcome—whether the planning process was working well, or was speeded up, depending on what the local challenge was.
Chris Philp
Q Can I invite other panel members to comment on that exchange?
Duncan Wilson: In the Historic England context, clearly the issue of hypothecation is really important. My colleague has said more or less what I would want to say on that. However, it is probably worth noting that Historic England has operated something called enhanced advisory services for the last year or so on more or less that basis. If it is worth your while as a developer, you can buy a tighter outcome, in terms of deadlines and delivery, and a more detailed assessment in relation to listed buildings and scheduled monuments. That has been introduced with the encouragement of the development industry, on the whole, and the British Property Federation.
Chris Philp
Q Have you found them coming forward and saying that they would like to pay these higher planning fees?
Duncan Wilson: Exactly. It can be consensual, because the cost of a planning application, certainly in the sorts of services that we provide in relation to listed buildings, is a tiny percentage of a major development project.
Hugh Ellis: I would add that there are two problems here; it is partly the planning service in local authorities, but I would not want us to completely ignore the fact that there is also a crisis in the number of planners. There is direct investment in planning schools that we also need to get right. There is a major recruitment problem in local government, not just in being able to afford planners, but in finding them. We need to take a wider step back and look at how we bring planners through the process. It is also about the messages you send to young people about why planning is important and why it might be a career that they want to take up. That is important.
Chris Philp
Q One of the challenges is that local authorities lose planning experts to private practice, because private practice can afford to pay more, and because local authorities are very stretched, so it is a slightly stressful and harassed environment to work in. The resource issue might partly address the brain drain to private practice.
Angus Walker: Undoubtedly, if you pay more for dedicated resources, you will get a better service. My concern would be that those who made applications and had not paid any more would get a worse service as a consequence. Maybe the diversion of funds would be a consequence of that. It would not necessarily be more money in the system that everyone would benefit from.
Chris Philp
Q Of course, you would still have the statutory time targets, and if you increased total resource levels, it may most directly benefit those paying more, but it might have wider benefits as well, even to applicants who were not paying the extra fees.
Angus Walker: It is possible, but in my field, it is not financial deadlines—we have time deadlines in some areas, and not in others. The ones that have a decision required, statutorily, in a certain length of time get their decisions within that time; the others probably take longer than they otherwise would have done, because more of the resources are devoted to making those decisions on time.
Helen Hayes
Q I have a question for Councillor Newman, and perhaps Hugh Ellis as well. Have either of you undertaken any assessment of the likely additional burden to local planning authorities from the new proposed process in the Bill? Supplementary to that, and following the discussion that was just had about the possibility of applicants paying for an enhanced level of service, might a better system be for local authorities to be able, on a transparent and consultative basis, to charge the full cost of their development management service through fees? One concern I have about the proposal that developers be able to buy in an enhanced level of service is that it is potentially quite difficult for local authorities to manage fluctuating demand, in relation to individual applications. Surely what we actually want is for local authorities to be properly resourced to do the job well for everybody, irrespective of who the applicant is.
Councillor Newman: We do want to be properly resourced anyway, as a starting point. There is a £150 million tax subsidy going in; that would absolutely be the starting point for me, but I still think that this is worth exploring, in terms of the particular recruitment issues we have, because there will never be agreement on what “properly resourced” would be. That is why I would not rule out looking at—I do not like the word “enhanced”. There is something around fast-track and something around some major developments perhaps requiring more resource than other developments, but there is a discussion to be had. One way or another, we have to get more resource into a system that is under-resourced financially, and where in many areas, as we have heard, there are pressures regarding recruitment and staff coming forward.
On the other question you asked, I know the LGA is submitting written evidence later in the week. I have not got figures in front of me to evidence the extra burden, but I think the extra work this would potentially bring round is significant. As colleagues here have said, you could see more refusals, and the whole thing could become mired in a more confrontational process that, by definition, will set planning applications back, rather than them being, where possible, resolved, sometimes in a mature manner.
Hugh Ellis: Just to reiterate, planning is a key service with vital outputs for communities; in that sense, it needs to be resourced properly, and certainly at a minimum level. It also worries me that a lot of this resource in fees would go into development management, leaving open the question of how you fund the rest of the planning service, which is, in some senses, the most important part for us—the development plan, neighbourhood planning and master planning process, and getting it right up front.
On the idea that applicants would pay a fee base for a particular service, and that that would somehow sustain the planning service, there are some real questions to answer. It could be part of the answer—that is absolutely true—but I return to the point, on section 106 and the community infrastructure levy, that there is already, in pure taxation terms, a slightly regressive element to planning: you get most in high-demand areas. If this was another measure that led to that, it would be challenging, partly because the planning system has to deal with all sorts of varied issues. The examples coming in from Cumbria really reinforce that. They need very powerful local plans; how are they to pay for them if the predominant form of income generation is fees from applications that they do not get?
Helen Hayes
Q I have a further question for Duncan Wilson. You mentioned concerns about archaeology. It seems there have been indications from the Government that some assurance might be provided around the question of archaeology, and we will wait to see what comes forward in that regard. Are there other areas of heritage about which you have potential concerns relating to pre-commencement planning conditions?
Duncan Wilson: Less severe ones. A number of concerns were raised in the context of the Housing and Planning Act that were perhaps more significant than in relation to this particular clause, other than for archaeology. Our concerns on brownfield land, design, massing and density are not really centre stage, as I understand, with pre-commencement conditions here.
Kit Malthouse
Q Obviously, the Government are trying to strengthen neighbourhood plans in the Bill. Do you think the provisions they have in there at the moment are likely to eliminate the erratic decision making from the Planning Inspectorate that we have seen with regard to neighbourhood plans?
Hugh Ellis: They go some way. The relationship between neighbourhood plans and local plans in law is still really quite problematic. There is a direction of travel question about whether or not we end up with a full coverage of neighbourhood plans and in some sense an idea that they might replace local plans. That is talked about but it is important to get that right.
There are a range of challenges. For example, the neighbourhood planning process is producing neighbourhood plans of variable coverage, predominantly in areas with the social and economic capital to prepare them. In law, neighbourhood plans escape a number of the placemaking duties that the wider planning system has applied; those on good design, for example, in law, do not apply to neighbourhood planning but do apply to local plans. I think these measures try, do they not, to fill some of those loopholes in relation to the status of an unadopted neighbourhood plan as it comes through the process, which might help solve part of that appeal process.
For us there is still a wider issue about how the system will work as a whole and the friction that is inevitably produced by neighbourhood plans coming forward in advance of a local plan; the different legal status between the two plans; and ultimately the adoption of a neighbourhood plan as part of the development plan. Part of this debate could very usefully settle what the vision is for neighbourhood planning. Is the idea that the neighbourhood plan ultimately becomes the key lodestone of the English planning process with local plans doing something else, or are local plans going to remain intact? That is a very important question going forward, because many neighbourhood plans are not dealing with the full range of placemaking issues that we need to resolve. That is perfectly fine because communities have a measure of choice about what they do with them, but in relation to good design, flood risk and climate change, for example, those issues are not well represented in the content of neighbourhood plans. So, this is a step; I am not sure it resolves the full range of legal issues that we are confronted with between neighbourhood and local plan status.
Kit Malthouse
Q So in your view, even if this provision goes through and a post-examination neighbourhood plan is given full weight in a planning application, in the absence of an approved local plan, do you still think we are likely to see neighbourhood plans effectively upended?
Hugh Ellis: You can still see neighbourhood plans upended because of the tensions that exist about whether we have a plan-led system, which is probably another three-hour debate. In a nutshell, the difficulty we have at the moment is that because of the tension between the national planning policy framework presumption in policy in favour of development and the legal presumption in favour of the development plan, you can find circumstances where a brand-new development plan can be rendered out of date because of its performance on five-year land supply—literally within months of adoption, rendering the entire framework of housing policy in that plan out of date. If they have adopted neighbourhood plans in support of that plan, then communities can quite understandably feel confused about that. That is a wider issue about the status of whether we have a plan-led system. For us, that balance needs some attention, to say the least.
Kit Malthouse
Q But if we do have a plan-led system, which seems to be the way that we are going, would you therefore support greater strength being given to local authorities’ ability to defend the five-year land supply?
Hugh Ellis: There is a need to end that uncertainty and it seems to me that the core issue—very crudely and very quickly—is that local development plans allocate five-year land supply but have very little influence over delivering it. The issue about joining those two things together is about other measures in play: local authorities playing a much stronger role with housing companies, and as lead and master developers. That is the way to resolve it. But the position at the moment, whereby allocations can be made and then overturned because of a deliverability issue that the local authority has no control over, needs attention. Otherwise, what happens—five-year land supply is crucial, by the way, to deliver the housing we need—is that the system becomes discredited in the public’s mind, particularly when neighbourhood plans are being overturned as a result of it.
Kit Malthouse
Q Given that the overall objective perhaps ought to be certainty for resident, council and developer alike about what is allowed where over time, if you can get to a situation where you have a post-inspection neighbourhood plan and an approved local plan—in other words, you have got two of the pillars in place—with a five-year land supply available, do you think that the role of the planning inspector in that circumstance should be diminished or not?
Hugh Ellis: That is an attractive proposition, but it is extremely difficult to see how you could remove an individual developer’s appeal rights without engaging a whole other legal debate. Whether you want to balance legal rights in the planning system between communities and applicants is a very interesting question.
Councillor Newman: I certainly would not want a position where neighbourhood plans were seen to override a local plan. I don’t think that is what you are suggesting, but the local plan does enable strategic and sustainable planning, in terms of health provision, schools or whatever, and a neighbourhood plan, by definition, is coming from a different starting point. The LGA would want to see local government having, in relation to the local plan, more powers to agree, for example, where homes should be, when they are not coming forward. That takes me back to the nearly half a million planning permissions granted that have not been acted upon as we sit here today.
As you said, it is about credibility in the system, so that the public do not start believing that their neighbourhood plan is going to have no impact or will probably be overridden, either by the local plan or by developers going to appeal. I do not have the answer sitting here, but I think it has to be about a system that has credibility—where people believe that if they make representations to their council or their Member of Parliament, although it may not always come out how they would want, the system is responsive, and respects their—there are tensions in this.
Kit Malthouse
Q On that point, is it possible for a developer to obtain a large permission in an area, and then not develop it out, and then challenge a refusal on another site in that area on the basis that a five-year land supply has not been fulfilled? That happens, right?
Hugh Ellis: Yes.
Kit Malthouse
Q That does happen. Therefore, by being patient, they are able to blow a hole in the land supply and get a permission that they otherwise would not have done, and double up.
Hugh Ellis: I would not want to comment on their motivations, but as a strict matter of policy and law, yes, absolutely that is what can happen.
Duncan Wilson: On behalf of Historic England, we do get engaged with neighbourhood plans when we are asked for advice and expertise, and it has been pretty positive, in the sense that it gives the local community a voice in a system that can seem, frankly, rather arcane otherwise. Where that has happened, we have found that neighbourhood plans have been quite strategically drawn and they have not fulfilled people’s worst fears, which were that they would be very narrowly drawn.
Angus Walker: I suppose it would be interesting to know, as Mr Ellis said, whether the intention is that the whole country will eventually be covered by neighbourhood plans. The resourcing issues that were raised earlier would be a lot worse if it were reliant on parish councils and neighbourhood forums to produce all these plans.
Kit Malthouse
Q Presumably the Bill is designed to provide that incentive. The incentive is that if you have a neighbourhood plan and it is strengthened you are more likely to have certainty about what is going to be developed in your area, so if you are bothered about development you should have a neighbourhood plan. I am interested in what you say about local plans. We hear that neighbourhood plans deliver more housing than was otherwise predicted. Is that your experience?
Hugh Ellis: It is. I think the Government produced some statistics about that. It has been one of the really positive surprises about the neighbourhood planning process. On housing, there are positive ways forward. On whether or not neighbourhood plans offer the full range of issues that planning needs to cover in a local area, the evidence we have is that they probably do not. But then, that is not what they are being set up to do. That is why I ask, is the ambition for them to be a kind of replacement for the local plan, or not? In our view, you need both. Neighbourhood plans are great at articulating community aspiration inside the local plan framework. When both work together very powerfully, that can be a very strong framework for a community.
The Chair
Q I just want to clarify for the Committee what Mr Malthouse was asking. If I understood right, Mr Malthouse was asking: if there is a neighbourhood plan, a local plan and an established five-year land supply, should there be a restriction on the right of developers to appeal?
The Chair
I was not quite sure whether the witnesses had answered that. Would everyone just say yes or no to that?
Hugh Ellis: I will try and be a bit clearer. In policy terms, you could probably strengthen that issue, but a legal restriction on an applicant’s right to appeal has always been in the legal territory of impossible because of engages of the legislation. You could certainly tighten the policy framework, but an absolute restriction on appeal is probably impossible in law.
Oliver Colvile
Q Thank you, gentlemen, for coming to see us. What a delight, Councillor Newman, to have you here, for the simple reason that I was the Tory party agent in Mitcham in the 1980s when Nicholas Ridley introduced the whole local plan process in the first place. I have been very interested in following all this.
You have talked quite a bit about resources. I am pretty aware that my council in Plymouth, for which I am the Member of Parliament, has similar issues. However, we have a university and a planning school. To my mind, councils could have a much closer relationship with their planning schools and try to use some of those resources. Is that something that you have looked at?
Councillor Newman: Periodically but, to be completely frank, not enough. As the LGA, and perhaps as local councils, sometimes we do not sell the exciting career that local planning can be for many people. Many people who are part of it stay for many years and have a good career. There is more work to be done on how we market a career in the local planning department and some other roles in local government.
There are other pressures. If you are in London, it is not about marketing the career. Social workers, for example, cannot afford to live in many localities. In London, the question is whether people can afford to live in the area where they might want to come to work. It is not just a single issue. I would encourage the sort of practice you describe in Plymouth.
Oliver Colvile
Q It seems to my mind that students, I keep being told, find it very difficult to make ends meet. They have tuition fee loans and all those kinds of things. It would actually be a way of trying to get them to have some practical experience in the planning world. Similarly, local archaeology people come to see me, some of whom are doing things at the university. Is that a resource that you might think about using and looking at?
Duncan Wilson: There are certainly supply-side issues with archaeology over the whole country in relation not just to local authority advice, but to the large number of archaeologists we will need to fulfil the demand for archaeology arising from major infrastructure projects. It would be an oversimplification to say that that is just an aggregate supply of archaeologists. The higher education sector is not necessarily producing archaeologists with exactly the right kind of skills to deal with the different kinds of problems that archaeology in Britain throws up. More fieldwork is rather an important issue in that context.
The Chair
I am sorry to interrupt, Mr Colvile, but I am very conscious that we have limited time and three people want to ask questions. I will bring in John Mann, because I know he will be brief.
John Mann (Bassetlaw) (Lab)
Q How many of these 500,000 unmet house planning consents are in neighbourhood development plan areas? Does anyone know?
Councillor Newman: I do not, but we will write to you rapidly with that information.
John Mann
Q Nobody knows. What is the increase from what the position was in the same areas covered by neighbourhood plans, in terms of proposed new housing units in areas covered by neighbourhood development plans?
Angus Walker: I do not know the answer to that, but I think the Secretary of State said on Second Reading of the Bill that, of those who had an increase, the average increase was 10%. That does not give how many there were overall.
John Mann
Q You said that the five-year land supply for housing was critical for housing development. How do you know that?
Hugh Ellis: It is an element of it. To be clear, the problem with the delivery of housing in this country is not primarily the planning system; it is development, but five-year supply is important.
John Mann
Q Correct. Am I right in saying that every neighbourhood development plan, in order to be in any way legal, has to incorporate new housing development?
Hugh Ellis: The position is that it has to be in conformity with the development plan, if there is one, and the NPPF, which means that it has to recognise local housing need and the five-year land supply to go with it.
Hon. Members
No.
Hugh Ellis: The general view, when neighbourhood plans were being developed, was that they could not plan for less housing—which is sometimes how people tried to use them—than the local development plan had allocated, so there is a kind of floor. They certainly can plan, and have planned, for more housing than the local development plan has allocated.
John Mann
Q Is there a reason why English Heritage has not tried to initiate neighbourhood development plans using major historic buildings, such as cathedrals, as the core basis for defining urban communities?
