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House of Commons Hansard
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Public Bill Committees
27 October 2016

Savings (Government Contributions) Bill (Third sitting)

The Committee consisted of the following Members:

Chairs: † Mr Christopher Chope, Sir Roger Gale, Albert Owen, Phil Wilson

† Barclay, Stephen (Lord Commissioner of Her Majesty's Treasury)

† Blackford, Ian (Ross, Skye and Lochaber) (SNP)

Cartlidge, James (South Suffolk) (Con)

† Caulfield, Maria (Lewes) (Con)

† Dowd, Peter (Bootle) (Lab)

† Ellison, Jane (Financial Secretary to the Treasury)

† Frazer, Lucy (South East Cambridgeshire) (Con)

Hepburn, Mr Stephen (Jarrow) (Lab)

† Hopkins, Kelvin (Luton North) (Lab)

† Howell, John (Henley) (Con)

Long Bailey, Rebecca (Salford and Eccles) (Lab)

† Merriman, Huw (Bexhill and Battle) (Con)

Onn, Melanie (Great Grimsby) (Lab)

† Quin, Jeremy (Horsham) (Con)

† Rutley, David (Macclesfield) (Con)

† Smith, Jeff (Manchester, Withington) (Lab)

† Whiteford, Dr Eilidh (Banff and Buchan) (SNP)

† Williams, Craig (Cardiff North) (Con)

Katy Stout, Committee Clerk

† attended the Committee

Public Bill Committee

Thursday 27 October 2016

(Morning)

[Mr Christopher Chope in the Chair]

Savings (Government Contributions) Bill

Clause 1

Government contributions to Lifetime ISAs

Question proposed, That the clause stand part of the Bill.

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With this it will be convenient to discuss the following:

New clause 1—Impact review: automatic enrolment and pensions savings

“(1) HMRC must review the impact of Lifetime ISAs on workplace pensions automatic enrolment and pensions savings within one year of this Act coming into force and every year thereafter.

(2) The conclusions of the review must be made publicly available and laid before each House of Parliament.”

This new clause would place a duty on HMRC to review annually the impact of Lifetime ISAs on automatic enrolment.

New clause 2—Lifetime ISAs: Advice for applicants

“(1) The Secretary of State must make provision by regulations for all applicants for a Lifetime ISA to have independent financial advice regarding the decision to save in a Lifetime ISA or through a pension made available to them.

(2) Any applicant that opts in to the services offered under subsection (1) shall be given a signed declaration by that service provider outlining the financial advice that applicant has received.

(3) Any provider of a Lifetime ISA must confirm whether the applicant—

(a) intends to use the Lifetime ISA for the purposes of paragraph 7 (1)(b) of Schedule 1,

(b) has a signed declaration of financial advice under subsection (2),

(c) is enrolled on a workplace pension scheme or is self-employed.

(4) Where the provider determines that the applicant is—

(a) self-employed and does not participate in a pension scheme,

(b) not enrolled on a workplace pension scheme,

(c) does not intend to use the Lifetime ISA for the purposes of paragraph 7(1)(b) of Schedule 1, or

(d) does not have a signed declaration of financial advice under subsection (2)

the provider must provide information to the applicant about the independent financial advice available to them under subsection (1).”

This new clause would place a duty on the Secretary of State to make regulations that ensure all applicants for a Lifetime ISA receive independent financial advice.

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The Opposition’s new clauses 1 and 2 are designed to address the concern expressed across the board, including by the pensions industry, the trade union movement, Select Committees of this House and the Office for Budget Responsibility, that the lifetime individual savings account poses a threat to traditional pension savings, and most significantly to auto-enrolment.

Auto-enrolment has been a success story in the pensions environment. As Members will recall, witnesses who gave evidence to the Committee had one or two things to say about LISAs. For example, some made it clear that there is concern about the LISA interfering with the roll-out of auto-enrolment. Mr Davies suggested that although few object to the LISA, there is concern about

“where it fits within the overall landscape of provision for retirement”.––[Official Report, Savings (Government Contributions) Public Bill Committee, 25 October 2016; c. 38, Q65.]

Given that, it is incumbent on us to ensure that any reasonable concerns are assuaged. The cost to the taxpayer, certainly in the longer term, was also of concern, given that for a standard taxpayer, the LISA is tax-free going in and going out, so to speak. Mr Davies of Union Pension Services certainly alluded to that.

New clause 1 would require Her Majesty’s Revenue and Customs to conduct a review of the impact of the lifetime ISA on automatic enrolment in workplace pensions and pension savings within one year of the Act coming into force and every year thereafter. The conclusions of that review would have to be made publicly available and laid before both Houses of Parliament.

It is patently obviously that automatic enrolment, which was brought in by the Labour Government, is an outstanding initiative and is starting to achieve the objectives set for it as the years pass by. It has been rolled out to large businesses and is well on its way into the small business sector. That is clearly good news, as I am sure the Minister will acknowledge. I appreciate that neither she nor other Committee members are partisan on that matter. However, not all employees will be auto-enrolled until February 2018, and the increase in minimum contributions to 8% will not be completed until April 2019. Drop-out is relatively low among younger people. We do not want anything in the meantime to jeopardise the maximum possible number of people enrolling, or to provide an incentive to opt out; that is not an unreasonable position to take.

Auto-enrolment is one of the few success stories in the pension landscape, and is widely acknowledged in all sectors to be right. I fear that the Government’s policy—intentionally or not; I do not point the finger—may put the wider landscape in jeopardy and be a dangerous path, and the history of pensions suggests that that will be recognised only in years to come. By that time, it will be too late to turn back. As my hon. Friend the Member for Salford and Eccles highlighted on Second Reading, the OBR agrees with that assessment, and has reported that the Government’s pensions and savings policies have

“shifted incentives in a way that makes pensions saving less attractive—particularly for higher earners—and non-pension savings more attractive—often in ways that can most readily be taken up by the same higher earners.”

The Minister may respond that this is not an either/or situation, but of course she would say that. I respectfully suggest that that demonstrates a potential lack of appreciation that many people out there cannot afford to pay into both a pension and a LISA. In fact, many can do neither. The Work and Pensions Committee has warned the Government that

“Opting out of AE to save for retirement in a LISA will leave people worse off. Government messages on this issue have been mixed. While the DWP has been very clear that the LISA is not a pension product, the Treasury has proffered an alternative view.”