Duncan Wilson: As I said before, we do engage with neighbourhood development plans, but normally on request, rather than proactive consultation on every neighbourhood development plan. When we do engage, we certainly encourage proper consideration of the historical character of the area and how development can sit alongside that. Cathedral cities are a really important subset of that group.
John Mann
Q My final question: is not the strength of neighbourhood development plans also their weakness? The strength is that at the moment a plan lends itself perfectly to villages with parish councils, which can easily, and very ably and effectively, localise the planning process—in my area virtually every parish council has or is developing a neighbourhood development plan, all of them increasing the housing supply significantly, and they will be delivering on that housing supply significantly over the next five years—whereas the weaknesses are in urban areas, where defining what the community is actually requires a bit of original thinking; otherwise everything simply becomes one urban mass. Is that not the opportunity, be it for the English Heritages, the good planners or enlightened councils, to get urbanised neighbourhood planning to involve communities in exactly the way that villages have hugely successfully involved vast numbers of people in the development of the existing neighbourhood plans that have been agreed, or are currently rolling forward?
Councillor Newman: I think you could have more urban neighbourhood plans, but I would want to see them still sitting with the overarching plan in an urban area—such as the one I am very familiar with, Croydon—to be the local plan. As we have learned from mistakes in the past—although I know this is not what you are suggesting—we should not just focus on increasing housing numbers without looking at the sustainability of the community in terms of health provision, school provision, transport links and everything else. Much as we need new homes, it should not just be a numbers game that leaves us in the same place we were in the ’70s.
Duncan Wilson: In relation to our historic towns, yes, I agree that neighbourhood plans would be and sometimes are a good way of crystallising that discussion, but it is really important that the areas around towns are brought into consideration too. Otherwise, you have a plan for an historic town and all the housing gets pushed out to the periphery, without a proper strategic consideration of how that relates to the historic town in terms of transport links, public spaces, infrastructure or design.
Hugh Ellis: In a way, the critical flaw in neighbourhood planning is the neighbourhood forum model. There has to be an issue around making that accountable. The differences in neighbourhood planning between an accountable parish or town council and an unaccountable forum were always pretty stark. It was always unclear where that ended up. There would probably be more enthusiasm for urban neighbourhood planning if that problem could be resolved.
Rebecca Pow
Q Will the changes proposed to the pre-commencement conditions leave enough flexibility to deal with things that local communities are really concerned about? In my area of Taunton, the big issues are all about what Mr Ellis referred to: design quality, the look of the houses, vernacular character, flood resilience. Can we get all that cleared through the changes proposed, or are we relying utterly on neighbourhood plans to do that? Are there enough teeth for that to be taken into account when the planning consents are given?
Hugh Ellis: Although there is conflicting evidence in planning, one thing we can be absolutely certain of is that the design quality of domestic housing in this country is one of the great lost opportunities.
Rebecca Pow
Q And it is one of the big bugbears locally, when you talk to people, in all neighbourhood planning.
Hugh Ellis: We are capable of delivering so much better. That would require two things: a sense that planning is part of the solution to these problems and not always part of the problem, and a fairly robust local planning process. I think it would also include a greater emphasis on good design as an outcome in planning.
Rebecca Pow
Q But where would you put it? In the pre-commencements?
Hugh Ellis: You would need to think about it right from the top. The content of the NPPF on design is actually quite good, but I do not see it being enforced, particularly, through plan-making.
Gavin Barwell
Q I have two quick questions for Councillor Newman. You felt that the planning conditions measures were a sledgehammer to crack a nut. I want to get a sense of the size of the nut. Among the previous witnesses, there was a consensus that the use of pre-commencement conditions has been growing over time. Does the LGA share that view?
Councillor Newman: As I said at the start, I think there is sometimes a perception in Government that planning is the problem. Maybe we are not even looking to crack a nut. To repeat what I said at the start, we risk setting up a far more confrontational process at the start. Conversations around design, sustainability and so on get lost, because people have to take a fixed position very early on in the process. Look, it is not perfect—there will always be examples that people can give of where it has ended up in confrontation—but the evidence seems to suggest that the nut is not particularly large.
Gavin Barwell
Q It is not getting bigger, in the LGA’s view?
Councillor Newman: No.
Gavin Barwell
Q In its submission to us, the District Councils Network acknowledged that the discharge of planning conditions can be a factor in slow decision making and supported the Government in seeking to address conditions. Why did district councils take a different view on this from the LGA as a whole?
Councillor Newman: I have not had district councils coming to me, knowing that I was coming here, but if that is the position of their network, we will include it in our evidence.
Gavin Barwell
Q You made a very good point that in the year to 30 June, this country granted a record number of planning applications for housing, but that there is a gap between the planning permissions we are granting and homes being built out. If you do not think planning conditions are part of the problem—I would certainly say they are not the sole problem—what do the panel think are the reasons for that gap?
Hugh Ellis: The core reason is that we have restricted our delivery of housing to a single development model. You have signalled, Minister, that you are interested in exploring how we can find new ways to challenge that. The critical issue is that from 2019-20 onwards, the private sector will probably go on building 150,000 homes a year, almost forever. The critical elements missing from our debate—I know your mind is open to this issue—are how we deal with scale strategic development, how we join up infrastructure with housing development and, crucially, how we deliver a new generation of new settlements.
I am very conscious of Macmillan’s achievement in delivering 350,000 homes in the mid-1950s, but he did have a programme that was 32 new towns strong at that point. They are a fantastic way of delivery. They overcome the issue of delivering numbers. Milton Keynes is delivering almost 4,000 homes a year. I believe that there is an exciting opportunity for us to take that up again, but it seems to me above all that in our collective debate about housing delivery in this nation, we need to address our attention to that strategic scale.
Councillor Newman: I will finish with an example from Croydon. If a planning permission has not been taken up within three years, perhaps a council building company like Brick by Brick should be invited to step in and start building the homes that somebody promised they would build but did not.
The Chair
I am afraid that time has beaten us, although we could have gone on much longer. Thank you, witnesses. That ends this morning’s evidence session.
Neighbourhood Planning Bill (Second sitting)
Tuesday 18th October 2016
(7 years, 6 months ago)
Public Bill CommitteesRead Full debate Neighbourhood Planning Act 2017 View all Neighbourhood Planning Act 2017 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 18 October 2016 - (18 Oct 2016)
The Chair
We will continue with evidence from the National Association of Local Councils and the Royal Institute of British Architects.
Examination of Witnesses
Ruth Reed and Jonathan Owen gave evidence.
The Chair
Welcome, witnesses. Will you introduce yourselves for the record?
Ruth Reed: My name is Ruth Reed. I am past president of the RIBA, I chair the RIBA planning group and I am representing the institute today.
Jonathan Owen: I am Jonathan Owen. I am chief executive of the National Association of Local Councils, which represents 10,000 parish and town councils in England.
Dr Roberta Blackman-Woods (City of Durham) (Lab)
Q 6868 Do the provisions of the Bill go far enough to support groups that want to undertake a neighbourhood plan and, in particular, does the Bill do enough to support groups in disadvantaged areas? Please address both parts of the question.
Jonathan Owen: You have probably put your finger on the most important issue facing the plans, which is how to make them credible and respected in the system, so that communities engage with and buy into them. The Bill does a lot to help with that process. I have visited lots of parish councils over the last few years and they certainly have expressed concerns about how difficult it is to revise some neighbourhood plans, and about some of the advice that they are getting from principal authorities. Some elements of the Bill will help with that, but I do not think that it tackles the fundamental issue, which is how credible the neighbourhood planning process is within the planning system as a whole. We are in danger of building a lot of expectations that will not be fulfilled.
Neighbourhood plans have been enthusiastically embraced by parishes and communities, with loads of people volunteering to help with them and 400,000 people voting in elections or referendums on them. A really good plan is produced at the end of that process, but all too often those plans are set aside on appeal, or decisions by planning authorities are taken contrary to the plans. We would like to see the Bill tightened to ensure that neighbourhood plans have more influence in the process, and so that there is a clear statement from Government about what exactly the role of neighbourhood planning is in the planning process.
Ruth Reed: Funding has already been put in place for providing plans for disadvantaged areas, but local authorities are beholden to identify and bring forward local plans and we do not yet know whether the funding is sufficient to enable that.
Where you have a clearly identified community, whether it be parishes or other well-knit communities, it is very easy to put in train the process of producing a local plan. In a city area with no clear community boundaries or, necessarily, a sense of community, plans are much harder to bring forward. I am not sure that there is anything other than the intention under previous instigations to provide funding—there is nothing necessarily in the Bill—to promote the identification of those areas and to bring them forward. It would be good to see this rolling out across all communities to give them the same access to the democratic influence in their immediate area.
Kit Malthouse (North West Hampshire) (Con)
Q Dr Owen, you said that a lot of neighbourhood plans had been overturned, or that decisions on appeal have blown a hole in the neighbourhood plan—that certainly happened in my constituency—so do you think that the provisions of the Bill will iron some of that out? Do you think that the intervention point, or the point at which the plan has more weight post-inspection, is the right moment, or could it conceivably be earlier in the process?
Jonathan Owen: I think it is helpful that the Bill proposes, in effect, giving plans influence from earlier in the process. Obviously we need to see how that works in practice, but it goes some way to address some of those concerns. We probably need during the passage of the Bill to try to press for greater clarity on the exact role of the neighbourhood plan and get some statements about the importance and significance attached to them.
Kit Malthouse
Q What do you think it should be?
Jonathan Owen: I think we should have a much more plan-led system—I am sure that will not surprise anybody. Neighbourhood plans need to sit very closely with the local plan, and together they should form a robust base on which planning decisions can be taken. The problem at the moment is that some local plans are not as developed as they might be. They do not have five-year land supplies. We have neighbourhood plans coming on stream more quickly, and they have caught the problems of the tension between the various tiers. A bit more clarity in the Bill about the respective responsibilities of those tiers and plans would be helpful.
Ruth Reed: Nothing beats having in place a local plan that is robust and that has sufficient provision for housing land supply, which it can renew throughout its life. The concern is that, if neighbourhood plans are brought forward pre-referendum immediately before local plans have been adopted, it will slow down the very necessary local plans process. The problem then is about the provisions to go back and amend neighbourhood plans. The danger is that you are disillusioning local groups that have thrown a lot of voluntary time and effort into preparing those plans. They will see the local authority, which in cities can seem quite distant—less so in the smaller authorities—wading in and changing something they hold dear because they have gone through the process of having prepared it themselves.
Kit Malthouse
Q But is it the case that, wherever you pick in the lifespan of the neighbourhood plan—from inception through to referendum—by picking a point at which you create weight, you also create a window for land speculators or developers to try to get in under the wire? Do you think the point the Government have chosen for the cut-off date—post-inspection—which is where this weight occurs, is too late? Of course, all the work is done pre-inspection. As you say, part of the mission is to make the process credible so people who are embarking on a two and possibly three-year, process do not feel their time is wasted because an application comes in just before inspection.
Ruth Reed: I do not want to run down the majority of neighbourhood plans, but they are generally prepared by voluntary work, sometimes by amateurs, and until they have gone through the inspection process they are probably not rigorous. It would be difficult to indicate to decision makers, whether the local authority or the inspectorate, that they should be given significant weight, because they have not had the thorough scrutiny of the inspectors’ examination. I personally would not bring it any further forward than that. My greater concern is that they are produced without the backing of, and without being in sync with, a local plan, which would ensure coherence and strategy across a local authority to provide housing where it is needed.
Jonathan Owen: Hopefully, the requirement in the Bill to make local planning authorities provide clear assistance to parishes should help to improve the efficacy of neighbourhood plans. My colleague is right that they are produced by volunteers, but that is a strength. They are often produced by volunteers with exceptional experience. I think that the earlier in the process they have a robust position, the better.
Kit Malthouse
Q Thank you. You have both referred to the importance of the local plan. Obviously, a neighbourhood plan is hampered in the absence of an overarching local plan with a five-year land supply. That is not the fault of the area that has put the neighbourhood plan in place. Do you think there is scope in the Bill or elsewhere to create some kind of compulsion on local authorities to have a plan in place? Some of them seem to take their time.
Ruth Reed: I believe that has already been addressed by the Local Plans Expert Group. I understand that the Minister has already made some comments about that. It would be extremely desirable for there to be some mechanism to make it a statutory obligation to have a local plan in place. Presumably, that should include a robust way of reviewing the five-year land supply to ensure it continues to be effective and not out of date throughout its lifespan.
Jonathan Owen: I agree very much with that. We would also like to see some certainty about how the community infrastructure levy will operate, and perhaps a time limit for getting those schemes in place. Again, one of the things that I hope the Bill will do is incentivise local communities to take control of their places and develop neighbourhood plans, but they need to see some reward for that, and I think that a share of the community infrastructure levy is a key element. The National Association of Local Councils is pushing for that to be increased from 25% to 35% where an approved neighbourhood plan is in place, which would help incentivise and perhaps persuade some communities, including some of the more deprived ones, to see the benefits of having a plan in place.
Kit Malthouse
Q On that notion of having a neighbourhood plan and a local plan, probably the most feared organisation in my constituency is not the Inland Revenue or the police, but the Planning Inspectorate. When a neighbourhood plan that has been through a referendum is in place and a local plan has been approved and has a five-year land supply, do you believe that there should be some restrictions on the jurisdiction of the Planning Inspectorate in such circumstances?
Ruth Reed: The Planning Inspectorate has a duty to make decisions in accordance with the development plan and other material considerations, one of which is national policy. I do not think that it is pushing a particular agenda; it is merely carrying out its duties. I declare an interest: I was an inspector.
Jonathan Owen: I think we would like to see some process perhaps to review the decision of those inspectors. We are calling for a right to be heard, or a right of appeal, so that where decisions are taken contrary to a neighbourhood plan and a local plan, people may have some reference to the Secretary of State or Minister to take a final view on the thing. It is really important that we have consistency across the piece, and that communities developing neighbourhood plans are confident that when they do the work, backed up by a local plan, those plans will have real importance and significance. If they do not, people will ask, “Why bother volunteering time to do these things?” Why bother to spend a lot of time on how to accommodate more housing and more growth in your community if those considerations are set aside for all sorts of complicated legal reasons that the planning system always seems capable of throwing up?
Ruth Reed: May I make a technical point there? The inspectorate is the Secretary of State—it stands in the shoes of the Secretary of State—and the recourse is a section 288 challenge.
Kit Malthouse
Q Yes, I understand that. All MPs can, pretty much, point to inexplicable decisions by the Planning Inspectorate in their area. One of the things that alarms local communities is this notion that the decisions made seem broadly random. I guess what I am trying to fish for is whether there is some way for an area that can prove it is playing ball, is providing housing and has its plans in place, to have the planning inspector say to a developer, “Well, don’t even bother asking, because we are not going to participate”.
Ruth Reed: Every group can be an appellant and has the right to appeal to the Secretary of State, so it would be undemocratic to deny people the opportunity, whether they be housing developers or individuals. Everyone has a right to appeal.
The Chair
Q It is a very important point that Mr Malthouse is making, but may we just be clear that if there is a neighbourhood plan, a local plan and a five-year land supply, you still think that the developers should have the right to appeal to the Planning Inspectorate?
Ruth Reed: If everything is in place, the developer’s case would not have any weight.
The Chair
But do you think they should have the right to appeal?
Ruth Reed: Everyone should have the right to appeal; they do not have the right to succeed.
Kit Malthouse
Q When you say “everyone” should have the right to appeal, you do not mean the residents.
Ruth Reed: Everyone who has had a decision made—no, I am not talking about third parties. I am talking about planning refusals under section 78. Anybody who has had a refusal is allowed to appeal the decision—appellants themselves may appeal the refusal, whoever they are.
Kit Malthouse
Q I understand, but you said that was of democratic importance—
Ruth Reed: Yes—
Kit Malthouse
Q But obviously a lot of residents believe the system is one-sided, because they cannot appeal an appeal that is allowed.
Ruth Reed: If there is a material error of process, they may ask the local authority to take it up as a 288 challenge in the High Court.
Kit Malthouse
Q Okay. My final question is on neighbourhood plans and the areas, to which you alluded earlier. Do you think that neighbourhood plans could be put in place by self-defined areas?
Ruth Reed: My understanding was that you could put forward an area and have it accepted. That is, to a degree, self-defining.
Helen Hayes (Dulwich and West Norwood) (Lab)
Q May I have your views on the availability and level of resources to support communities that want to undertake neighbourhood planning? What more could be done to enable and encourage neighbourhood planning in more deprived communities and in areas of high housing need, for example, where there are voices that might not be heard in the planning process, but that might stand to benefit from the neighbourhood planning process?
Ruth Reed: I personally believe that there should be a proactive role for local authorities to instigate and identify neighbourhoods, and put in train a process. There should also be an opportunity to financially enable not only the technical aspects of planning, but—on behalf of the Royal Institute of British Architects—to provide design capacity to enable them to input well-worded design policies, and even design codes so that individual neighbourhoods can give expression to the kind of development that they would like to see, and to make it real to them. We believe that there may now be financial provision for this. One of the problems in planning is that it is a paper, two-dimensional base exercise. Sometimes you need people like architects to make it real and three-dimensional and to be able to explain what it would look like, using models or digital models.
Jonathan Owen: The pump-priming funding provided by the Government to support neighbourhood plan development has been an element that has encouraged parish councils to get involved, and it has driven neighbourhood planning of the 2,000 plans that have been produced. Parishes have led 90% of them, so they are embracing that opportunity, and I would like that to continue. The element in the Bill requiring planning authorities to identify the kind of advice that they would provide to groups and draw up neighbourhood plans is helpful. Where it falls a bit short is where it does not set out what is required or expected by the local planning authority.
We would like to see something more formal by way of either a statutory memorandum of understanding or a code of practice relating to what might be expected of the local planning authority in terms of helping with community involvement, helping them to access the principal authority website to do consultation work on it and that kind of thing, rather than just a basic entitlement. So it would be a mix of hard cash and softer things that could be provided by the planning authority. I know that would cost them money, and there was a good debate this morning about planning authority resources.
John Mann (Bassetlaw) (Lab)
Q Prince Charles’s Foundation for Building Community did the groundwork in my area to self-define an urban area around a historic church as a community. It is a coherent community, and it is a community that has not been defined as such for 300 to 400 years. In your position, would you say that there was far more scope for this? Imagine if it had been done for the St Paul’s neighbourhood plan 40 years ago. Things might be rather different. Do you see great scope in this, and do you see scope for your organisation in prompting this kind of thinking?
Ruth Reed: I think we have locally active members who have been engaged in the first phase of neighbourhood plans. It is not core to architects to bring forward planning initiatives. There is no reason why certain individuals should not get involved, but it is not something that the RIBA would do, since the RIBA exists to promote architecture rather than enable communities to deliver local plans. There are groups aligned to the RIBA, including the Design Council, the Commission for Architecture and the Built Environment and the Architecture Centre Network to put design capacity into local authorities. The RIBA would be involved in initiatives in this kind of area to provide resources to local groups.
John Mann
Q Some would say great architecture defines communities and I hope you will give further thought as to how you might inspire people, particularly in urban areas and around our great cathedrals and other great buildings. Most of your member organisations were busy consulting vast amounts of local people over local plans, and then the Government changed the goalposts in March 2013. How many local plans have had to be redone because of the requirement to consult neighbouring authorities?
Jonathan Owen: I don’t have the answer to that. Two thousand neighbourhood plans have been prepared by our parish and town councils—
John Mann
There must be a significant number, because councils like mine that had had all the consultation were informed that they had to start again entirely from scratch, which seems to me to be quite a way of delaying house building—albeit inadvertently—by the coalition Government.
Ruth Reed: I think stability in the planning system is to be welcomed, because it gives confidence to developers and other people bringing forth developments that they will get planning. That is why it is important that local plans are in place, and it is very important that they have adequate provision for housing land in particular. The stability we have had since 2012 has been quite welcome.
John Mann
Q The stability we have had? There has been no stability in all those councils that had to abandon their local plans—there is no plan there, so in fact there has been instability. Dr Owen, have there not been cases where small district councils, with the risk of adverse costs should they lose at appeal, have felt obliged to pass things that they do not want and their local communities vociferously do not want for fear of risking a quarter of a million pounds in costs from their budget? Does that sound familiar?
Jonathan Owen: I am sure there are examples of that, but from a parish perspective I guess that also introduces uncertainty into those neighbourhood plans themselves. We have had plenty of examples of where those neighbourhood plans have had to be redone, revised or tossed aside. In the pack of papers we sent in by way of submission, we quoted Haddenham parish council, which gave evidence to an all-party parliamentary group last week mapping out the enthusiasm of the people who drew up that neighbourhood plan. They got experts involved from within the community and produced a really great plan, but within six months it got set aside through a judicial review.
The representative from that parish came here and was deeply disappointed that all that hard work and effort had come to naught. He could not see how he would be able to engage his local residents or his community in shaping such a plan again. That is why we need some certainty, clarity and credibility around the whole system. Hopefully the Bill will help address that.
John Mann
Q Indeed. My own parish council had exactly the same experience. Vast numbers participated. A community plan was drawn up with huge engagement. It was environmentally sound and very forward-thinking on green technologies. Architecture was built into it, with what the new housing should look like to fit in with the feel and history of previous architecture, but that was overturned because of the five-year housing supply. Someone wants to build something that does not fit in at all, and that was not agreed by anyone, because someone in Whitehall says, “You’ve got to have this number of houses.” Will that inspire more neighbourhoods to have plans, or will that mean there will be even more cynicism about the planning system?
Jonathan Owen: Well, I think you are right—cynicism is a very real risk. That is why we need to ensure that we build a system where the role of neighbourhood plans is clearly spelled out and we are not raising expectations unreasonably, so that, together with local plans, they provide a really robust framework to support communities to have control over their areas and get the right kind of development.
John Mann
Q The evidence, overwhelmingly, is that where there is a neighbourhood plan that increases the potential housing supply through land allocation, that housing will be built and will be built quickly. However, there is a bit of a time lag in proving that in huge numbers. Do you intend to keep providing that information on how successful neighbourhood plans have been in bringing forward new housing? Would that not therefore strengthen the argument that where there is a neighbourhood plan that has been formally adopted by one of your members in district council, after a referendum and a council vote, that should be the plan stuck to by everybody?
Jonathan Owen: We will certainly showcase those examples. Government research shows that something like 10% additional housing is provided by neighbourhood plans. I am particularly pleased that Newport Pagnell, one of our larger town councils, won an award from Planning magazine for the quality of its neighbourhood plan, which, among other things, provided for 30% more housing than was set out in the local plan.
We believe—you would expect us to say this—that parishes can really drive forward neighbourhood planning, and can set aside the outdated nimby view of parishes and build communities that have housing for local residents and others, provided in a way that has infrastructure and community support. The key thing is to make sure that people’s enthusiasm for that is not set aside because the plans are set aside or overturned on appeal or whatever.
John Mann
Q Indeed. With more than 20 local plans either agreed or proceeding in my constituency, every single one brings forward new housing—more than any plan previously. Every single community is willing to have housing, but wants to have a great say on what kind of housing—what shape, what design—and where it should be. Seing as so many of them are in beautiful parishes such as the village where I live, is there not a danger that one part of society is going to benefit from this whereas in more deprived communities, in urban areas, there is the same desire for local control over neighbourhoods, but it requires a bit more imagination to create communities sufficiently robustly small to carry out this kind of planning? Should we not be giving far more incentive, encouragement and expert advice to those communities, on the basis that all politics is local as long as you are prepared to trust local people?
The Chair
In 10 seconds, please.
Ruth Reed: I think we have already said that we would support the proactive work by local authorities in identifying communities and bringing forward neighbourhood plans in more deprived areas.
Jonathan Owen: And parish councils, of course, are increasingly being set up in urban areas these days. Sutton Coldfield, Swindon and many other places are setting them up, so hopefully, with a bit of luck, we will see more parish councils in those urban areas helping those deprived communities.
Mrs Theresa Villiers (Chipping Barnet) (Con)
Q Part of this has been covered by John Mann’s questions, but just to be clear, it seems to me there are far fewer neighbourhood plans in big cities than elsewhere. It would be useful to understand from you what you think the main cause of that is. Is it because it is very difficult to identify a community small enough to be viable for a neighbourhood plan within a bigger urban area?
Jonathan Owen: I think it is that, and I think those communities need support from their local planning authorities. Of course, the absence of a parish or town council in those areas means there is no institution that can drive it forward and raise funds through precepts to support the neighbourhood plan, with an ongoing democratic existence over time.
Rebecca Pow (Taunton Deane) (Con)
Q One of the things so many communities want is to have an influence on how their communities look and feel, what nice places they are to live in and all of that. Do you think the changes proposed in the Bill will help that? Will people really feel that they are going to influence the places in which they live?
Ruth Reed: I think it would be helpful if it was explicit that provision is made for enabling the capacity for local communities to express what they want out of the quality of their environment. I do not think it is explicit. It is implied that there will be funding provided for guidance, but it does not say that that should be what it is. I think it would be good if the Bill made a clear statement that good design will be brought forward through this process.
Rebecca Pow
Q Do you think that will be an incentive for people who are sceptical about the process we have been discussing? Would it really encourage them to do it?
Ruth Reed: I think if they felt they had some control over the way things looked, they would be much more incentivised to bring it forward.
Jim McMahon (Oldham West and Royton) (Lab)
Q I am interested in the powers providing the finance to deliver and get the expertise in, and so on. What about practical support beyond that, for instance toolkits, pro formas and websites that can generate content and formatting? Maybe I can use this opportunity to blow the trumpet of Greater Manchester, which is currently embarking on a project with the Cabinet Office to develop open data mapping. Would more projects like that help your parish and town councils?
Jonathan Owen: I have been interested in how the neighbourhood planning process has taken off over the last few years. We should recognise that it was an experiment, really, and we are at the early stages of that experiment. In any experiment we need to have plenty of ways to share good practice and showcase what others are doing, and the kind of toolkits you have mentioned. Certainly, from talking to parishes, they are reassured when they are able to talk to other parishes or other neighbourhood forums that have done it and learn lessons from that. Anything that we put in place—not necessarily in the Bill but through any financial support— to ensure that sharing of good practice would be brilliant.
Ruth Reed: Any obligations placed on local authorities to provide extra services, if they are not accompanied by funding, are going to put extra pressure on a system that is already in a—
Jim McMahon
The mapping, of course, could be provided by central Government. The technology platform could be provided centrally.
The Chair
Order. I am really sorry, but time has beaten us, and we have to move on. Thank you so much for coming and giving evidence.
Examination of Witnesses
Carol Reilly and Matt Thomson gave evidence.
The Chair
We now hear oral evidence from Locality, and from the Campaign to Protect Rural England. For this session we have until 3 pm. I welcome the witnesses. Could you please introduce yourselves?
Carole Reilly: Hello, I am Carol Reilly. I am the head of neighbourhoods and housing at Locality.
Matt Thomson: Good afternoon. I am Matt Thomson. I am the head of planning at the Campaign to Protect Rural England.
Jim McMahon
Q I am interested in the balance of the drive and ambition to build more homes with trying to protect the environmental standards, in particular around the green belt. I would welcome your views on that.
Matt Thomson: Shall I kick off, given that green belt is one of the key things that the Campaign to Protect Rural England is concerned with? It comes down to the general principle behind neighbourhood planning, that people and communities at the local level are best placed to make decisions about the impacts of development on their area, and about the type of development that takes place in their area. The more local the level at which decisions are made, the better the outcomes can be for those kinds of concerns.
Carole Reilly: I think it is really important that we listen to communities. We have seen a number of neighbourhood planning groups that are challenging local authorities that have not got a “brownfield first” policy. That is one the things that we see: a brownfield list that is going to be updated and reported on. That surely will be one of the ways, viability issues all being considered, of securing the green belt.
Chris Philp (Croydon South) (Con)
Q Welcome to Westminster. Do you think the way the local plan interacts with the neighbourhood plan could be improved in any way, particularly bearing in mind that the neighbourhood plan has been subject to local referendum? If you think that interaction could be improved, how would you suggest improving it?
Carole Reilly: I think we are going to see quite an interesting two years coming up, where local planning authorities are getting their local plans in place. I think neighbourhood plans and local plans can be produced in tandem. They depend on a lot of the same evidence. We are very heartened that this Bill shows a commitment for local authorities to explain what their support is going to be. There are a number of ways in which the development of the local plan would really help the development of a neighbourhood plan: giving maps, giving evidence, sharing diagrams—stuff that often does not happen at local authority level. So I think there is a way that they can be developed together. Without a local plan, obviously the latest plan takes precedence under the national planning policy framework—it is the neighbourhood plan. Where there is no five-year land supply, that leaves your neighbourhood plan terribly vulnerable. So I think the two have got to be intertwined. We also have to remember that, in practice, we are four years in, and there was a lot of scepticism from local authorities about neighbourhood plans. It feels like there is a far more open, partnership approach now.
But local planning authorities have been stripped of funding and they have reduced huge amounts of skills. Lots of people do not have a lot of experience with neighbourhood planning, and their focus will be on writing and producing the local plan. So I think they should be produced together, they should be meshed together, and that can be done by sharing that top-level evidence that is gathered by the local planning authority, but I think the resources are tight and the focus is going to be on the local plan.
Matt Thomson: I would agree with a lot of what Carole said. The question reflects one of the key problems that we have been facing with the operation of the planning system for decades. That is that where you have tiers of nested planning policy documents, there is always a question of which has precedence over the other. It should not necessarily be just a question of the one that is produced most recently holding the most weight in a planning application environment.
Another, bigger, question has vexed us with regard to the relationship between local plans, county structure plans and regional strategies. We tend to think of neighbourhood plans as somehow needing to be prepared in the context of an adopted local plan, despite the fact that, although we have lots of adopted local plans, we do not have enough adopted local plans. But we need a relationship whereby the work that goes on at the neighbourhood plan level informs the preparation of the local plan, rather than the local plan, when it is finally produced, somehow trumping a short-lived neighbourhood plan and forcing the neighbourhood to review that plan. We need somehow to protect the policies and proposals of the neighbourhood plan, and bring them into the local plan when it is being produced.
Chris Philp
Q On that point, can you think of particular examples of the type of policies or measures that might appear in a neighbourhood plan and that you think could or should trump a local plan?
Matt Thomson: The existing NPPF says that detailed policies—non-strategic policies—in a neighbourhood plan, where they exist, can outweigh the policies in the local plan.
Chris Philp
Q What is the definition of “strategic” in that context?
Matt Thomson: I think, generally speaking, that that is interpreted as relating to the scale and location of mainly housing development. It is the big picture things. A lot of local plans have quite detailed policies on design, and on the kinds of development management policies and conditions that can be imposed on planning permissions and so on. A neighbourhood may feel that the design policies are not the right design policies for their particular area, and so produce their own design policies. It is that kind of thing.
Chris Philp
Q As an example, let us say that the local plan specifies the total number of housing units in a five-year period to be built in a particular area—in a village or a particular neighbourhood of a suburb. Would it be reasonable to say that a neighbourhood plan could allocate different sites—that would take precedence—provided that the total number of housing units was the same as specified in the local plan?
Matt Thomson: That, I think, is a tricky area. A good example of where this has worked well is Thame in Oxfordshire. The district council gave an overall housing requirement for the Thame neighbourhood plan to meet and identify its own sites. It is more difficult when the district council has already identified sites, because the owner of that site has a reasonable expectation that they will get planning permission for it. It would be difficult for a neighbourhood plan to de-allocate a local plan. It is not impossible, and it may be appropriate to do that.
One of the other pitfalls we would want to watch out for is this: we know that neighbourhood plans are allocating more housing sites than they were expected to—that is the 10% or 11% figure that the Government have been talking about—and that is great news. What I would be really concerned about is when a neighbourhood is expected to provide 100 houses, but plans for 110 houses, and the local plan then takes the extra 10 houses off its total. It should be putting those 10 houses somewhere else in the district and not just double-counting, because it might lead to a void and end up punishing that neighbourhood for being much more forthcoming with housing sites.