Those are not my words, but those of the Work and Pensions Committee. That simply affirms that there is confusion over the matter. At the very least, that is the perception abroad, and as some people say, perception is reality. If we have learned one thing over the years, it is that confusion in the market simply puts people off.

Moreover, we heard in evidence from Ms Lowe of the Women’s Budget Group that making a LISA

“available to everyone does not make it gender-neutral”—[Official Report, Savings (Government Contributions) Public Bill Committee, 25 October 2016; c. 51, Q96.]

She said that account had to be taken of people’s capacity to access the LISA, and in that regard, many women would be left out. That is a salutary observation.

Although Mr Bennie from Scottish Friendly supported the LISA, he recognised that people’s experience of pensions was sometime bad, which could be a problem for take up. In response to the hon. Member for Ross, Skye and Lochaber, he said that he recognised that for some, given their experience, pensions are a broken product. He also indicated that he saw LISAs as being complementary to a main pension, as did Ms Knight of the Tax Incentivised Saving Association, hence the Opposition’s caution about pushing on with this product without appropriate review.

It is fair to say that messing about with the pension system over the years has left people sceptical and blaming politicians for the mess. I worry that that we will be seen as messing about again, even with the best intentions. Our proposals today are a form of inoculation against the problem. The Women Against State Pension Inequality campaign is an example of a pension issue, albeit a public pension one, coming back to haunt us—or rather, it is the women concerned who are coming back to haunt us. That has shown the scepticism about pensions in general.

The Work and Pensions Committee recommended that the Government conduct urgent research into any effect of LISA on pension savings through auto-enrolment. That is another sensible bipartisan approach to the issue, which, political banter apart, is worthy of consideration by the Government. After all, the wisdom of Conservative Members on that Committee—and on this Committee—is always welcome on these matters.

Our new clause 1 would require the Government to carry out the review every year after the passing of this Bill. I hope that the Minister will consider accepting the new clause, or at least take it away for consideration.

The purpose of new clause 2 is to ensure that those opening a lifetime ISA for retirement savings receive independent financial advice. Advice is a crucial in purchasing any expensive product, be it a car, house, university education, or holiday. The advice would be offered automatically through an opt-in service, and the service provider would sign a declaration outlining the advice that the applicant received. Any provider would have to confirm the status of the applicant, whether they were enrolled in a workplace pension scheme, whether they had signed a declaration of financial advice, and whether they plan to use the lifetime ISA for a first-time residential purchase. The Opposition believe that it is only right that anyone considering a lifetime ISA is given the opportunity to see its benefits, compared with those of other schemes on the market.

The new clause would: ensure that people make an informed choice, with the benefit of independent financial advice; create parity in the quality of advice for all those entering the scheme; and offer much-needed oversight and education about the benefits of the scheme. The purchase of a pension is perhaps one of the most important purchases a person makes. That issue has exercised the minds of many people in Government, the regulatory sector and the product sector. The history of mis-selling has left a long, deep shadow across the financial product sector, and we must take that into account. It is fair to say that all witnesses made this point, either directly or indirectly.

There was more consensus among the witnesses on the issue of complexity than a first assessment would suggest. Hon. Members may recall me asking Mr McPhail of Hargreaves Lansdown about his assertion that the LISA was a misguided policy. His response was that the product was not complicated—the point that the hon. Member for Bexhill and Battle made to Mr Lewis—but that the pension landscape was complex. Mr McPhail said:

“The product itself is reasonably simple…but you have dropped it…into a complicated landscape.”—[Official Report, Savings (Government Contributions) Public Bill Committee, 25 October 2016; c. 20, Q40.]

I repeat that he never said that the product was complicated. The assertion from the hon. Member for Bexhill and Battle that

“this morning we heard from some of the representatives from the financial services industry, who seemed to think that this was a complex product”

was seized on by Mr Lewis, who called that view “palpable balderdash”. However, Mr McPhail did not say that. What Mr Lewis said, which is more than reasonable, is that people need to understand what they are buying. He said of LISA:

“All products are complicated; all products can be explained…They have to be explained and they have to be communicated. They will take time.”

That reinforces the reason for supporting the new clause, and the need for independent robust advice, which, as Mr Lewis advised, should be given in

“nice, easy and real terminology and not jargon”.

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I am grateful to the hon. Gentleman for reading those passages. I was also struck by Mr Lewis’s comment that

“When you contrast these products with the state pension, they are pretty easy products to understand.”

Would the hon. Gentleman like to comment on that section of Mr Lewis’s assessment?

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Yes, I am happy to. The point that we were discussing was that while the products may or may not be complicated, the environment and landscape in which they are being sold is complicated, as there are all sorts of other financial products out there. That was the issue.

The primary point is that if people are to make a decision about something so important in their lives, and especially a pension, they need as much simple advice as they can get, with

“nice, easy and real terminology and not jargon”.

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It may seem a strange analogy, but there are lots of laws passed by this House that could be quite complicated; that does not stop us passing more laws that may help people, though. I find the defeatist attitude somewhat baffling.

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I genuinely do not think that ours is a defeatist attitude. The responsibility of this House when we pass complicated laws, which we do all the time, is to make clear what they mean. I would rather we spent more time in here dealing with these matters, teasing and winkling out the issues, and being clear about what we mean. I would rather spend 10 hours in here dealing with an issue and sorting it out than one hour in here and 10 hours out there trying to unravel it.

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I understand the hon. Gentleman’s point. However, I agree with my hon. Friend the Member for Bexhill and Battle in his previous comments. In the Hansard of the witness hearings, Martin Lewis is very clear:

“The argument that they are too complicated is just a complete load of palpable balderdash.”––[Official Report, Savings (Government Contributions) Public Bill Committee, 25 October 2016; c. 56-7, Q100.]

Those are not my words but his. He went on to say that there might be sections of the industry that think that they have products that could compete with those in the Bill, but if there is a product that is right, we should be getting on with introducing it.

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There is a danger of an “angels dancing on a pinhead” argument here. Mr Lewis said that an assertion had been made—an assertion attributed to Mr McPhail—that this was a complicated product, and that has clouded the issue. I am trying to get clarity that that was not what was said. It is not the product per se that is complicated; it is the landscape in which it is delivered. There are so many products that people may get confused, depending on how much information and simple terminology they are provided with. All I am trying to do is pin this issue down.