Carole Reilly: Also, where a local plan is allocating a large housing development, quite often what we have seen in practice is that, on designation of the area, the local authority has removed that strategic site from the neighbourhood planning designated area, against the wishes of the qualifying body. Quite often they are not even able to take those out, and there has been quite a lot of wrangling over designation for boundaries that are coterminous with parish boundaries, because strategic sites have been removed. Whether that is about not wanting to interfere with housing development or about protection of the community infrastructure levy, there are a lot of questions.
Matt Thomson: To clarify, if it is desirable for a neighbourhood plan to de-allocate one site and allocate a different site, then that is a good thing—it is something that the CPRE would often support, because, as I said before, it is better for local people to make the decision. I am just saying that it would be tricky to do that. It could be tricky and there could be legal ramifications if an investor has invested in that site as a result.
Chris Philp
I am not sure that any public body has ever been financially liable for changing planning permissions.
Helen Hayes
Q May I ask Carole Reilly how many neighbourhood plans Locality has supported to date?
Carole Reilly: To date? Under the current programme, we have supported 1,300 neighbourhood plans with grants for technical support. In outline, there are two ways in which you can get support. You can get cash—£9,000 for straightforward plans and, for those that are more complex, the grant can go up to £15,000—and, alongside that, we offer a number of technical support packages. Under the current programme, which we have been running since the beginning of 2015, we have worked with 1,200 or 1,300 groups.
Helen Hayes
Q Of those, how many neighbourhood plans have been in urban areas and/or in areas of significant deprivation?
Carole Reilly: It is pretty similar to the national figure, so we are talking about 10% deprivation, but on the programme about 15% of groups coming from non-parish areas, which is slightly more—it stands to reason that those people would come in for higher levels of support.
Helen Hayes
Q Have you done any work to understand good practice or the resources necessary to engage effectively communities that might not naturally have the capacity or inclination to engage in strategic planning?
Carole Reilly: We have. We undertook an internal review early days, thinking, “Why is this going on?” because we always seemed to be speaking mainly to the parish council. I have to say that that is one of the elements of the Bill that I feel most disappointed with—it does not go far enough. There was a manifesto commitment to encourage neighbourhood planning across the country, but I think we could be sitting in this room in 10 years’ time and, if we have not done something very significant around urban and deprived areas, we will still be having 10% to 15% of forums doing neighbourhood plans.
Some of the issues are very straightforward. Parish and town councils have a place, a building, a phone, a clerk and an address where people know to go, so they are easy to do. When we did all the asset transfer work at Locality, people understood district councils better than counties. People understood where to go. Those councils also have a big infrastructure, like a number of other bodies, to inform them, “This is an opportunity, take it!” and they have a bank account that they can get going straightaway.
In urban areas, who is your neighbourhood? Is someone on the next street your neighbourhood? Where is the boundary? Is it coterminous with another one you know, such as your political or health boundary? What is it? That is really difficult. Who are the leaders on that? I think it is a major problem that neighbourhood forums have a five-year lifespan. From the start, that does not build in long-term thinking.
There is a problem about funding for implementation for forums, so while my first reaction would be to say that CIL is an issue, it and the new homes bonus scheme only channel funding to areas where there is growth already. If we look at those forums in deprived, urban areas, where CIL is set but set at nought, 0% of nought is still nought, so it makes no difference. These issues could be helped in terms of big-picture stuff. A national policy that tried to balance regeneration and planning would be really helpful so that people can understand what a neighbourhood plan can do for an area where there is actually not a lot of housing demand—there is not a problem because there is not a shortage—but where there is a shortage of employment. Using your neighbourhood plan to understand employment space and encourage and generate that would be great.
The reason why it does not happen in urban areas is that there is not already a thing or a vehicle to do it. In poorer areas, there is an issue about personal investment. If you do not own your own home—if you live in private rented accommodation—you have no investment there, and there is nothing to lose. If you are time-poor, you are not going to get involved. There are also things about skills, transient communities and a general point about focus.
I think a huge amount of work can be done. There have been promotional campaigns on neighbourhood planning, but I think we need something much more targeted and focused, something that works with the people that we know on the ground—the local planning authority—and supports them. We also need to fund it, so it is about a very proactive, promotional mobilisation campaign that targets specific groups to take it forward, otherwise we will be still be at the same picture.
Mrs Villiers
Q I would very much like to ask Matt Thomson about one of the points made in your recent report, “Safe Under Us?” about housing development on the green belt. Obviously our planning rules say that such development should be made only in very exceptional cases, but I am alarmed by the research that CPRE and the London Green Belt Council have done, which seems to suggest that inspectors are now deeming general housing pressure and housing need to be sufficiently exceptional to justify green belt development. Could you expand on that?
Matt Thomson: Well, you have put the case that I think CPRE would make very eloquently. Despite the fact that Ministers have said on several occasions that housing demand on its own is not sufficient justification to grant planning permission on green-belt land, it is of concern to us that neither local authorities nor the Planning Inspectorate have necessarily enforced that in all cases, and certainly not in a number of cases that are of concern to CPRE.
Secondly, under the same principle, it is very clear, in our view, in paragraph 14 of the NPPF that, while local authorities should plan to meet their objectively assessed need in full, the requirement does not apply in green belt areas and other areas listed in footnote 9. However, councils are planning for growth—despite being restricted by green belt—and releasing land from the green belt to meet that growth need at an increasing and higher rate than regional plans were doing before they were abolished, largely for the reason that they were proposing development in the green belt. Yes, that is a great concern to us. Housing need obviously needs to be met somewhere and there is still some way to go in order to overcome the problem of how housing need should be met while protecting the green belt and other areas of landscape importance and so on that we would expect to be protected.
Mrs Villiers
Q Is there a legislative fix to this? Should we be thinking about adding something to the Bill to resolve the problem?
Matt Thomson: Strangely, we are not calling for that. Our position is that the NPPF should be enforced, as the policy is clearly worded at the moment. At the moment, our feeling is that local authorities, which are hard-pressed to get local plans in place and to meet their unrealistic housing targets, are granting planning permission and releasing sites from the green belt through their local plans simply because they do not feel like they will get the support from the Planning Inspectorate and the Secretary of State if they choose to do what the NPPF policy actually tells them to.
Jim McMahon
Q I want to try to get under the skin of trying to encourage planners to come forward in areas of deprivation. In previous sessions, we have heard about a conflict between identifiable neighbourhoods of scale. Planning tends to be easier where a village can be identified that is very defined in its own right, but a lot harder in urban areas. Is that partly because, in urban areas, local is extremely local—the street or collections of streets, rather than defined villages and towns on a bigger scale? Could more support be given even more locally so that people could have a say? Perhaps clusters of communities might be able to come together with a bit more support than is currently offered.
Carole Reilly: In urban areas?
Jim McMahon
In urban areas.
Carole Reilly: There are lots of examples of how you can find leaders in urban areas to help to identify what the needs are. Until recently, we ran the community organisers programme, funded through the Office of Community Services. That was an amazing way of finding out what people were passionate about in their communities, because—let’s face it—2,000 groups doing neighbourhood planning is not about a passion for planning. It is about a passion for places and for placemaking. We need to be really clear about that. It happens in cities and towns as much as in rural areas, so we should try to harness it, and there are a lot of ways of doing that.
We must commend the 14% of groups on our programme that are from urban areas and are delivering neighbourhood plans as forums, and we should understand why those groups exist. There is a really active group in London that is bringing together London neighbourhood planners and inspiring people, despite enormous odds including enormous development pressure, high land values and conflict over boundaries where every scrap of land is worth so much money. Conversely, in the north, regeneration may be at the very core of city centres, but is not in suburban areas.
There are loads of examples. Community organising approach is a big one, as is working with neighbourhood planning forums already in urban areas and getting them to spread the word. We have just started to run the neighbourhood planning champions programme, which is a really good way of inspiring people—come and see it. The resource programme is good. A lot of money has been dedicated to neighbourhood planning, but the promotion around urban areas has been under-resourced. The way to mobilise people in urban areas is to have a far more focused, targeted and funded intervention.
Rebecca Pow
Q In suggesting modifications that might be introduced to the neighbourhood plans, do you think that there will be enough chances to include and consider the environmental implications?
Matt Thomson: The existing legislation—the Bill does nothing to harm this—gives communities the opportunity to address whatever issues they feel that they want to address through their neighbourhood plan. The serious question is whether the effort to which they go to do that will be taken notice of when it comes to planning permissions being granted.
Neighbourhood planning has the power for placemaking and environmental protection. Difficult decisions at a local level about how to balance the need for housing in a green-belt village with the desire to protect the green belt and that kind of thing are effectively made through neighbourhood plans. The question is whether the decisions actually get made in accordance with the neighbourhood plan. At that point, the concern about environmental protection really kicks in.
Rebecca Pow
Q If this was made very clear, perhaps with the guidance of the Bill, would that encourage communities to be keener to have development?
Matt Thomson: There is already evidence that demonstrates that as soon as communities start considering about their development needs, even when they start off from a very nimby perspective, they think, “We are really worried about development that is going to come and destroy our village,” or whatever, and then they all sit down together and start talking about it. They then realise that there is a development need: the neighbour’s children need somewhere to live, there is a school that is threatened with closure or a shop that is closing down and so on, and people start to recognise the needs that they have. But again, because they are the local people and they know their area, they are best positioned to resolve the potential conflict between growth and conservation.
Carole Reilly: There is a wide interpretation of environmental issues. We talk about coding on houses and new developments having to reach certain codes, but neighbourhood planners are the best people to understand their area and to build into it those things that make places permeable—things that make you able to walk to your shop, and not have a development that faces out in which you get in your car and drive to the mini-supermarket.
We do see lots of neighbourhood plans that are coming up with environmental policies, and they are very interesting. They have policies around walkability and building cycle paths. I think that is core to building communities; I do not think they are separated.
John Mann
Q On that point, before you spoke, Ms Reilly, I wrote down safe walk routes, including school routes, and road design and layout. Are there sufficient powers in neighbourhood planning in relation to those issues, or is that merely illusory? Separately, Mr Thomson, in relation to neighbourhood plans that specify explicit preference for forms of energy that should be used within the neighbourhood and state that preference should be given only to housing that uses those forms of energy—in other words, plans that define what the energy requirements should be and how they should and perhaps should not be delivered—is there more scope for that? Are the powers there?
Carole Reilly: I think there is more scope for it. One of the things we see time and again in neighbourhood planning is protecting green spaces. There is a balance between what is a land use planning policy and what is something that has actually drawn people to the table in the first place but is not a land use planning policy, and is then appendicised in a neighbourhood plan and therefore does not form part of a statutory document. These things always have to be dealt with on a case-by-case basis, but there are loads of examples of neighbourhood plans that have protected green space and encouraged cycle paths, and there are other things that are more tangential that have not.
On the issue that was Matt’s answer about environmental energy use, the key question will be about viability. One of our technical support packages is around viability. We see neighbourhood planning groups being increasingly interested in site allocations, understanding the strategic environmental assessment and, on top of that, looking at the viability of a site. Neighbourhood planning groups will look at those sites that are not interesting to the volume house builders—they will look at a site that might have four plots on it. We run a programme for community-led housing in locality and we see these inspirational community organisations that think, “Actually, we need something for old people and we want to build it here,” in stuff that would be completely overlooked. I think it is not just about energy; it is about understanding those areas that would be distressed areas forever and understanding them within their viability in terms of using different sources of energy.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
Q Carole Reilly, I think you said that the five-year life spans of neighbourhood plans do not encourage long-term thinking, if I understood you correctly.
Carole Reilly: For neighbourhood forums. A neighbourhood plan is the length you determine it to be.
Dr Huq
Q Right. The Bill requires a local planning authority to review its statement of community involvement every five years. I wonder whether both of you think that is a suitable length of time. For a neighbourhood forum, do you think that five years is not long enough? In a constituency such as mine, there are a lot of transient people, and a lot of neighbourhood plans. People staying in urban areas do not get them, and there seems to be a mushrooming, with every street seemingly submitting one at the moment. There used to be a Central Ealing one, but now, even with that, everyone is coming forward with the whole impetus to localism. I wonder, for both of you, what those timeframes should be.
Matt Thomson: My view on statements of community involvement is that they are a strange hangover from the former form of development plans. Really an SCI should be a piece of information, which is on a council’s website, that explains how people engage with the planning system in that council area. So it should be updated every time that the council has a new bit of information that it wants to share. The idea of reviewing the SCI every five years is bonkers; it should be reviewed all the time to make sure that people know how to engage with the planning system.
The Chair
Order. On the point of bonkers, I am afraid we are going to have to stop. I have stretched it as much as I possibly could. I really apologise, because we could have gone further. Thank you for being excellent witnesses, but we have to move on. We will now hear evidence from the Compulsory Purchase Association, the Royal Institution of Chartered Surveyors, the Royal Society and the Royal Town Planning Institute—for Members, page 32 of the brief. For this session we have until 4 pm.
Examination of Witnesses
Colin Cottage, Richard Asher, Tim Smith and Richard Blyth gave evidence.
The Chair
Welcome, witnesses. Will you introduce yourselves?
Richard Blyth: My name is Richard Blyth. I am head of policy for the Royal Town Planning Institute.
Richard Asher: My name is Richard Asher. I am a chartered surveyor and a member of the RICS governing council.
Colin Cottage: I am Colin Cottage. I am also a chartered surveyor, and I am chairman of the Compulsory Purchase Association.
Tim Smith: Good afternoon. My name is Tim Smith. I am a solicitor and member of the Law Society planning and environmental law committee.
Jim McMahon
Q I will start with the planning conditions element but perhaps, with the Chair’s permission, return to the compulsory purchase powers element later. On the planning conditions, what evidence is there to suggest that pre-commencement conditions are overused? Is there evidence that they are unnecessary?
Tim Smith: The Law Society represents those in private practice and in local government, so we get both sides of the story, as it were. The complaint is more from those who benefit from planning permission and have to implement the conditions. Certainly there is complaint there that the weight of pre-commencement conditions can be onerous for those wanting to start on site.
It is probably helpful to categorise the problem by breaking it down into two separate areas—first, pre-commencement conditions that are relevant but need not be discharged before commencement. One can conceive of conditions that perhaps affect the operation of development, which would certainly have to be complied with before occupation, but not necessarily by commencement, yet often by default the imposition is that they must be discharged before commencement of development.
Secondly, on a more granular level still, “by commencement of development” means, in essence, before any development at all is carried out—development as defined in the legislation. There are some examples, we feel, where certain early works, such as demolition and site clearance, could take place before the conditions fall to be discharged, which would help with the timely implementation of development, but still ensure that the details that need to be discharged are done by the time that they need to be. I have seen one commentator express the view, for example, “Do you really need to approve the details of your roof tiles before you start to demolish and clear the site?” The answer is probably not. However, if there were a way to ensure that the conditions were discharged when they had to be discharged, some development could be got under way quicker than it is at the moment.
Jim McMahon
Q In order to allow flexibility—so you would not argue for a blanket rule to allow demolition in all cases, because there might be an argument to say that what is there now could be better than the alternative, depending on the final scheme presented.
Tim Smith: Yes. It is the kind of thing that is susceptible to regulations and policy far better than it is to primary legislation, but that would be an example of where some welcome flexibility could be brought.
Richard Blyth: I think there is an issue around whether the condition needs to be pre-commencement or not—around leverage, I suppose. If construction is under way, there is less incentive for the developer to come forward and submit the relevant scheme because they are already getting on with it, whereas saying, “You must do all this before you start,” gives a very powerful incentive for the party to come to the table. That may be why local authorities have tended to do that. They are afraid that, if they try to implement and enforce a condition after the starting gun, they might find that that was very difficult to do in terms of ultimately getting the court to agree. There are lawyers here who would probably better interpret that than me, but that may be why this has arisen.
Under the Infrastructure Act 2015, if a condition is not discharged by a certain time, it will be discharged in a deemed fashion, so the issue of having to discharge them is not necessarily requiring further legislation—we have just had some legislation on that. The other question is that, if a condition is not really serving a useful planning purpose, welcome other aspects of the Bill would say that it should not actually be possible to impose it in any case.
I am just a little concerned that requiring every good developer and every good planning authority to go through a written sign-off procedure for the sake of the minority, perhaps, of planning authorities and developers who may be pursuing less good practice is kind of asking everyone to take on an extra burden for the benefit of some bad eggs. Maybe there is another way of dealing with the problem of poor practice than requiring everyone else to have to go through the process of signing off conditions and, ultimately, the risk of applications being refused as the only way of resolving the dispute.