If, having been auto-enrolled in a pension, someone opts out of it to go into a LISA, it is important that they have all the boxes ticked and understand exactly what they are doing. I say that only because of the point I made earlier. There have been so many scams and so much mis-selling in the past that when we introduce a product that some see, rightly or wrongly, as being in direct competition with a pension, we must ensure that people make their decision in full knowledge. We are trying to tie independent financial advice into the legislation. The Government may or may not accept that; that is a matter for them. I am trying to put the idea into the mix and get discussion on it.

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I absolutely agree with what my hon. Friend is saying and support the new clauses. We have had a recent history of appalling mis-selling, with billions having to be paid back to people who were mis-sold savings instruments and schemes over the years. Even though this scheme may be simple in itself, it could have serious knock-on effects on other parts of the industry. He is right in what he has been saying.

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I am grateful to my hon. Friend for bringing that in. I reaffirm the point: we have a responsibility and duty to ensure that we nail this issue down. The last thing any of us wants is, in three, four, five or six years’ time, to have to unravel and unpick a problem we could have avoided in the first place. That is our intention. The new clause is not a spoiler; it is a genuine attempt to get the issue into the open.

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Should we not reflect on what experts in the industry have said? Zurich said there is a danger that the LISA

“would derail auto-enrolment and reverse”

the progress made

“in encouraging…people to save”

for later life. We heard evidence on Tuesday that nobody would be better off coming out of auto-enrolment and investing in a LISA.

Specifically on mis-selling, do we not run the risk of ending up with financial institutions marketing the LISA in a way that is to its detriment? I cannot put it any other way: that is creating the circumstances for mis-selling, and having shaped the Bill in this way, the Government are responsible for that.

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I thank the hon. Gentleman for his intervention. That reinforces the concern out there. If his point was completely off the wall, I would say so, but it is not. Millions of people out there have completely lost confidence in much of the sector. That is partly why, as was alluded to by the witnesses, if people are saving, they are often doing so in cash ISAs—because they are not sure about stocks and shares and other things. They therefore put their savings in products that give them a return of 0%, 0.1%, 0.2%, 0.3%, or 1% if they are lucky. We must create an environment in which people save and feel confident that they will get a reasonable return on their investment, especially if that investment is for their later years. That is perfectly reasonable.

This is not a question of protecting people from themselves. We are saying, “If you want to buy a product, look it over, and we will set up mechanisms to enable that to happen.” In a sense, it is for the Government to decide whether they believe that what they are doing is enough.

The Work and Pensions Committee said:

“We recommend the Government develop a communications campaign that highlights the differences between the LISA and workplace pensions. It should make it clear that the LISA is not a pension and that, for employees who have been automatically enrolled, any decision to opt-out is likely to result in a worse outcome for their retirement.”

It is not just the Labour party, the Scottish Nationalists or anyone else saying that; a bipartisan Committee that includes Government Members is saying it. That is why I said that there is a little wisdom there that we should tap into.

Opposition Members are concerned that the Government are not doing enough to ensure that people who are considering opening a LISA are fully aware of all the pensions savings options available to them. New clause 2 would require the Government to legislate to ensure that all applicants for a lifetime ISA had to prove that they had received independent financial advice if they intended to use the ISA for retirement savings. If they had not received such advice, the provider of the lifetime ISA would have to direct them to independent financial advice.

With so many bodies from across numerous industries outlining concerns that there is a risk that people will save into a lifetime ISA when it is not the most beneficial retirement savings option, I cannot see a reasonable argument against ensuring that applicants receive independent financial advice before opening an account. To paraphrase Mr Lewis, it seems palpably sensible to take that approach. I hope that the Government give careful consideration to our proposal and take on board the concerns that not only I but many people have expressed.

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The Scottish National party welcomes the attempts by Peter Dowd, the hon. Member for Bootle, to ask the UK Government—

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Order. You refer to hon. Members not by their name but by their constituency. He is the hon. Member for Bootle.

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Indeed. The hon. Member for Bootle is right to ask the UK Government to keep a watchful eye on the impact of automatic enrolment. However, that does not go far enough. The LISA must be paused. It is a gimmick that has not been thought through. The impact assessment states:

“The government could have done nothing more, relying on existing tax incentives to promote saving among younger people and working families on low incomes. However, this would have failed to provide the necessary level of support for those who are unable to use existing support to plan and save for their future.”

What a dismal statement. Where is the vision? Where is the hope? Where is the idea of a Government who can architect a pensions savings system that encourages young people to save? Should we not bring forward next year’s review of auto-enrolment and make sure that we have the tax incentives and the structure right? That is what we should be doing, not introducing this hopeless gimmick that risks mis-selling to young people in this country. This Government stand charged with creating circumstances that could lead to mis-selling through this product. They should be utterly ashamed of themselves.

The SNP has tabled amendments that ask for the LISA to be halted until workplace savings are enhanced through automatic enrolment, which is the right way to proceed. Stakeholders have picked apart the UK Government’s main arguments for the LISA, including that it will be good for self-employed individuals who are left out of automatic enrolment. The British Bankers Association said that

“two thirds of the self-employed are already ineligible for the lifetime ISA.”––[Official Report, Savings (Government Contributions) Public Bill Committee, 25 October 2016; c. 18, Q34.]

One of the Government’s major arguments has been shown to be fatally flawed. Why do we not reform auto-enrolment to make sure that the self-employed are included? That is the right way to progress.

At present, as a savings model, the LISA only supports the wealthy—those with the ability to save. New clause 2 is a welcome move to promote financial advice. We welcome this amendment. However, an SNP new clause that will be tabled ahead of the next stage will go further and explicitly demand that the advice extends to workplace savings and automatic enrolment and targets young people. We encourage Labour colleagues, and indeed the Government, to join us in supporting that new clause.

In its oral evidence to the Committee, the Association of British Insurers raised concerns about the communication of the difference between automatic enrolment and the LISA. There is a real concern that individuals could switch out of automatic enrolment and into LISA, and that

“they could lose up to a third once they get to the age of 60.”––[Official Report, Savings (Government Contributions) Public Bill Committee, 25 October 2016; c. 5, Q1.]

The ABI also said that

“there needs to be a strong signpost towards the guidance services.”––[Official Report, Savings (Government Contributions) Public Bill Committee, 25 October 2016; c. 9, Q14.]