Chris Philp
Q The draft legislation provides that the Secretary of State by regulations can prohibit the use of certain planning conditions entirely, should the Secretary of State see fit. First, do you think that is a reasonable provision? Secondly, assuming you do—or if you do—are there any particular kinds of planning condition that you, if you were advising the Secretary of State, would advise him or her to prohibit?
Tim Smith: We have some visibility about how this might play out, because the consultation has been issued for views on what sort of conditions might be prevented. What we have in those proposals are things that, as a matter of policy, ought not to be applied anyway. I recognise that putting them on a statutory footing places a different emphasis on them. It is not just a question of whether policy should be interpreted so as to prevent them. The starting point will be that they should not be applied.
Having seen the list of conditions that are proposed, I would have a concern that some of them are not capable of being drafted in a sufficiently precise way. One proposal, for example, is that conditions should not be imposed that place a disproportionate financial burden on developers. That is easy to state and easy to understand as a concept—
Chris Philp
Q So you think that is inappropriately broad.
Tim Smith: I think that, as the proposal stands, that would present difficulties both for developers and local authorities in deciding whether or not it were a permissible condition, and it is not the kind of thing that I can see is easily capable of being further defined so as to provide that certainty.
There are other things that I think are appropriate. One of the examples is—
The Chair
Order. Sorry to interrupt. The hon. Member is taking a sip from that cup. It looks remarkably like tea. I am sure that it has cooled down to a temperature that is no longer regarded as hot. In other words, we cannot have hot drinks in here, bizarrely. I am afraid that is one of the rules. I am sorry—do continue.
Tim Smith: I think that the proposals we have before us in the consultation are on the species of condition that it would be apt to prevent. I do not know whether this is an appropriate answer to this question, but I should perhaps flag that there is one type of condition that should be expressly permitted that currently is not. It would be a missed opportunity if the Bill did not allow for it. It is something that the Law Society has expressed a view on before. I am happy to elaborate on that now or, if you would prefer, I can come back to it.
Chris Philp
Q No, elaborate now, please.
Tim Smith: At the moment, one cannot use a condition for the payment of a financial contribution. In some cases of minor development, the planning obligations sought from a developer upon the granting of planning permission are those that would be minor financial contributions. As things stand, the developer and the local planning authority are forced to use the vehicle of a planning obligation under section 106, which is the negotiation of an agreement, and that takes time and incurs additional cost for both sides. The cost, however, will be borne by the developer in defraying the cost to the local authority in putting that agreement in place.
One of the things that the Law Society has recommended in response to previous consultations is that, so long as it be agreed between local authority and applicant—a proposal that forms part of the Bill, albeit for different reasons—it would speed up the system to prevent the developer from having to enter into a section 106 agreement because they will have consented to a condition requiring the payment of a financial contribution. That is the very reverse of what is being proposed at the moment. These are conditions that must not be opposed. We are saying, and we have recommended this previously in consultations, that it would add utility to the system to allow conditions that are expressly approved by the developer to require the payment of financial contributions.
Chris Philp
Q So are you in effect suggesting that what we currently refer to as a section 106 agreement should be integrated into the main planning consent to avoid having to then have a lengthy and uncertain subsequent negotiation?
Tim Smith: It will not be appropriate for all cases. This relates to a safeguard that would apply for the benefit of the developer. The concern had always been that, if you allowed conditions to be imposed about the payment of financial contributions, it could be done unilaterally by the planning authority, leaving the developer having either to appeal the permission or to submit another application to get rid of that condition.
A sufficient safeguard would be if the developer said, “I’m fine with the process here. I’m fine with the principle of paying this contribution, so let’s put it into a condition so that I do not then have to negotiate the planning obligation.” In a sense, you might be surprised that I am sitting here as a lawyer saying that there are some things that lawyers get involved in that are perhaps not necessary, but the view expressed fairly broadly in the committee is that it would be sensible to include the idea in a piece of legislation.
Chris Philp
Could I invite other witnesses to comment on that?
Richard Blyth: On the issue of whether it is necessary, the proposals to elevate a list of satisfactory kinds of conditions into law from policy have been around under successive Governments for a very long time, and the principle is well understood. It seems sensible to elevate that list into the status of law. I am not clear, however, on why the Government need to go further and empower the Secretary of State to add a whole series of secondary legislation to the list of what constitutes a reasonable condition. I do not see why that is necessary; we have not had that before. I would have thought that policy and guidance would be quite able to elaborate, if the Bill becomes law, on a satisfactory basis in principle for defining a reasonable condition.
Dr Blackman-Woods
Q Can I move on to look at some of the compulsory purchase order provisions in the Bill? To what extent do you think the proposals in the Bill will free up more land for development and lead to the delivery of more homes in a speedier and more streamlined way?
Richard Asher: I think that any improvements to the compulsory purchase process are to be welcomed. The provisions in the Bill for resolving the long-standing issues about temporary possession are very important. It has long been an area of great difficulty for practitioners to try to interpret how temporary possession should be dealt with. That is a key advantage of the Bill. Some of the detail needs further work, as the wording could lead to further legal disputes or litigation. However, the principle of providing for temporary possession on broadly the same terms as permanent acquisition is very important.
There is one area of difficulty: the danger that authorities may use powers to acquire land compulsorily when it is only required on a temporary basis. That interferes with long-term prospects for development by landowners, whose development plans are quite often disrupted by compulsory purchase on a temporary basis. That needs to be considered to ensure that authorities only acquire land on a temporary basis when it is required temporarily.
Colin Cottage: I agree with that, and the Compulsory Purchase Association welcomes a more codified approach to temporary acquisition. At the moment, the large number of compulsory purchase orders do not allow for temporary possession at all. Where there is potential to introduce it through development consent orders, Transport and Works Act orders and so on, each of those particular instruments is drawn separately, so a codified approach is to be welcomed.
As Richard said, there are practical issues with temporary possession that need to be dealt with, including the interrelationships between different tenures in land, how to deal with an occupier of land when that land is taken temporarily, and what to do if buildings have to be demolished and so on. Those issues can be overcome, but they need to be looked at carefully if the Bill is to come into law and to not cause, rather than solve, problems.
Another issue that we are quite conscious of is the ability to take both temporary and permanent possession. We are of the view that a decision should be taken at the outset as to whether possession will be temporary or permanent. When a business or individual homeowner is faced with compulsory acquisition, and possession is initially taken temporarily but may ultimately become permanent, huge amounts of uncertainty are created. The person or business does not know how long the land will be taken for, and whether it will be for a temporary period or whether it will be permanent, and that makes planning difficult.
When temporary possession is taken initially, compensation is paid on the temporary basis. At the moment, because the system is not codified, there is no strict ruling about when compensation is paid, so the introduction in the Bill of advanced payments should be encouraged. But, of course, even if compensation is paid, it is on a temporary basis. If permanent possession is then taken, it may cause a problem for relocation or for funding a business move.
Richard Blyth: The concern for us, as we set out in our briefing, is that we do not think it is reasonable for the owners of private land to benefit from public investment in infrastructure. I am not a lawyer so I cannot tell whether that is in the provisions of the Bill but, from a lay point of view, that is an important point.
I was in another building in the Palace of Westminster yesterday talking about the issue of land hoarding before the Select Committee on Communities and Local Government. The Royal Town Planning Institute is not really of the view that developers are necessarily guilty of as much land hoarding as is the case. There is a difficulty in situations where the most sustainable choice for the expansion of a town requires the conversion of greenfield land into housing land. That puts the owner of that land in an extremely powerful position. It would be regrettable in that situation if those owners were, as it were, to hold the city to ransom—to require very high prices for the sale of land for conversion to residential use—not only because of ideological concern but because finding money for schools, health centres, roads and other infrastructure is increasingly difficult.
What is vested in the increase in land value coming from the grant of planning permission is an extremely important possible source for trying to deal with the difficulties of the lack of infrastructure provision in relation to housing. It may assist with what Dr Blackman-Woods started with—the understandable resistance to large-scale housing development that communities feel when they find it means there is a longer queue for the doctor, it is harder to get a primary school place and there is more congestion on the roads and railways. In answer to that question, lower land prices would be useful. I would not advocate CPOs as a way of enforcing that, but they are a useful thing to have deep in the background.
Dr Blackman-Woods
Q Those were very interesting responses, but they did not actually address my question, which was, are the provisions in the Bill likely to bring more land forward for development and speed up the delivery of more homes, or are they too much at the margins to make any real difference? In which case, should we have a much bigger review of CPO to see whether we can get a better system?
Richard Asher: I believe, and the Royal Institution of Chartered Surveyors has always believed, that codification of the whole of the CPO rules, which go back to 1845 and are highly complex, would be a sensible way forward. I think the simplification of the rules for CPO would be a major step forward.
A CPO, at the end of the day, is a draconian measure. It is taking people’s land without their consent in the public interest. That means there has to be a balanced approach. I think the complexity often deters people—particularly local authorities, in my experience—from using CPO powers. It also results in a number of CPOs being refused or rejected by the courts because of the complexity of the rules that surround them. There were two Law Commission reports in the early 2000s that went some way to making recommendations that, had they been implemented, would have speeded up the process.
There are also too many routes and different procedures. One of the most recent—the development consent order—is in its infancy, but it seems to be a way of delivering compulsory purchase quickly. That is to be commended. I think there should be a rationalisation of the process.
Richard Blyth: I think it is a very difficult balancing act. I commend the fact that the Government have taken on CPO as an issue to include in the Bill and the previous Act earlier this year. It is a tricky job and a long journey. One of the difficulties with this area is that if you were to propose some kind of utopian world, it might be that the perfect is the enemy of making improvements. We support the fact that the Government have made steps on a journey. Although it may not be completed now, they are very commendable steps for the time being.
Colin Cottage: My short answer to your question is no, possibly they will not. There are more underlying problems with the system. It is lengthy. It is uncertain for all parties—both for acquiring authorities and for the people affected by it. Acquiring authorities do not know how much it is going to cost them, because the process is uncertain in that regard, and people affected by compulsory acquisition do not know how much compensation they are going to get. That then causes conflict, and it does so from the outset.
The existing system is not helpful for reaching quick solutions. In fact, in many ways it encourages people to be fighting with each other from the outset. Ultimately, that increases the uncertainty, conflict and cost. That is really the issue that we have to look to address in order to give ourselves a more streamlined system. We need to try to bring dispute resolution to the forefront of the process, rather than it being very much at the back end, where it current is.
Once conflict has set in and disputes have got hard-grounded, there is the possibility of resolution through the tribunal. In itself that is an immensely costly process. Even a relatively cheap case will set a claimant client, who may be just a private individual, back a couple of hundred thousand pounds. There is an access-to-justice problem that needs to be overcome. Those costs are also a risk for acquiring authorities as they go through the process. Those are the kind of things we need to deal with to make the process more user friendly, both for acquiring authorities that are trying to bring forward housing development and for those whose land is acquired.
Tim Smith: The provisions are sensible so far as they go, but none of them tackle any single major obstacle to the delivery of land, so there is not going to be in the Bill a silver bullet for compulsory purchase to allow housing development to come forward. There is nothing in there that is hugely significant. What is on its face the most significant proposal—the statutory enactment of the no-scheme rule—is effectively what happens anyway. That is the position that has been established by case law. It is fine so far as it goes, but it does not go very far.
John Mann
Q Should there be additional powers to encourage house building that allow planning authorities to more easily compulsorily purchase land from within the public sector?
Richard Asher: I do not think more powers are required; we need a more streamlined process that allows the authorities to have more certainty. As Colin was saying, it is the uncertainty that is preventing a lot of authorities from using compulsory powers where they might otherwise decide to use them.
There have recently been several high-profile cases in which compulsory purchase orders have been rejected by either the Secretary of State or the courts. That is because there is not the clarity about the process that there needs to be. As Colin said, the uncertainty applies to the property owners as well. The longer the process goes on—CPO is a very lengthy process—the more uncertainty it creates for the landowners as well.
There is no silver bullet, but if we had a more streamlined system with clear milestones, that would go some way to encouraging local authorities in particular, because it is quite often local authorities that do not have the experience or capacity to deal with compulsory purchase orders. For large-scale projects such as High Speed 2, there is clearly the ability and understanding to deliver that. For smaller-scale housing projects for local authorities, there is still a fear of using compulsory purchase powers.
Richard Blyth: I commend Birmingham City Council, which has developed high-level expertise in this area and puts it to good use, and it is available to other authorities to use. The contracting out and sharing of excellence across the local authority sector makes sense, rather than a very small authority having to build up its own expertise on a specific matter, which it may not use very often.
Dr Blackman-Woods
Q That is interesting in terms of good practice. Are there any other countries that do CPO better than we do and that we could look at?
Colin Cottage: The American system has some merits. At the CPA, we are looking at that at the moment. It is not perfect in all regards—no system is—but in the States, for example, projects are funded up front in a way that they are not in this country. That means that there are no public inquiries; the scheme just goes ahead, so people know they will be affected by it. Then there is an independent assessment of value in advance. Value is independently assessed, and that then forms the basis of an offer to the landowner. The landowner can challenge that, but there are cost implications if they do.
We had a chap by the name of Douglas Hummel, who came over from the International Right of Way Association, the American body that oversees compulsory purchase best practice. The results there are that in the order of 81% of land value compensation assessments are agreed immediately, and another 4% settle after a short period of time. Only the remaining 15% are then contested for any lengthy period of time. That is a much higher strike rate than we have in this country.
I am not necessarily saying that the American system is exactly the way to go, but there are examples of early dispute resolution. That is what it is in form: an independent valuation. In the UK system, the claimant puts forward his claim, and that is then contested by an acquiring authority, and you have a creation of conflict. An independent third-party valuation up front should really be considered quite carefully, and could lead to a reduction in conflict.
Richard Blyth: We are not necessarily going to look for places that do CPO better, because I think everyone would agree that it is better never to have any, but Germany has a land reorganisation system, where all the private landowners party to an urban extension of a town are put into a readjustment system, and the local authority then provides the infrastructure out of the increase in land value. It is then reapportioned.
That is quite useful. From my experience when I was in practice, it is very difficult if you are the landowner who gets the bit of land that will be the public open space, or the balancing pond or something, in a wider scheme. It can seem very unfair, but this kind of approach not only makes sure that all the infrastructure gets put in, it evens out the benefits across a clutch of landowners more fairly, so the first one does not get all the benefit. That is certainly impressive, in terms of how to ensure that infrastructure is provided in advance, so house builders can just get on and build the houses within the plots that are then made available, and are often of very different sizes.
The Minister for Housing and Planning (Gavin Barwell)
Q I want to probe a little bit more on the issue of temporary possession. You expressed a concern in relation to uncertainty about the length of time that temporary possession might last. In the Bill as drafted, acquiring authorities will have to specify the total period of time for which they are taking temporary possession, and owners—freeholders and leaseholders—can serve a countering notice placing limits on that. How are you suggesting the Bill needs to be developed further to give even greater certainty? We have tried to address that in the drafting.
Colin Cottage: There are two issues. The first is on our reading of the Bill. There is still the possibility of taking both temporary and permanent possession, and that will create uncertainty for people affected by it, because, even if there is a period of temporary possession, it may be converted at a future date to permanent possession and they will have no control over that.
Secondly, we feel that, for freehold owners, six years is too long. Three years as a maximum is better. Notwithstanding that, the ability to serve counter-notices is correct and encouraging to development. Six years is quite a long period. If a business is dispossessed of its property for six years, that is effectively almost as good as a permanent dispossession because if you are away from your premises for six years, you will have restarted and be trading somewhere else. With that restriction, we encourage and welcome the proposal on the table.
Gavin Barwell
Q Can I just clarify one further point? The concern about both temporary and permanent CPOs is that one might be used and then another, which could create uncertainty over time. You might have a site where an authority needed permanent possession of part of it because it wanted to put, say, a goods yard on the second section and wanted part-temporary and part-permanent. Is your point about starting with one and then converting to the other?
Colin Cottage: That is correct.
On the other point of clarification, we do not have an issue when there is temporary possession of land, but a permanent acquisition of rights. That can work perfectly well also, so it is not an issue. The point is just when the same piece of land may be subject to temporary and then permanent. We think it should be one or the other.
The Chair
The point of the evidence sessions today is to inform Members better for when they go through the Bill clause by clause. Now is your opportunity to leave the Committee with one thought, which Members may like to deliberate on as they progress through the Bill.
Richard Blyth: On the issue of resources for local planning authorities, the Bill has provisions relating to the support of neighbourhood planning by local planning authorities. We have completed a survey of local planning authorities in north-west England that shows that between 2010 and 2015 there was a fall of 37% in planning policy staff. These are the staff who tend to get asked not only to provide the support for neighbourhood plans, but are under a deadline of completing a local plan by the end of March 2017.
I am a bit concerned that legislation is being used in a way that may not be possible to support in terms of the resources available to local planning authorities. Plan making is not supported by any fee income whatever. Planning applications have a certain element of cost recovery, but plan making is entirely a charge on the central resources of the local authorities, which—particularly unitary authorities—are hugely stretched by requirements relating to education and social care. That is what I would like the Committee to bear in mind when considering neighbourhood plan resourcing.
Richard Asher: Clause 23 proposes to repeal part 4 of the Land Compensation Act 1961. We would oppose that repeal. Part 4 allows a claimant to make a further application up to 10 years after the land acquisition when the use of that land has changed and there has been alternative planning permission or use that was not contemplated when the land was acquired. The circumstances in which that occurs are usually when an acquiring authority has not used the land for the purpose for which it was compulsorily purchased and often there has been a change in planning policy that has allowed consent for alternative uses of the site. In those very specific circumstances, it seems appropriate for a claimant to make an application.
I think this has been brought forward because it has been used very rarely. I am not a lawyer, but the advice I have had from lawyers is that the way part 4 is worded makes it difficult for claimants to make a claim. My appeal would be for that not to be repealed but to be rewritten.
Colin Cottage: I am going to choose as my part of the Bill clause 22 and in particular proposed new section 6D(2) to (4). The concept of simplifying what is understood to be the scheme is absolutely the correct one. In a certain way, it has happened through the courts over recent years and what needs to be guarded against is complicating instead of simplifying the principle.
It is the CPA’s view that proposed new section 6D(2) to (4) is not necessary at all. The reason for that is that everything within those sections could be achieved under proposed new section 6E, where an acquiring authority can advance evidence as to the nature of a larger scheme. All that 6D(2) to (4) does is make specific reference to exactly the kind of arguments that could be put forward in 6E. When you start looking at some of the wording—for example, 6C, about relevant transport projects—rather than simplifying, it all looks horribly complicated and possibly capable of misinterpretation. That could lead to unfairness and certainly could lead to conflict in the courts, so the thing I would like Members to go away with and think about is, is 6D(2) to (4) absolutely necessary? We do not think it is.
Tim Smith: May I offer the Committee a second vote in favour of more resources for local planning authorities, but perhaps with a slightly different point of emphasis that comes from the Bill itself? The advantage of that is that it is very much in accord with the interests of both the public and private sector lawyers that the Law Society represents.
Successive proposals to change legislation have all brought about additional burdens on local planning authorities without a consequent increase in the resourcing available to them. To draw that point to one of the proposals in the Bill that is about conditions, the assumption that underlies the legislative provisions, as explained by the consultation issued by the Department for Communities and Local Government, is that there is an ongoing dialogue between applicant and planning officer about the planning application, including the suite of conditions that will accompany it if the proposal is deemed to be capable of being improved. Very often, that is not the case.
The sheer burden on planning authorities and planning officers to discharge the number of applications they have to deal with means that very little dialogue goes on between applicant and planning authority. I hope it comes across that I say that not critically of planning officers. They have an awful lot to discharge, and to expect that the solution to this problem will be a discussion between applicant and planning officer to approve pre-commencement conditions before they are imposed is to assume that there is plenty of time available to planning officers to engage in that discussion. We simply do not believe that that is the case. I give a second vote in support of what Mr Blyth said, but maybe for a slightly different reason.
The Chair
Thank you very much indeed for your time and for being excellent witnesses. We will now move on to the next panel.
Examination of Witnesses
Gavin Barwell MP, Steve Evison and Tony Thompson gave evidence.
The Chair
We will now hear oral evidence from the Department for Communities and Local Government. We have until 4.45 pm for this session, and we have been saving the best for last. Would the witness introduce himself, even though everyone knows who he is?
Gavin Barwell: It is not just me, Mr Bone. I am Gavin Barwell, the Minister for Housing and Planning.
Tony Thompson: I am Tony Thompson, DCLG planning.
The Chair
Q Shadow Minister, do you have any questions?
Gavin Barwell: Mr Bone, before we go into questions, may I make a short statement? It might be helpful for the Committee. With your permission, I would like to make some introductory remarks in relation to amendments on plan making that we will be tabling. As we heard from the Secretary of State on Second Reading, the Government agree with the central thrust of the local plans expert group recommendations. Most of those recommendations can be implemented via policy changes, but some require a change in the law. Where that is the case, we will bring forward amendments to the Bill to make those changes.
Specifically, the amendments will do four things. First, they will place beyond doubt the requirement for all local planning authorities to have a plan, but with greater freedom on the detail in those plans, providing that they address strategic priorities such as housing and infrastructure. We will do that by requiring every local planning authority to have a development plan document—the documents that collectively make up a local plan—that sets out policies to deliver the strategic priorities for the development and use of land in the area. Local planning authorities will have the flexibility to rely on the spatial development strategy, if they wish to do so. Additionally, they will be required to review those documents at intervals determined by the Secretary of State.
Secondly, the amendments will see more collaboration to address issues that require solutions across geographical boundaries, keeping plan making at the lowest level of government possible. We will do that by enabling the Secretary of State to direct two or more authorities to work together to produce a joint development plan document where that would ensure effective local planning in an area, for example, to address housing needs.
Thirdly, the amendments will see plans made at the lowest level of government, keeping things local where possible, by enabling the Secretary of State to invite a county council in a two-tier area to prepare or advise on a local plan where a district council has not done so. Fourthly, the amendments will allow us to take the opportunity to improve the accessibility of plans to local communities and others. We will do that by enabling the Secretary of State to set data standards for certain planning documents.
It has been clear from our discussions today that there is a great deal of concern about speculative development around the country. Clearly, one of the key ways in which we can deal with that is getting plans in place throughout the country. That is what we are determined to do. I will write to all members of the Committee when we table the amendments, putting in writing what I have described briefly to you today. However, I wanted people to have the chance to ask me questions about those amendments, as well as what is in the Bill.
The Chair
Thank you, Minister. That sounds like rather a lot of amendments to the Bill. I have to say to the Government that it would have been far preferable to have had the amendments before the evidence session, so that our witnesses could have been questioned about them. I have had a word with the Clerk, and we will make them available as soon as possible to all Committee members. Perhaps the Opposition have something to say about this—I call the shadow Minister.
Dr Blackman-Woods
Q Thank you, Mr Bone. I accept absolutely what the Chair has said. Nevertheless, I am very impressed by the new Minister’s reading of the Lyons report that Labour produced a couple of years ago, because it is gradually being rolled out.
I want to get a few points of clarification from the Minister about what he has just said. I totally agree about the requirement for local authorities to produce a plan. Will he put a particular time on that? Will plans have to be in place by a particular date? Furthermore, as the Minister knows, the duty to co-operate has simply not worked in practice, so the Opposition very much welcome having a direction to a council on producing a plan, because that is something that has slowed up development. However, I will stop there and get some immediate feedback from the Minister before my follow-up.
Gavin Barwell: If I may respond first to what you said, Mr Bone, I completely understand your sentiments. Obviously, we had a significant change of Ministers in July, so we wanted to take the opportunity to ensure that we could use the Bill as a vehicle for any other changes we might want to make to legislation. We are very conscious of the experience last year—or this year—with the Housing and Planning Act 2016, when a large number of Government amendments were tabled late on in the progress of the Bill. In this Bill, we wanted to ensure that any Government amendments were tabled before Committee consideration began. In an ideal world, obviously, they would have been part of the Bill by the time it was introduced, but I think people will understand why that was not possible. We have sought to ensure that people have as much time as possible to scrutinise the amendments.
In response to the question that the hon. Member for City of Durham asked, on the timing of intervention, the existing situation is slightly confused. There is no single place in statute where the duty to have a plan is clearly identified, but the Government have previously said that they will start to intervene early next year with those authorities that have not yet put planning documents in place.
In the Bill, partly we are providing a clear statutory requirement, but we are also broadening out the ways in which we intervene. At the moment, if we were to intervene next year under the existing framework, all we can do, in essence, is to intervene where a council has not met its own timetable for the process of producing a plan. Ultimately, the recourse is that we step in and produce the plan.
I do not think that is ideal, because I hope that we would all broadly agree that we are localists and want to see local plans driven from the bottom up. My ideal solution would be for every council to do that, but where they do not we must look at options where we could get a couple of councils to work together to produce one plan, or we could look at a county council potentially having a role; that might help.
There were a couple of intakes of breath, possibly from the direction of the Chair, when I mentioned county councils.
The Chair
No, no; I have no views on the matter.
Gavin Barwell: Clearly, these are powers that we do not want to use unless we absolutely have to, and hopefully the existence of the powers will help to focus minds and ensure that we get plans in place. In relation to the designation regime, in terms of the speed with which authorities are taking planning decisions, since the Government took those powers to designate I think we have only had to use them so far on three occasions. So, the existence of the powers has led to authorities raising their game and that is what we hope will be the case in this regard as well.
Dr Blackman-Woods
I suspect that we will come back to this issue in Committee, Mr Bone—
The Chair
Q Order. I assume, Minister, that these will be additional clauses at the end of the Bill.
Gavin Barwell: They will be additional clauses to the Bill, indeed.
The Chair
Q Because obviously where they come in the Bill will determine when we can debate them.
Steve Evison: I understand that they are scheduled to be taken after the clauses that are already in the Bill. So they will be taken then—
The Chair
Q Fine, because obviously we would like all Members to have as much time as possible to look at them before—
Gavin Barwell: Understood. I think we are hoping to table them tomorrow.
Dr Blackman-Woods
Q I want to ask the Minister two further questions. We have heard from a lot of the witnesses about the difficult situation we are in with regard to funding infrastructure now. Infrastructure was in the Bill—or at least bits of stuff about the National Infrastructure Commission were in the Bill and have been taken out. I would just be interested to know whether addressing all the infrastructure issues is on the Minister’s agenda.
My second question is about the consolidation and review of CPO legislation, which also seems to be coming through from a number of witnesses as an issue that really needs to be addressed if we are serious about getting enough land into the system to deliver the homes that we need.
Gavin Barwell: I will take those two issues in turn, Mr Bone. Regarding the National Infrastructure Commission, obviously that already exists in shadow form and the Treasury has confirmed that we will make it an executive agency. A charter has been published, setting out how the commission will work. So, the Government still attach huge importance to the work that it is doing; we just came to the view that we did not need to create it as a statutory body. So that can be taken forward without the need for legislation. However, it has already produced a number of reports. Its work is ongoing. So, absolutely, our commitment to that organisation, but also to the wider piece of work on making sure this country has the infrastructure it needs to support the housing we desperately want to see, remains unchanged.
In relation to the second issue about CPO, I think in the sitting we just had it was really the latter evidence session that concentrated more on the CPO powers rather than the other issues. However, I think there was a general recognition that what is in the Bill is moving things in the right direction. There were some concerns about some points of detail.
We recognise that there is an appetite out there for a more comprehensive reform of CPO law, but our view was that at this point in time, when there is not a clear consensus about what form that comprehensive reform would take, we should concentrate on the elements that clearly are not working well at the moment and try to sort them out so the system is fairer and faster, and then look over time to see whether we can build a consensus about more radical reform.
The Chair
Q Just before we move on, I think Mr Evison ought to introduce himself, and Mr Thompson should also introduce himself, formally for the record.
Steve Evison: I am Steve Evison. I am deputy director for local plans and neighbourhood plans at the Department for Communities and Local Government.
Tony Thompson: Tony Thompson, DCLG planning, deputy head of development management division.
Jim McMahon
Q We have heard a lot—I think it was raised in almost every evidence session today—on the concern about resource in our planning teams. It is not only about the number of people to administer the process and existing applications but about the quality of expertise within teams as well, and reference was made to archaeological support and conservation specialities within those teams, too. This could be a significant new burden for local authorities at a time when they are struggling to keep their heads above water. What plans do the Government have to address that concern?
Gavin Barwell: I am not sure we would necessarily accept that there are huge new burdens in the Bill itself. There are obviously requirements to support councils with neighbourhood planning, and the new burdens doctrine certainly applied when they were introduced in the Localism Act 2011. More than £13 million has been paid out since 2012 to help with this. Under the current arrangements, a council gets £5,000 for each of the first five neighbourhood areas it designates, £5,000 for each of the first five neighbourhood forums it designates and £20,000 for plans when a referendum date has been set after the plan has been through the examination process, so there is financial support there.
Without getting into all that detail, I would very much accept the overall point that the hon. Gentleman is trying to make, which is that if we want to build the housing that we desperately need in this country, we need to make sure that our planning departments are adequately resourced. The Government have recently consulted on the level of planning fees, and we will be responding very shortly to the results of that consultation. Without pre-empting that response, I can say that in a lot of the meetings I have had in the first three months in my job, people from different bits of the housing world have said contradictory things to me, but I have had an almost unanimous message from local government and developers themselves on the need to get more resourcing into our planning departments. That is clearly an issue that I am looking at.
The evidence that we heard today identified one of the real challenges we have there: if we did allow fees to rise, how do we ensure that all of that money goes into added value in our planning departments, and is not used to allow local authorities to release funds elsewhere? I entirely understand the pressures local councils are under—I was a councillor myself for 12 years before becoming an MP—but I think, in my current job, if fees were to go up, we would want to make sure that every penny of the extra money raised was going into planning departments, increasing their capacity, both in terms of numbers of people and, as you say, expertise to deal with these issues.
There is also some interesting potential in the competition pilots that the Housing and Planning Act 2016 will provide for. There is now some interest in the local government world. There are councils that are potentially interested in looking at whether they can take their planning department and offer it as a service that would cover a wider area. In some of the evidence we had earlier today, people sometimes said, “You might have a small district council that would only deal with one application of a certain type every year,” and if you were dealing at scale over a wider area, you might develop a greater expertise in some of those applications.
I think money is part of the problem, but we are also thinking, interestingly, about how we could restructure services and about how councils might work together on some of this agenda, which might also lead to some improvement.
Jim McMahon
Q A point was also raised about how the profession is perceived and whether it is really attracting talent and new people who want to come through. The suggestion was made that we should work with local universities to try to bring that through. Have the Government got any plans to raise the status of that? When it works well, it is developers that want to build a great product and planners that want to build great communities, and together they find a way of making it work, and everyone benefits from that.
Gavin Barwell: I am very interested in talking to the profession about that. You are obviously aware that we are publishing a White Paper later in the year. We are thinking about an overall strategy for how we get this country building the homes that the Prime Minister wants to see us building, and a key ingredient of that is ensuring we have enough people with the right skills, both within local councils’ planning departments, more generally in the planning world and in the construction industry—making sure that we have got enough people out there to actually build these homes. The skills agenda—ensuring we have got the right people in the right places with the right skills—is absolutely a cornerstone of the strategy that we need to build.
John Mann
Q I have two questions. The first one is on neighbourhood plans. In my area, we have more than 20 under way. The vast majority of land proposed in them or agreed in them to be allocated for housing would be classified under the previous aborted local plan—the rules were changed by the coalition—as windfall sites. My estimate is that there will be approaching 1,000 units of windfall sites just in Bassetlaw, just from those neighbourhood plans. That is a huge number. Every single one of the urban neighbourhood plans that I would like to promote, for which there is a clear community interest and a definable community that, according to my subjective judgment, would be keen and easily engaged—and there are a lot of them—would also classify entirely as windfall sites, despite the fact that Bassetlaw is required to find around 5,000 housing plots in its local plan. That is a huge number in addition.