Individuals who choose to invest in a LISA, rather than investing through automatic enrolment, could lose a third of their retirement benefits.

Carol Knight of the Tax Incentivised Savings Association said:

“We should be looking at retirement saving as a whole and helping people to put different types of assets towards funding later life.”––[Official Report, Savings (Government Contributions) Public Bill Committee, 25 October 2016; c. 14, Q26.]

It is clear that stakeholders are concerned about the confusion that may arrive for savers with the introduction of the LISA. When he gave evidence to the Committee, Tom McPhail from Hargreaves Lansdown said forcefully:

“We are in danger of sending ISAs down the same road as pensions, making them more and more complicated.”––[Official Report, Savings (Government Contributions) Public Bill Committee, 25 October 2016; c. 15, Q29.]

He advised of savers that it is

“really important that we support them with good information”.––[Official Report, Savings (Government Contributions) Public Bill Committee, 25 October 2016; c. 16, Q31.]

As well as the potential distractions from auto-enrolment pension schemes, the LISA represents a major missed opportunity to increase the attractiveness of auto-enrolment. In a submission to the Work and Pensions Committee, the union Prospect argues:

“If Government wants to subsidise younger workers saving towards a deposit on a first home it could just as easily do so through changing the rules relating to the taxation of pension schemes as through introducing the Lifetime ISA. Such an approach would greatly increase the attractiveness of automatic enrolment pension schemes.”

The submission goes on to say:

“Anecdotally, Prospect members who opt out of automatic enrolment pension schemes sometimes report they do so in order to be able to save towards a deposit for a first home. Research shows a majority of young people would be more inclined to save into a pension scheme or would save more if they could use their pension pot to fund a deposit for a first home.”

Prospect also points out:

“In New Zealand the rules of the Kiwisaver allow the withdrawal of savings to purchase a first home”,

and research from the Pensions Policy Institute shows that early access and borrowing against funds for the purpose of home purchases are permitted in other countries.

David Wren of the BBA pointed out that the LISA will be the sixth type of ISA on the market. He said:

“The hybrid nature of the product—between saving for a house and saving long term for retirement—also adds considerable complexity for people who are choosing where to save and what to do.”––[Official Report, Savings (Government Contributions) Public Bill Committee, 25 October 2016; c. 17, Q32.]

He also noted that

“complexity is definitely the enemy of success in getting people to save.”––[Official Report, Savings (Government Contributions) Public Bill Committee, 25 October 2016; c. 20, Q39.]

That is why robust financial advice that takes account of an individual’s other savings and pension pots is essential. We do not accept that no alternatives to the LISA were considered—the impact assessment for the Bill spells that out clearly. The Government must look at other options. Surely the delay that we are calling for would give the space for a pause.

Since its introduction in 2012, auto-enrolment has been a success, with more than 6.7 million workers successfully enrolled by September 2016 and lower opt-out rates and higher employer compliance than was initially expected. That success has been built on the back of a broad political consensus and thorough planning ahead of its introduction. As the National Audit Office report on auto-enrolment pointed out, the policy faces greater operational risk as it is rolled out to small employers. The phasing in of increases to minimum contribution levels also presents challenges. A separate NAO report identified a potential risk if individual interventions

“are managed separately without adequate consideration of their impact on the overall objective of increasing retirement incomes.”

That warning could hardly fit the circumstances of the introduction of the LISA any better.

The Government’s main priority should be to build on the success of auto-enrolment to date and deal with the upcoming challenges that have been identified. That work should include strategies for addressing issues with ineligibility for auto-enrolment and for increasing contributions under auto-enrolment. That is particularly important for workers aged under 40, because most will be worse off in retirement as a result of the introduction of the new state pension. Prospect also said that

“the Government is in danger of losing focus on what should be its priority with the introduction of the Lifetime ISA.”

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I rise to support new clauses 1 and 2, along with everything said by my hon. Friend the Member for Bootle and much of what was said by the hon. Member for Ross, Skye and Lochaber. It would be sensible of the Government to accept the new clauses. They are practical and logical, and it is perfectly reasonable that we want a review of the effect of the LISA on auto-enrolment and pensions savings and that anybody choosing to buy a LISA is given proper advice. None of that would undermine the Government’s legislation; it would actually improve it considerably and give the necessary protections.

I have considerable doubts about the wisdom of going ahead with lifetime ISAs. The whole pensions and savings world has been far too complicated for far too long. Some 25 or 30 years ago, I reached the age at which I had sufficient income to start to save so that I would have extra income in my later years—I must say that I am now benefiting from that, in spite of having a very generous parliamentary pension as well. At that time it was extremely complicated. There were tax-exempt special savings accounts, personal equity plans, ISAs, national savings certificates and all sorts of tax-free savings instruments, but interestingly they were all perfectly acceptable for people on higher rate tax like me. I have always been concerned about that.

Mr Bryn Davies—an old friend whom I used to work with at the TUC—is a very able consultant and adviser on such matters, and he advised us the other day that there is a future pensions problem for people who are poor and cannot afford to save. Tax incentives are pointless for such people because many of them do not pay any tax at all. What is the point of a tax-free savings instrument for people who do not pay any tax? It does not benefit them at all. Government subsidies to the better-off—to people like me—are misplaced. Any subsidies should help the less well-off and the poor to have a decent life in old age, rather than reward the fortunate people like me, who are sufficiently wealthy or who have an income sufficient to invest in all these tax-free schemes.

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Does the hon. Gentleman agree that one of the LISA’s major flaws is that the only people who will be able take full advantage of it are people who have a spare £20,000 a year to save? That is an attractive tax break for very wealthy people.

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The hon. Lady is absolutely right. During the era of TESSAs, PEPs, ISAs and national savings certificates, the wealthy, if they were wise, would have bought all of them for themselves, their partners and their children—anyone within the family for whom they could buy them—every year. They would build up a massive portfolio of tax-free savings over the years and be extremely well off in old age, especially if the savings in those four schemes would otherwise have been taxed at the higher rate. Instead of incentivising poor people to save, the schemes were actually tax-free bunce for the wealthy. I had some TESSAs, PEPs and ISAs, and I still have some national savings certificates today, so I am sitting pretty, but I am comfortably off. I am more concerned about people who are poor, and I am certainly not poor. I am not wealthy, but I am not poor. Mr Davies made the point well.