Bearing that in mind, first, what additional resource is going to be made available to allow the creation of new neighbourhoods and the required planning work where no existing infrastructure—such as parish councils —is in place? Secondly, you rather strangely suggested that you would have county councils taking over where district councils were failing to deliver. I am not exactly sure what the core competence in planning in county councils would be for that, but will that power also apply to city regions?
Gavin Barwell: I will deal with your second question first; I would like a little clarity on your first question before I answer it.
In terms of city regions, the answer is “definitely”. Some of the devolution deals have already included an appetite to produce a strategic plan for the area. For example, in Greater Manchester—the hon. Member for Oldham West and Royton is nodding—rather than the 11 districts in the Greater Manchester area all producing their own local plans, they have made the decision to use the devolution deal to produce a strategic plan for Greater Manchester as a whole. From a Government point of view, that is extremely welcome, because it allows us to cover off all those areas with one plan.
It is not necessarily something that we would want to impose, but if, as part of the devolution process, areas have an appetite for looking at strategic planning across an area like that, there is a lot to commend it. I am looking forward to going to Greater Manchester soon to co-chair the Greater Manchester Land Commission and look at how that plan is progressing. It is potentially a very attractive idea.
John Mann
Q That is not quite the same as intervening powers.
Gavin Barwell: No. We are not taking it as an intervention power. It would be something we would look to negotiate on a case-by-case basis for each devolution deal. I stress that the county council power is not something I would anticipate using regularly, but if you look at the parts of the country in which there has been a struggle to produce local plans, it is often because you have two or three districts where land use is heavily constrained, because large amounts of the land are green belt or protected in some other shape or form. As the hon. Member for City of Durham was saying, the duty to co-operate is therefore not working and the housing need is not being reallocated around the area. Hypothetically, there may be cases in which having a county council look across the county and ask, “Where in the county could the housing need go?” might be a way to deal with it.
I say to the hon. Member for Bassetlaw: I see my job as the Minister very clearly. I do not want to be the person writing plans for local communities. As the Minister, my job is to say to local councils, “It’s your job to produce the vision and aspiration for the area.” I have one role in the process, which is to say, “I’m not going to let you duck the tough choices.” We have, as a country, to meet the need for housing in our country. As the Minister, it is my job to say, “You have to find a way to do it in your local area.” Whether that is several districts working together, county or individual local plans, or an agreement on a devo deal in Greater Manchester, I am open to different ways in which it can be done. I hope we all agree that we have not been building enough housing in this country for a long time, and that we have to find a way to make sure that we have that coverage throughout the country.
On your first question, were you asking about how we make sure we resource the groups that might produce the plans in urban areas of your constituency?
John Mann
Yes.
Gavin Barwell: Okay; understood. A £22.5 million support programme is available and has so far made more than 1,500 payments. All groups can apply for a grant of up to £9,000, but, as I represent an urban constituency, I absolutely recognise that it is more difficult to do this kind of work in more deprived areas—sometimes in more transient parts of the country as well—so additional funding and technical support is available to people in such priority areas. There is a national network of 132 neighbourhood planning champions who provide advocacy and peer-to-peer support. We recently launched an advertising campaign to promote the take-up of neighbourhood planning. That targeted a number of urban areas. I know that both you and Helen Hayes have spoken about this before, and are keen to push it. I am keen to listen to you and to think about whatever else we can do to help. I do not want the policy just to work in rural parishes, although the contribution it makes in those areas is important. It should be something for the whole country.
Steve Evison: May I just add a further point? For instances where the individual local authority has not written its plan, the 2016 Act enabled us to invite a Mayor or the combined authority to write the plan in place of the individual local authority. At the moment, that power is not available to county councils. Through the change, we are ensuring that we have the same options in two-tier areas as we do in areas with Mayors and combined authorities.
Chris Philp
Q I am pleased by the comments you made earlier about the plans to consult on increasing planning fees to get resources into local authorities. Could you lay out, for the Committee’s benefit, the proposed timetable for replying to the consultation? How will you go about enacting that when you have considered the results?
Gavin Barwell: That is a fairly simple one. The consultation has happened and we are waiting to respond to it. The realistic likelihood is that the response will come in the White Paper.
Chris Philp
Q When is the White Paper due?
Gavin Barwell: Later this year, so you will not be waiting long for an answer.
Chris Philp
Q Is your decision implemented by regulations, by a circular or by primary legislation?
Gavin Barwell: By regulations, I am told. That is something that we should be able to make progress on quickly, should we decide to.
Chris Philp
Q Okay. In the first session, we talked about giving planning authorities the ability to charge extra fees, which would be refundable if they failed to meet a certain level of service, such as the delivery of a decision by a certain time. Would that mitigate, in part at least, the concern you raised in your answer to Mr McMahon about money not seeping out through the back door?
Gavin Barwell: Clearly, that provides some protection for applicants. If they are paying more money and do not get a better service, they get a refund, but we are thinking about a wider issue, which is how to come up with a mechanism to ensure that all the money goes through to extra spending in planning departments.
For example, there might be a council department where 60% of the budget is funded through fees, and 40% comes through council tax. The council could take the extra fee income and just remove the money that was funded through council tax. Not a penny more would be spent on planning, but they would have released some money somewhere else for the local authority. Now, I can well understand their desire to do that but, in my job, I want to ensure that if more money comes in, it leads to more money being spent in total.
Chris Philp
Q The Minister is quite right to say that any extra money raised by way of fees should fund incremental extra levels of resourcing, and not simply replace money from general subsidy. To that point, do you agree that we might learn some lessons from the way in which business improvement district funding works? Extra money comes in by way of the business rate supplement but the local authority has to agree the existing level of service provision in writing in advance, and it cannot reduce that. The extra bid funding provides for incremental service levels. Could a similar approach be adopted in this situation? You would agree with the council, before they levied extra fees, that there are 30 people working in the council’s planning department and that the extra fees must lead to incremental hires on a cost basis. Would that be a way of avoiding the problem?
Gavin Barwell: There are a number of mechanisms. I do not want to get into too much detail speculating about them now, but that would certainly be a possibility. A very good point was made in previous evidence sessions that we are partly interested in the speed with which decisions are made on applications, but that is by no means the sole arbiter of how effectively a planning department is doing its job. We also want section 106 agreements to be reached speedily, planning conditions to be discharged speedily and local plans in place. There are a number of strands of work.
Chris Philp
Q I am glad that the Minister mentioned section 106 agreements. As far as I can tell from the Bill, the pre-commencement conditions get folded into the planning application. If I have read correctly, section 106 agreements will still come after planning permission. Am I right about that?
Tony Thompson: They are normally negotiated as part of the process. The expectation is that they would be agreed before the final decision notice is issued.
Chris Philp
Q But sometimes you get section 106 agreements that are not agreed or signed until after planning is granted. Sometimes it can be sequential. It is better that it is simultaneous, as you described, but sometimes, currently, it does happen sequentially.
Tony Thompson: Sometimes we encourage completion of the section 106 before the final decision is issued.
Chris Philp
Q So in that case, might you go further than simply encouraging it, as you do now, and introduce a provision in this Bill to make it a requirement? Rather than simply encouraging, why not compel, if you think it is best practice?
Tony Thompson: The expectation is that you should complete them, but there are sometimes very exceptional circumstances—perhaps a very significant development—where it is exceptionally agreed that the section 106 can be done afterwards. But in those circumstances, the expectation is that when the committee takes the decision to approve and issues that decision, there is a clear understanding of precisely what the section 106 should comprise, even though it has not actually completed the process. As I said, those are the exceptions rather than the rule. We wanted that element of flexibility, rather than a clear point that could not be exceeded.
The Chair
Q Order. I am sorry to interrupt. Would it be possible for you to write to the Committee giving us the numbers of how many are exceptional and how many are not? That would be helpful to the Committee.
Gavin Barwell: I am sure we could do that, Mr Bone.
Chris Philp
Q The Bill provides for the Secretary of State or one of his or her Ministers to proscribe certain kinds of planning conditions—to ban them from being imposed. Can you explain for the Committee’s benefit, Mr Barwell, what kinds of planning condition used currently you have it in mind to proscribe or ban using the new powers?
Gavin Barwell: My hon. Friend is quite right. Clause 7 tries to deal with two different issues. One is what we see as overuse of pre-commencement conditions; the second is taking a fairly wide-ranging power to proscribe certain types of planning conditions. I will give a brief answer and refer him somewhere where there is a lot more detail. Essentially, one thing that we want to stop is the use of conditions that essentially just replicate things that are either in the building regulations or other statements that legally oblige developers already. There are things that do not need to be restated as planning conditions because there is already a legal obligation on the developer, for example, to do them.
We published a consultation paper when we introduced the Bill that sets out in more detail how we would choose to use the regulations. The main point of reassurance that I would give the Committee is that it is clear on the face of the Bill that the power cannot be used in any way contrary to the NPPF. It cannot be used to water down protections clearly set out in the NPPF.
Chris Philp
Q But are there any specific planning conditions currently used that you have it in mind to outlaw, for illustrative purposes?
Tony Thompson: The consultation paper talks, for example, about something that requires the completion of the development. That is an issue about the certainty that could be achieved with that condition. In that particular instance, the expectation is that such a condition should not be imposed.
Chris Philp
Q Thank you. Can Mr Barwell comment on neighbourhood plans versus local plans? Are there any areas where you think it may be possible to give slightly higher weighting to neighbourhood plans than to local plans, provided that the neighbourhood plan is consistent with the overall level of housing supply predicted or required by the local plan, given that they are more local and have a bigger democratic mandate?
Gavin Barwell: It is really important that we do not see it as local plans versus neighbourhood plans. Neighbourhood plans should be consistent with the overall planning policy framework set out in the local plan. I think the issue we have at the moment—as some of our witnesses say, the Bill goes some way toward addressing it, but we also need to consider policy changes that could help—is that you either do not have a local plan, or you have one that does not have a five-year land supply. At that point, the presumption in favour of development in the NPPF applies, and that can sometimes, although not always, lead to neighbourhood plans being overridden.
That is where the issue is. I do not think it is so much about the conflict between the local plan and the neighbourhood plan; it is about when you either do not have a local plan, or you have one that has not met the five-year land supply test. There are some things in the Bill that will help a bit with this, but I think the main thing we need to look at is how that five-year land supply test is working and whether we can provide some protection to local councils where perhaps there is suddenly a problem with one site and that therefore drops off. Overnight you thought you had a five-year land supply plan but you do not. Can we provide some protection where councils think about other options available to get things back up to the required level? Can we also ensure that, at least for a period of time after neighbourhood plans are approved, they afford stronger protection so that where a parish or a community in an urban area has worked really hard to produce its neighbourhood plan and, through no fault of its own, its local council does not have a five-year land supply, it does not find that its neighbourhood plan is immediately undermined by speculative development?
Chris Philp
Q Where there is a large local authority—we were just talking about having a local plan that covers the whole of Manchester, which is a gigantic conurbation—or indeed a large London borough like our own, Croydon, a local community might have a different view on where housing can be built in their neighbourhood from that of the local authority or, in the case of Manchester, the entire metropolis. There might be a conflict between where the local plan thinks housing should be built and the local neighbourhood—the parish or whatever it might be. Provided that the neighbourhood plan has enough houses in total, would you not want to give priority to the views of the local community, particularly given that that is backed by a referendum?
Gavin Barwell: Yes. As long as the neighbourhood plan is consistent with the overall strategic planning for the area in the local plan, the neighbourhood plan can absolutely fill in that level of detail. If a local plan says a particular town within the district will take a certain level of housing growth, the neighbourhood plan can fill in what the community feels are the right sites and the required mix of housing.
Chris Philp
Q I have a final question. One of the bugbears that people developing housing will have told you about are these wretched great crested newts, which apparently are endangered in Europe. The reason they are protected in the UK is due to European regulations, which of course will cease to apply relatively shortly. When the European regulations cease to apply to the United Kingdom, will you be minded as the UK or England and Wales planning Minister to remove or loosen the restrictions that the European Union has hitherto imposed on us?
Gavin Barwell: The first thing to say is that that moment is not yet upon us. We are still within the EU and at the moment all those European laws apply. Clearly, as the Prime Minister has set out, the decision we took as a country on 23 June will lead to some short-term challenges—it will change our role in the world and we are going to build a new future for the country around that—but it also offers some opportunities to look at the laws that we have and ask, “Are these the right laws for the UK?” I am sure that all Members of the House will want to ensure that we have proper environmental protections and proper protections for endangered species, but if we look at a law and say, “Actually the way that law is working in this country is disproportionate or leading to some perverse outcomes,” there will be an opportunity to review it.
The Chair
Order. I am sorry to interrupt you, Minister. I hate to say this, but we are talking a little bit too much about the European Union, which is slightly outside the scope of the Bill. We should not really be banging on about Europe.
Gavin Barwell: Having served as your Whip for nearly two years, Mr Bone, I know you have been waiting for the chance to say that to me.
Kit Malthouse
Q Minister, you will have gathered from my line of questioning that I am concerned about protection for neighbourhood plans. I am pleased to see what is in the Bill, but part of the genesis of the Bill with the previous Minister was, I think, a case in Oakley in my constituency where an appeal was allowed five or six days before the referendum on the neighbourhood plan, notwithstanding that even at that late stage, under existing planning regulations, the plan was meant to have been taken into account. Why will this be any better?
Gavin Barwell: The honest answer is that this will not solve the problem in that very specific case, because as I understand it that appeal was determined days before the examination—
Kit Malthouse
No, before the referendum. It was post-examination.
Gavin Barwell: In that case it would help. This will make it clear in statute that some weight should be given to that emerging neighbourhood plan, because it had been through examination. So the inspector who was determining that particular appeal would be required by statute to give some weight to that emerging local plan.
What I cannot do—this is a complex area and it is important that I am entirely open with Members about the balance here—is give a guarantee. You will know that when any planning committee or inspector—or indeed I as Minister—takes decisions on planning applications, they have to look at all the material considerations. What the local plan says is an important material consideration What the relevant emerging neighbourhood plan says is an important material consideration. The views of the people who live in the area are a relevant material consideration. The national planning policy framework is a relevant consideration, and there may be other ones in particular cases. All those things have to be weighed, and I know from the cases that cross my desk every week that sometimes they are weighed in a way that would support the neighbourhood plan. You cannot guarantee that that will always be the case, but this change in the law would help in that situation because it would give some weight to an emerging plan and would ensure that, immediately a referendum is held, the plan is in place, whereas at the moment there is a period of time that you have to wait for the council to make the plan.
Kit Malthouse
Q Once this is in place, and hopefully it will go through—I do not know whether anybody has ever done any work on the consistency of decisions. Talking to colleagues, it is apparent that decisions about whether neighbourhood plans are given weight are a bit random, which is part of the problem with the rather wide definition of “giving weight.” It does not really mean anything and it seems to be at the whim of the individual inspector rather than a central policy. Once the planning inspector has had a look at the plan, it has been approved and gone through all the checking in Bristol, or wherever it goes, they should be broadly happy. That means it should be predictable that any appeal will not be allowed against the decision of what might be a different inspector, whereas in fact that is not the case. You get two different inspectors and they make different decisions.
Gavin Barwell: I would make a number of observations. I think this goes to the crux of the argument about this issue, and it is one on which we will no doubt spend a lot of time when we go through our line-by-line consideration and on Report.
Where there was a local plan that had a five-year land supply, with a neighbourhood plan beneath that, and a developer attempted a speculative application that was inconsistent with both, I would regard it as highly exceptional—you can never say “never” in planning—that such an application would be approved on appeal if it was turned down by the relevant local authority. Clearly, all the local planning policies would point against that application.
It might be useful for the hon. Gentleman to know—one of the difficulties of my job is that I never know which of my decisions have or have not been made public, so I will anonymise the place I am talking about—that I had three applications on my desk the other day, all in the same council area. The applications were affected by two different neighbourhood plans. The council concerned does not have a local plan with anything like a five-year land supply, so the presumption applies. In one case, I judged that not only was the neighbourhood plan an argument for turning down the appeal but that the application would also have eroded a key strategic gap between two settlements. There were two very strong arguments against, and in favour was the presumption for development, so I turned down the appeal.