That is a frontal assault on such instruments, but the concern about damaging auto-enrolment is also serious. I strongly support auto-enrolment, which has been a great success so far. I wanted to go much further, and I have said in the Commons on more than one occasion that I believe we should have a compulsory universal earnings-related savings system for everyone, including the self-employed, so that we all make sure that we save for our old age. I do not stand back from that proposal, which I intend to continue advocating as a step beyond auto-enrolment. Auto-enrolment is a major step forward, but it is still not a defined-benefit scheme and it is still subject to stock market fluctuations, whereas a state system could have guaranteed defined benefits.

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The hon. Gentleman makes an important point about self-employed people. We heard in the evidence sessions that LISAs would help a significant element of the self-employed. The Government are carrying out a review of how auto-enrolment could support the self-employed in future. Does he think it is important to think about not just nirvana and what might be, but how we can tangibly help people now? This product will make a difference to a big section of the self-employed.

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I agree with the hon. Gentleman that there is a serious problem for the self-employed. There is a lot of bogus self-employment, with employers forcing their employees into self-employment. If we counted only genuine self-employment, there would be far fewer self-employed people. We could then make sure that people are paying into the system through taxes and national insurance contributions. They could also be enrolled in a compulsory state system of earnings-related savings. I agree that there is a problem with the self-employed and I am glad that the Government are reviewing the problem, but we have to go far further into that than we are discussing today.

What my hon. Friend the Member for Bootle said is sensible, practical and reasonable. The Government should just accept his argument and say, “Of course, we want a review of the impact on the automatic enrolment and pension savings and we want to have proper advice for people applying for lifetime ISAs.”

When I was investing in my middle years—rather than my later years, as I am now—people gave me advice. People came to my door and talked about their savings schemes. I did not understand what they were talking about, even though I used to teach statistics and am mathematically qualified and could understand logic. It became clear to me that the people coming to my door did not understand the instruments either. They were selling something because they had been told to sell and they were on commission: “Just sell it, get the signature on the bit of paper, come away and we will give you 5%.” When they did not understand, I thought it was even more terrifying. No wonder we had mis-selling on a gigantic sale. Billions are now having to be paid back, and no doubt billions have been lost for ever and will never be paid back because many people died before compensation was thought about.

We have a problem. We have to make things automatic, simpler, with a state-managed system involved. We also need to ensure that, if there is any kind of subsidy for pensions in old age, it should go to the poor and not to the better-off like me. The gulf between rich and poor in our country has widened. We have a serious problem of poverty in old age and we have to deal with that through the state. I hope to persuade my own party to adopt a policy of that kind, as and when we become the next Government.

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It is a pleasure to be here with you and the Committee, Mr Chope. I thank everybody for their attention at the very good witness sessions on Tuesday, when we heard from some very interesting people who were good enough to give up their time to come and inform our deliberations.

I will say a general word around lifetime ISAs when speaking to clause 1 and will come on to new clause 2. However, I should say first that there is much about the spirit of the new clauses and amendments proposed with which I agree, as I think we all would. When I come to speak on them, it will be to demonstrate that they are unnecessary or would not work as intended. I do understand the spirit in which they are tabled. I also note, as we all have, that there are areas of significant consensus across the Committee, particularly around auto-enrolment, the success it has been and the wish to see it go from strength to strength.

I will come to that in a moment, but I will first introduce the broader product. We believe the lifetime ISA is a positive addition to the savings landscape. That was a view substantiated by a number of the experts we heard from on Tuesday. It will support younger people to save for a first home and to supplement their long-term savings by topping up individual contributions with a generous 25% Government bonus of up to £1,000 a year.

In 2015, the Government held a full consultation on pension tax relief, which is the background to how we came to the lifetime ISA. The outcome was clear: there was at that time no consensus for fundamental reform to the pension tax system. In some ways, some of the comments that we have heard in speeches this morning reflect the fact that there is still a desire among some people for a fundamental redrawing of the landscape, but the reality is that that is a debate for another time and place. We are in Committee to deal with this Bill, but I acknowledge that that other debate is ongoing.

Throughout the course of the consultation, young people indicated that they wanted more ways to save flexibly for the future. At Budget 2016, therefore, the Government announced the introduction of the lifetime ISA, which has been welcomed by insurers, ISA providers and other industry experts, as we heard on Tuesday. Although some people had some concerns, I think it is fair to say that there was a broad degree of welcome from people across the sector. They see the lifetime ISA as a valuable new vehicle to help young people save.

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Does not the Minister accept that all the generous bonus will do, in effect, is compensate those who have gone into the LISA for the fact that, in contrast to a pension where people are putting pre-tax income in, the money is coming out of post-tax income, so on a zero-sum basis it comes out more or less the same? Anyone going into a pension can expect to get employer contributions, so anyone saving in a pension will be better off. For the life of me, I cannot understand, given the cross-party consensus about supporting and strengthening auto-enrolment, why on earth she wants to muddy the water so that people might be seduced into this product when they should be investing in a pension.

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This perhaps goes to the nub of the disagreement we have in Committee: the Government do not see it as an either/or. The hon. Gentleman is very much positing the product versus pensions as an either/or, but we have been quite clear that the lifetime ISA is a complement, and we heard that from witnesses. I also think that, while acknowledging the consensus to protect auto-enrolment, and indeed to encourage people to save with the pension products appropriate for them, to jump from that to the assumption that the lifetime ISA is, by its nature, going to undermine everything else is a jump too far. I would reject some of his language. Later, I will come on to some points to support my assertion.

The clause itself sets out the defining characteristic of the lifetime ISA: a Government bonus will be paid by Her Majesty’s Revenue and Customs where a qualifying addition is made to a lifetime ISA in a relevant period. “Lifetime ISA”, “qualifying addition” and “relevant period” will be defined in regulations, which will also provide that the Government bonus will be 25% of all qualifying additions made to the account. I confirm that those new regulations will be brought to the House for debate ahead of the launch of the new account in April 2017. Further detail on the lifetime ISA is set out in schedule 1.

New clause 1 seeks to place a requirement on the Government to conduct an annual review of whether the lifetime ISA has had any impact on workplace pensions, and in particular automatic enrolment, as we heard from the shadow Minister. The Government are absolutely committed to automatic enrolment, which will help 10 million people to newly save or to save more into pensions by 2018.

The lifetime ISA is designed to be a complement to automatic enrolment and workplace pensions, not a replacement. We are clear about that language, and we will continue to be. The aim of the lifetime ISA is to support younger people to purchase a first home and to supplement their long-term savings, not to choose between the two. The reality is that some of the youngest people who take out this product will be able to take the money out at 60, but that will not be their retirement age. We are talking about people saving for a later phase of their life, perhaps the last phase of their working life, or to do something in their later years that they always wished to do but did not have the chance to do when they were younger.

The Government’s different policies on employer contributions to a pension and a lifetime ISA reflect all that, which goes to the point made in an intervention. Employers have a statutory obligation to contribute towards pensions under automatic enrolment. They also have a direct incentive to do so through relief on national insurance contributions. The cost of that to the Exchequer was £13.8 billion in 2014-15, which is a powerful demonstration of the Government’s commitment to retain strong incentives in the system. Neither is the case with the lifetime ISA.

We have already conducted an impact assessment, published alongside the Bill, and we clearly do not expect that people will opt out of their workplace pension in order to pay into a lifetime ISA instead. The help to buy ISA already provides a 25% bonus to support people to purchase a first home, but the launch of that did not lead to a surge in opt-outs. I accept that it is a slightly different product, with a different timescale. Nevertheless, there is real-world evidence that it did not lead to that.

The shadow Minister said that the Government are not doing enough to make people aware of pension savings available to them, but that is not right. The Government automatically enrol eligible employees in pensions. That is more than just making them aware; we are getting them to pay into a pension. As I say, there is considerable consensus across the House about the reasons we all support that. The idea of the lifetime ISA is that it is not an alternative but a top-up.

The opt-out rate for automatic enrolment is still lower than the Government expected, and is currently at 9%. The overall programme assumption for opt-out is 15%, reduced from the original estimate of 28%, which I think we all welcome. The Government estimate was not quite right at first and I am happy that we are undershooting. People—particularly young people—are sticking with auto-enrolment and not opting out at the rates Members thought they might.

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I agree with the Minister about us all being satisfied by the opt-out rate being lower than anticipated. The real challenge will come in the next few years, as rates going into the auto-enrolment scheme increase. That is why it is important we keep the primary focus on auto-enrolment, to ensure that as contribution levels increase, we do not inadvertently see an increase in the opt-out rate, with people perhaps switching to the LISA.

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I entirely accept the hon. Gentleman’s broad point. He assumes the worst will happen, whereas I have good evidence to show that that is not a reasonable assumption. I will go on to show that we are keeping these things under constant review across the broad piece of pensions and savings.

The lifetime ISA, like all Government policies, will be kept under review to ensure that it is meeting its objectives. We already publish a wide range of details about the take-up of Government-supported savings accounts such as ISAs, and we intend to take a similar approach with the lifetime ISA. Similarly, national statistics and other information such as the Office for National Statistics wealth and assets survey set out information on the savings held across a range of different household types. It is quite granular information.

As the hon. Member for Ross, Skye and Lochaber said earlier, we have a legislative commitment to review certain aspects of auto-enrolment in 2017. In addition, we have the discretion to conduct wider review activity. We recognise that broader challenges and questions have been raised by stakeholders in connection with the review—for example, questions of inclusion and adequacy. It is important we look at the scope and the right sequencing of review activity. The Government are currently scoping the review and hope to update further on that by the end of the year. Of course, the debate we are having in this Committee will inform those deliberations. Because of that, we consider publishing an additional review of the scheme’s operation to be unnecessary in terms of its interaction with the product we are discussing in this clause. I therefore urge the hon. Member for Bootle not to press new clause 1.

New clause 2 seeks that the Government provide in regulations that independent financial advice is made available to all customers making an application for a lifetime ISA. I think we all agree with the thrust of the debate on the new clause. We have all seen victims of mis-selling and want to ensure that our constituents go into every financial decision with the best information available. The Government want people to have the information they need to make important financial decisions and we will achieve that by providing clear factual information on gov.uk, as well as working with the Money Advice Service and its successor to ensure they make appropriate and impartial information available.

New clause 2 would require all individuals to take out financial advice before they open a lifetime ISA. I want to demonstrate that that is not practical, however well intentioned it is. Financial advice is relatively expensive. The point has been made that we do not want to disadvantage younger people and basic rate taxpayers who want to take advantage of this product. Our impact assessment and all the work that we have done indicate that the vast majority of people who take up the product will be basic rate taxpayers.

Research carried out by Unbiased shows that the average cost of financial advice for customers is £150 per hour and the average advice process takes around eight hours. That totals £1,200. Even if we assume that that is the upper end of estimates, it is still £200 more than the maximum annual bonus that an individual could receive from the lifetime ISA. That would create a significant barrier to all but the wealthiest individuals opening a lifetime ISA, and I know that that is the opposite of the Opposition’s intent.

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If there was a simple state office where people could obtain such advice from an objective, publicly employed adviser rather than a private financial adviser, would that not be an efficient and relatively cheap way of providing good, reliable advice?

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I think we would all agree on the broad point about wanting people to have access to financial advice whatever their income, but we are dealing with this Bill. The Government will consult and take soundings on the successor to the Money Advice Service and the other advice services that will be brought together, and I am sure that we will have a good debate about that in due course. The hon. Gentleman may wish to contribute those broader thoughts to that debate.

Let me turn to the current regulatory framework around the LISA. It is worth saying that it is not the Government’s role to set that regulatory framework. The hon. Member for Luton North talked about the different regulatory landscape at the time when he was being sold products—not particularly well, apparently. We are all thankful that that landscape has changed greatly since those days, and rightly so, but it is the role of the independent Financial Conduct Authority to regulate the providers of ISAs, and it will likewise set the appropriate framework for the lifetime ISA.

The FCA will consult on the regulatory regime for the lifetime ISA throughout the autumn and will, as is its ordinary remit, ensure that providers are transparent to customers about the products that they are offering and those products are sold with suitable safeguards in place. We heard in some of the evidence sessions on Tuesday about how the industry wants to get advice right. Everyone has been scarred by what has happened in years past. As I said to the hon. Gentleman, we will consult later this year on the scope of the new financial guidance body, as a complement to the industry’s advice. We heard people such as Martin Lewis talk about the common-sense advice that people need to hear, and that is also an important part of the landscape from which people can seek guidance. I am sure that Martin Lewis and others will contribute to the debate about the new advice services.