In the other cases, although it was contrary to the neighbourhood plan, the land concerned was not green belt, prime agricultural land or anything else that you could give weight to, so I allowed the appeals on the basis of the presumption. That is what we mean when we talk about giving weight to different things. Although it is difficult for us, and I have also felt the frustration that the hon. Gentleman is expressing as a constituency MP and as a local councillor in the past—I know exactly where he is coming from—we have to recognise that the planning system is quasi-judicial. In the same way that you can take a case to a court of law and a judge will rule in a certain way and then you can appeal to the Appeal Court, which might take the same evidence and come to a different judgment, it can happen in the planning system as well. The judgment of different individuals looking at a particular case can be different.
Kit Malthouse
Q I understand that parallel, other than the fact that, obviously, in the judicial system each judgment is informed by the judgment before, whether or not it is taken by a different judge. Part of the problem with the Planning Inspectorate is that that common law aspect does not seem to take place.
Gavin Barwell: The chief executive of the Planning Inspectorate is one of the people I work with. If she were sitting here, she would say to you that one of her key objectives is to try to improve the consistency of decision making. She understands the concern.
Kit Malthouse
Q Would it be possible to find out how many appeals have been allowed—I know it is early days—in areas where there are neighbourhood plans and local plans in place?
Gavin Barwell: Where there are both?
Kit Malthouse
Yes, so we can see whether, as you say, this is exceptional or whether it is happening on a fairly regular basis.
Gavin Barwell: I will try to see whether we can find that out without disproportionate effort.
Kit Malthouse
Q That would be great. The second thing I want to ask about is the local plans. You are absolutely right about them being key. I think it is encouraging that you are going to be pushing for that in local areas. We have heard a lot of evidence today about the local plan, and the critical thing is the certainty of devising and defending a five-year land supply. There are two methods of calculation. Often you get challenged on one if you have used the other, so it might be helpful to have a single definition. I did not hear you talk, in your four things, about making five-year land supplies post-approval more defensible from a highly paid QC. Are you planning on including anything on that in the Bill?
Gavin Barwell: Those are issues more for policy than for legislation, but my hon. Friend the Member for North West Hampshire has correctly put his finger on one of the problems. It is not about not just the five-year land supply but how to objectively assess need, by which I mean how we calculate how many homes we need to build in an area. One of my key jobs over the next few months is to see whether we can find ways of taking conflict out of these processes. Can we find an objective way of calculating that need figure and identifying five-year land supply that gets rid of costly legal battles—a lot of money is currently spent on them—arguing the point with the developer who is trying to overturn a local plan? We need to have a process that attracts much more confidence, so that people know clearly where they stand.
The second issue is the one I have already alluded to, which is that if there is a change in the status of a particular site and a council therefore dips below the five-year land supply, we want to give them a window of grace where they can adjust to that, rather than them literally coming in to work one morning and finding that they are now open to speculative development, when they were not the day before.
Kit Malthouse
Q The final question from me is on whether you might consider including within the Bill a general anti-abuse clause on five-year land supply and the situation we outlined, where you can have a developer who gets permission on one site, fails to develop and challenges on another site on the basis that the five-year land supply has lapsed.
Gavin Barwell
We can certainly talk about those issues. There is a fundamental thing that we need to address in the White Paper. I am sure that one of the difficulties we will have as a Committee is that the Bill is going through Committee at the same time as we are developing some of the policy responses. I will do my best within the constraints I am under to try to keep Members informed about where we are going in policy terms and what we believe needs to be done through legislation and what can be done through changes in policy.
One of the fundamental questions that we have to apply ourselves to is that the changes that the Government have made to the planning system over the past six years have had a profound effect on the number of applications that have been granted. In the year to 30 June, our planning system in England granted permission for 277,000 homes. That is the highest figure since we started collecting the data in 2007, at the height of the boom before the great crash. The planning system in most parts of the country is granting lots of planning permissions, but there is an increasing gap—people cannot live in a planning permission—between the number of planning permissions that we are getting out of the system and the number of homes actually being built. We need to understand the cause of that gap.
My view, a few months into the job, is that there are a number of things here. Planning conditions are a factor, which is why we are trying to deal with them in the Bill, but I would not say to the Committee that they are the sole or even the dominant factor. There are issues around our utility companies and the time it takes them sometimes to put in the basic infrastructure on site that the developer needs before they start building. There are some real issues about developer behaviour, essentially.
I am interested in looking at policy vehicles that can ensure we speed up the rate at which applications get built out. One of the things that I am saying to the Home Builders Federation is, “You give me all the things that you say are slowing you up, and I will look into them. If I think there is a problem, I will deal with the problem, but once I have got through your list, I expect you to raise your game.” I am definitely interested in looking into that area, and perhaps as the Bill goes on we can talk about what the vehicles might be.
Kit Malthouse
That is encouraging. It is certainly the case that it is possible to make more money holding land and trading it than it is developing it. The other area to look at, I suggest, is developer finance, because none of them have got any balance sheets that they can use to expand their operations beyond where they are. I am grateful for the answers, Minister.
Helen Hayes
Q I have two quick questions. Can you address the concerns that Carole Reilly raised about neighbourhood forums and their lack of accountability, lack of infrastructure and resources and lack of clear identifiability to local communities? There were also issues raised—I have raised them on a number of occasions—about the intensity of resource you need genuinely to engage a diverse community in a deprived area.
Gavin Barwell: This is a real challenge and I am very open to talk to the hon. Lady, to the hon. Member for Oldham West and Royton, and to others who have an interest in this matter about how we go about doing things. As I said, there is extra funding in deprived areas that a rural parish would not get. There are also people who have expertise in this area and who can engage with groups.
There is a democratic issue; I do not think we can get around that. Clearly, if someone is in a part of the country where there are parish councils, there is an automatic accountability and legitimacy that comes from that. Although we can now have parish councils in Greater London, I think there is only one in the whole of Greater London; we do not tend to have that kind of infrastructure. So there is a challenge in making sure that the plans that come forward have that legitimacy and are genuinely owned by the whole of the community, and not by a particular group of people who have a certain interest.
If we look at the average turnout in referendums on neighbourhood plans, it is running at about a third, which is actually not that different from the kind of turnout that we would see generally in local elections. That is quite an encouraging average figure in terms of trying to ensure that there is some legitimacy—I think the hon. Lady would regard her local council as legitimate on that kind of turnout—but there is certainly more that we can look to do and I am very happy to have a dialogue with her about that.
Helen Hayes
Q Thank you. I have a second question. The issue of permitted development rights continues to be a cause of concern. I appreciate that it is not within the scope of the Bill, but it has a direct bearing on neighbourhood planning, so it is essentially a way in which development can take place that is not allowed for in a local plan and that has not been discussed by the local community, who have not been consulted about it. It is under the radar, without anybody having any say about it at all. I wonder whether the Minister has any plans at all to address the concerns that have been raised about permitted development rights.
Gavin Barwell: I would say two things there. There is some limited scope for local say. The main one that the hon. Lady is probably talking about is the office to “ressy”, or residential, permitted development. There you do have to give a prior approval application to the council. The council can only look at certain limited things such as flooding; there is a list of four or five things that can be looked at. It is not a full planning application, but there is at least a little bit there.
I tried to touch on this in my response to the Second Reading debate, so I understand some of the concerns that people have. You do not get the affordable housing contribution, for example, that you would get if there was a full planning application. However, I think it is demonstrably the case that permitted development has delivered additional homes that we desperately need.
I went on Friday night to see one in central Croydon. It is a building called Green Dragon House that was essentially an old office building with very low levels of occupancy and it has been converted into 119 homes. In my community, those homes are desperately needed and I am not sure—in fact, I am pretty confident that if we had left things as they were, many of the buildings that have been converted would not have come forward. Now, they are not all as good quality as Green Dragon House, so I am perfectly prepared to accept that there are challenges here.
I suppose the point I tried to make in response to Opposition Members on Second Reading is that if you genuinely believe that there is a really urgent need to get us building more housing, you have to look at some measures that you would not take if you did not feel that urgency was there. That is the argument about PD. However, the one thing that this Bill does on it is uncontroversial, I would have thought, which is to say, “Let’s make sure we get good data.” At the moment, all we know is the number of applications that have gone in, but not how many homes they are delivering. So, the one measure in this Bill on this issue is trying to ensure that we collect data on how many units the policy is delivering and then, as we debate our different opinions on this policy, we can at least be informed by what the output is.
Helen Hayes
Q So you do not have any further plans at the moment, either by way of additions or amendments to this Bill, or within the White Paper—?
Gavin Barwell: No. There is an issue that I think we have consulted on, which is around the office to “ressy” thing and whether you should be able to do it potentially through demolition rather than just refurb, but there are no plans to amend this Bill further to change the PD rules.
Jim McMahon
Q During your introduction, you said that part of the reason why the amendments were so late in coming was actually change of positions and looking at the Bill with a fresh pair of eyes, and that was the result. Given the tone of the contribution, I take that at face value, and I appreciate the comments that you have made.
When you were looking at the Bill and at opportunities to enhance it further, did you consider the roles of listed buildings in that? In my constituency, we have a very old mill—apparently one of the oldest mills with a concrete floor, if anyone is interested in those kinds of things—but it is a blight on the local community. Last year, there was the death of an 18-year-old, who fell through the floors, because the mill is so unsafe. The fire service, the council and the police have all put a notice on the building, because it is absolutely liable to cause another death very soon, but its heritage value for the experts in London, who do not have to live in its shadow, maintains that it should stay there. It is scuppering development on the site—a £248 million tram system runs alongside it, with a station there ready for development. Did you consider that the process is stifling the development of what should be attractive places to live?
Gavin Barwell: The simple answer to the hon. Gentleman’s question is that that is not an issue that I have looked at in particular, but if he wants to write to me to set out his concerns, I would be very happy to take that forward. He knows his community and what the issues are, better than anyone who is adjudicating on such things from a distance. I am very happy to help him to get that issue resolved.
Craig Tracey (North Warwickshire) (Con)
Q I want to pick up very quickly on something that Mr Thomson from the CPRE talked about, which was about councils having to chip away at the green belt to deliver the provision. He mentioned that often they do not feel that they are getting the backing of the Secretary of State. I am aware that several local authorities in my area have jointly commissioned a report to grade areas of green belt, based on the extent to which they make all five functions in the NPPF. They are basically suggesting that some areas do not have as much value as others, and they are planning to use the report to recommend parcels that can be used to facilitate building. So there still seems to be a lot of confusion in local councils about how the green belt rules are applied. Is there any provision in the Bill to strengthen that? The former Housing Minister was great and came to my constituency to explain to one of the councils how things needed to be implemented, but it still does not seem to be filtering through, and I am guessing that that could be the case in a lot of councils.
Gavin Barwell: At the moment, there is nothing in the Bill that touches directly on the green belt. What I would say to my hon. Friend is that the national planning policy framework is very clear on this. Basically, there are two issues: one is how an authority deals with an application for development on the green belt. Essentially, with the exception of certain very limited uses, which are defined in the NPPF, development is inappropriate in the green belt. The second issue and the one to which he is alluding, I think, is when you want to change the boundaries of your green belt. The NPPF has a very clear presumption against doing that, too. It should only happen in exceptional circumstances, and one of the features of green belt should be its permanence.
What we asked local authorities to do—again, I think it is very important that these decisions should in most cases be made locally—is to assess objectively the need for housing in their area. When they have done that, they need to look at how they can meet that need. It is certainly possible that there are authorities for whom meeting that need without making use of prime agricultural land, green belt or some other kind of protected land is not possible. It is then a judgment for them about what they should do. They might decide, “We will release some land and make some changes to our local plan in order to meet the need.” However, they might decide, “Actually, we don’t believe that it will be possible to meet this level of need without having too detrimental an effect on these particular sites, therefore we will provide for less than our level of need,” and when an authority does that—the hon. Member for City of Durham has now left the room—it should certainly be having conversations with neighbouring authorities about whether they are able, through the duty to co-operate, to take up some of the slack.
The inspector’s job is to test whether authorities have applied that policy correctly. There are examples of local plans in which an inspector has accepted an authority’s judgment that it is not able to meet the full level of need for those kinds of reasons, and for others the inspector has said, “Actually, no, there are other things that you could have looked at, but didn’t look at. You need to go back and look at them.” Some people think that there is an automatic presumption that the green belt can never be a justification for not meeting the full level of need, but that is not true; nor is it true that it automatically is either, if you see what I mean. The test is there in the NPPF, but the circumstances have to be exceptional.
Craig Tracey
Q As a quick follow-on question—where a constituency like mine comes under pressure, because we are a rural constituency surrounded by big areas we are having to co-operate with, what are the mechanisms for challenging their assessed need? That is where the calculation figures are often seen to be well away from what we would expect.
Gavin Barwell: One of the things I was alluding to for Mr Malthouse was whether we can look at a more objective method of saying what need is. The starting point, it seems to me, is the household projection figures. One of the concerns people raise with that is that we have taken the decision we took on 23 June, so migration levels may well be lower. It is worth saying that what the projection numbers do is look at past trends and roll forward, so they are already assuming a reduction in the level of migration over the time period and they are updated every few years.
The starting point, as I said, is those household projection figures. Then if I were running a council, I would be looking at what the market is telling me. In other words, what is the ratio of house prices to salaries in my area? If that ratio is very high, we have not been building enough houses; so we need to do a bit more than the household projects would suggest, if we are going to try to get that ratio down. To me, those are the two things you would be looking at, but if what is being said is that it would be helpful to have more certainty about what those numbers are, and to have more confidence in them, I agree with that and that is something we are looking to do.
Mrs Villiers
Q Obviously the key concern that has been raised by some of the campaign groups, such as the Campaign to Protect Rural England, is that local authorities are being driven to propose green belt development because they cannot meet their targets and they cannot make the duty to co-operate work. So in order to avoid the risk of having their local plan rejected altogether they are putting forward green-belt or greenfield developments. What is the incentive on a local authority—on the other end of a duty to co-operate —to accept somebody else’s housing targets? I do not see how the duty to co-operate can work effectively if you are saying that local authorities have to somehow persuade their neighbours to accept their housing needs. I would be grateful if you could explain how the duty to co-operate is supposed to work.
Gavin Barwell: There are some local authorities that genuinely want to go for growth, and therefore they are almost happy to take extra housing because they have made a strategic choice that that is what they want to do in their district. Those are probably not the kinds of authorities in the areas my right hon. Friend and I represent or the areas immediately around them, where land is very much at a premium. One of the things we need to look at in the White Paper is what more we can do to provide those kinds of incentives. To me, a lot of that is about much more explicit links between housing numbers and infrastructure. I actually want to get down to the level of having very bespoke conversations with individual authorities saying, “If you were going to take an extra x thousand in your area, what does it need to make it work? What would make it politically acceptable?” and then trying to have those kinds of bespoke deals.
There is also a real role for all of us to provide some political leadership here. What many people imagine is that if we do not build the homes, the people will not come. Actually, evidence in London in recent years shows that that is not true; they do come, and you end up with people living in beds in sheds at the end of gardens and things like that. We do not want to live in a city like that, so Mr Tracey is absolutely right—we need to have confidence in the numbers and we need to believe that they are genuinely what is going to happen in a given area. But then there is a moral duty on us to make sure that we provide housing, once we have confidence in the figures, to meet that level of need.
Sometimes that is going to involve difficult choices. I have tried to avoid being parochial so far, but I will just give a Croydon example. In my constituency—it has been really interesting to see over the nearly 20 years that I have been involved in local politics—essentially an explicit choice has been made to build very high in the centre of Croydon in order to protect our green belt. If someone had come to Croydon 20 years ago and said, “We are going to have seven or eight buildings over 40 storeys in the town centre,” they would have been laughed out of town. Confronted with either not meeting the housing need we have—people can see the housing need all around them—or building on our remaining parks or green belt, people have actually said that this is a better option. It is near where the infrastructure is—the East Croydon station route into London and all those kinds of things.
In some parts of the country there are no easy ways of doing this. It is a question of having an honest debate about what the options are. I certainly believe that in parts of London higher density is part of the solution. Even that is not an easy sell to people because it does change the character of an area, but we need to think—what are the alternatives?
The Chair
Order. I am afraid that time has beaten us in this session as well. I thank the Minister and his team for the full and frank engagement with the Committee, which is really appreciated.
Ordered, That further consideration be now adjourned. —(Jackie Doyle-Price.)