I reassure the hon. Member for Bootle that information about the lifetime ISA will be available so that potential customers can make informed choices about which financial products to use. We want people to understand what the right choices are for them, but it would not be appropriate for the Government to require advice to be provided, as that would create a significant financial barrier to individuals accessing the lifetime ISA. It is the independent FCA’s role, not the Government’s, to set the regulatory framework for ISAs. For those reasons—not because I disagree with the spirit of his new clause but because I do not think it would work in practice—I encourage him to withdraw new clause 2.

I conclude my remarks about clause 1 by saying that the lifetime ISA will benefit many young people by supporting them to save flexibly for the long term. It is designed to complement the pension system, not replace it. The clause makes provision for the fundamental feature of the lifetime ISA: the Government bonus. We think that is a positive product for young people, and we do not want them to lose out on, for example, a year’s worth of saving and the compound interest on that because of the delay that has been called for. I therefore ask Committee members to support clause 1.

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I welcome some of the Minister’s comments on both new clauses, and the spirit in which she made them. In the spirit of trying to move on, we will not push new clause 1 to a Division. We acknowledge that the Minister has said that there will be reviews of some fashion, though maybe not statutory reviews; we will take that away and consider it, and may come back to the question of reviews. Our concerns in relation to auto-enrolment can be appreciated. It has been a good product, to use the jargon, and we do not want to lose that. However, again, in the spirit of moving on, we will pull away from the new clause.

We will push new clause 2, on independent financial advice, to a vote, because this House has to lay down a marker when it comes to people’s future and making a significant investment in a product. The lifetime ISA is a significant investment, whatever way we look it. Importantly, it is also a significant investment by taxpayers; that has to be taken into account. If somebody wants a lifetime ISA, and rightly understands that the Government will put a lump sum towards it, it is not unreasonable for us to say that we expect that person to take independent financial advice.

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I absolutely support what my hon. Friend says, but is it not important to have that commitment in the Bill, rather than just rely on the apparent sympathy of the Government?

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It is, and that is why I am trying to push that message home. To some extent, we need to draw a line in the sand.

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Given that some of the debate on new clause 2 has been about the concern that the product would be insufficiently attractive to people on lower pay, the practical nature—not the spirit—of what the hon. Gentleman proposes would essentially be regressive, and make the product less attractive to those on lower incomes, whom we wish to attract.

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I completely understand that. The Bill is full of principles: we want people to save and to have pensions, to have the Government cough up towards that, and the individual to put money in personally. There is a whole series of things that we say must be part of the process in principle. For us, there is also the principle at stake of seeking independent financial advice. That is not unreasonable.

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The hon. Gentleman makes a really important point about independent financial advice. The Minister also made an important point about the cost of that advice. From the evidence we heard, it came across strongly to me that for most people on moderate incomes, this product is a lot less advantageous than putting the money into a pension and attracting employers’ contributions. That is why independent advice is so important, and why this product is not very attractive for anybody on a normal salary.

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That is a reasonable point to make. The question is: what is the reasonableness of the argument? The Minister, again perfectly reasonably, makes her point. I do not necessarily accept the figures that she gave, but I take at face value the point that she makes. On balance, people have found that not taking independent advice on such matters was a little costly in the short term, but in the long term, if they did not get the right advice, it was even more costly. That bill has to be picked up by someone, and we are not talking about a few pounds—we are talking about people’s lives in the future, and it is difficult to put a price on that. We recognise the points that the Minister made, and the spirit in which she made them, but as a matter of principle, we want to press new clause 2 to a Division, just to get it into the mix.

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May I explain the procedure? We will not vote on new clauses yet. We will vote on them after we have finished discussing the amendments and the rest of the Bill. At that stage, it will be open to anyone to press new clause 1 to a vote, if they want to, and then we can have a Division on it, if that is the will of the Committee, and similarly for new clause 2. I have made a note that the hon. Member for Bootle wishes to press new clause 2 to a Division at the appropriate time.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Schedule 1

Lifetime ISAs: further provision

Question proposed, That the schedule be the First schedule to the Bill.

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With this it will be convenient to discuss new clause 3—First-time residential purchase: Research and impact assessment

‘(1) Within one year of this Act coming into force the Secretary of State must conduct a review into the potential impact of provisions within paragraph 7(1)(b) of Schedule 1 on house prices in the UK.

(2) The findings of the review must be made publicly available and laid before each House of Parliament.’

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New clause 3 would require the Government to conduct a review within a year of the Act coming into force of the potential impact of the lifetime ISA on house prices in the United Kingdom. The review must be made publicly available and laid before both Houses of Parliament. The Opposition recognise that many people want to own their own home. However, we are concerned that the Government’s housing policy will only inflate house prices further. We have concerns that the LISA will make things even more difficult in a housing environment that is already strained because of the limited number of houses being built nationwide, not to mention the huge cost of housing, particularly in London and the south-east; the average figure is £250,000.

Evidence to the Committee on Tuesday was cautionary. Martin Lewis from MoneySavingExpert.com, while acknowledging the potential popularity of the LISA, flagged up its potential impact on the housing market. He highlighted that

“Unintended consequences are possible—the lifetime ISA might pump the housing market, which is a concern”.––[Official Report, Savings (Government Contributions) Public Bill Committee, 25 October 2016; c. 50, Q95.]

The Institute for Fiscal Studies, referring to the Office for Budget Responsibility, made a similar point.

I do not want to over-emphasise the point, but it is worth noting—and perhaps assessing, as suggested in the new clause—the effect of the LISA on house prices overall. It is worrying that fewer homes were built in the last Parliament than under any previous peacetime Government since the 1920s. LISA may help—if that is the right word—to overheat a market that is already short of capacity. The Government’s priority should be to try to mitigate that, not to add to the problem. I do not think that is an unreasonable point to make.

The fact is that people are increasingly chasing a product in a market that has low supply levels. It so happens that the product is a house. The facts speak for themselves. Since I sat on the Housing and Planning Bill Committee around this time last year—it may well have been in this very room—the housing market has remained pretty tight, with supply remaining low. The national planning policy framework, which the Government were warned would create confusion, has done so. That all adds to the broth and is creating problems. By now, according to the plan, and the former Housing Minister, the right hon. Member for Great Yarmouth (Brandon Lewis), there have should been a better housing supply. Alas, he was wrong.

The lifetime ISA, which will in effect replace the help to buy ISA in due course, provides a Government bonus that can be used towards a deposit on a house—if one can be found. If I remember correctly, concern was expressed by a witness that the help to buy ISA had been poorly articulated, and that the current one was potentially being poorly articulated as well. There was the impression that an ISA could be used for a deposit. Of course, there was a smorgasbord of consternation, anger, disappointment, frustration and bewilderment when many young people found that that was not the case. The problem is that if people are encouraged to borrow money for a house in a tight market, the more house prices rises, the bigger mortgages they need, and so on. The fact that the Government are helping to do that is not helpful. The problem is exacerbated. When the growth of mortgage lending outpaces the supply of housing, prices just keep rising and rising, making it increasingly difficult for people to access the housing market at a reasonable rate. There is no doubt about that.

The Government have identified the right problem but are coming up with the wrong solution. We need to build more houses. That is the only way to solve the housing crisis. New products are fine, as far as they go. Lots of people welcome the LISA—I cannot argue against that—and many people do not, but the comprehensive solution is to deal with the continuing housing supply problem. It is worth noting that the house shortage is simply a physical manifestation of the shortage of skills in the construction sector in general and the housing market in particular.

The Government are almost two years through their five-year housing plan, not counting the previous five years, and we are still falling badly behind on targets. The question is whether the proposals really deal with the substantive issue of supply, and the answer is no. In that context, it is important to look at whether this policy will have an impact on house prices. If it will, in addition to there being a lack of action on housing policy in general, that is a concern. It is legitimate to ask the Government to review the impact on the housing market of this product.

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I rise to support my hon. Friend’s new clause. Many of us have long been concerned about the massive rise in house prices. I will give a simple example. When I bought my first house in Luton in 1969, house prices were three times average earnings. Now in Luton, they are 12 times average earnings.

Millions of people are seeing the possibility of home ownership disappearing. Owner-occupation is in decline; it is becoming a smaller sector, and we are seeing an opening up of major social divisions between owner-occupiers and renters. For owner-occupiers, equity will cascade down the generations, and their children and grandchildren will stay in the owner-occupied sector because they will inherit the equity. Those who are not in the sector and do not have sufficient income will remain outside the sector, as will successive generations after them—unless they win the lottery or become extremely wealthy for some other reason, but that will apply to only a small number. The great majority of people will find it very difficult to become owner-occupiers if they do not have equity handed down by their forebears.

Adding extra cash to help people who are already likely to be in a position to buy their own home will simply increase house prices further and take home ownership even further away from those who do not have equity and are unlikely to be able to afford a home. We have to see some action by Government over time at least to stabilise house prices, so that more people can get into owner-occupation, and so that those who aspire to be a homeowner have a realistic prospect of becoming one.

I support what my hon. Friend said. We have to build many more houses. The only way to stabilise house prices is to raise supply, not increase demand, which would just push house prices up. It is not the price of houses that is increasing, but the price of the land on which they are built. The cost of building a house does not increase by that amount; it is the land on which it is built. There is a case for land value taxation and doing something about the price of land.

It is a mad world. In 1969, I thought becoming an owner-occupier was a bit of an adventure, but I could afford it on one income—mine, which was not massively high, because I was a trade union research officer. Nevertheless, I could afford to buy a three-bedroom house with a garage and gardens back and front—a nice, typically British home, which we might all aspire to. If I were trying to buy the same house now, with the same sort of income, in the same town, I would have great difficulty. On my generous parliamentary salary, I might stand a better chance, but not on the salary that I had at the time, so I think my hon. Friend the Member for Bootle is absolutely right, and I support his new clause 3.

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The Committee is enjoying the autobiographical journey to Luton North through the ages.

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I used to be a teacher—I taught economics years ago—and I always found that using examples kept the class alive and entertained them. It also helped them to understand the points that I was making.

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To that end, he has succeeded magnificently; everyone looks thoroughly engaged, which is not always the case in Bill Committees, it is fair to say.

Before I speak about schedule 1 and new clause 3, I have a couple of points to make. I do not intend to go into a wide discussion about house building. We all agree that we need to build more houses. Earlier this month, the Government unveiled a £5 billion package at the Conservative conference, which will make substantial progress and build on the progress already made.

The help to buy ISA is often unfairly criticised. In a way, those myths then transfer across to criticism of the lifetime ISA, so it is worth putting on the record that the take-up of the help to buy ISA has been high; there have been more than 650,000 of them to date. Where people have used help to buy to buy a home, that home has been worth on average £167,250, which is well below the scheme’s property price cap of £250,000, or £450,000 in London. That underlines the fact that we expect the majority of those who use the lifetime ISA to be basic rate taxpayers.

I will turn to schedule 1 and then make a point or two about new clause 3, because I hope to show the shadow Minister that I can respond to his substantive concern. The schedule sets out some of the detailed rules of the lifetime ISA. It is a long schedule, so I propose to provide only an overview.

Regulations made under paragraph 11 of the schedule will set out who is eligible for a lifetime ISA by specifying who “the investor” is. We intend to provide in regulation that a new account may be opened only by a person aged under 40, and that payments to a lifetime ISA may only be made until an account holder reaches 50. That is to reflect the fact that the scheme, as discussed, is designed to support younger people in getting into the habit of saving. Draft regulations have already been published for consultation, and they will be considered and debated by the House before the product is launched.

Paragraphs 7 and 8 of schedule 1 concern withdrawals. Account holders will be able to withdraw sums from their lifetime ISA at any time; that is consistent with normal ISA rules. Such withdrawals will not be subject to a withdrawal charge in the circumstances set out in paragraph 7, which include account holders purchasing their first home after saving in a lifetime ISA for 12 months or longer, or reaching a specified age, which regulations will set at 60.

Regulations will also set out detailed rules for the processes to be followed when a withdrawal is made to buy a first home. We intend to consult with industry experts to ensure that those regulations are simple to apply and that they meet our objectives for the scheme. Officials have been working hard and openly with industry experts for some months to ensure a product that works well. There will also not be a withdrawal charge when an account holder dies or becomes terminally ill, or when savings are transferred to another lifetime ISA.

Paragraph 8 concerns the charge that will apply for other withdrawals. That charge will be set by regulations at 25% of the withdrawn amount. That is designed to return the Government bonus and any growth or interest on it, and also apply a small additional charge. That reflects the fact that people should commit to saving into the lifetime ISA for the intended purposes rather than speculatively. In most cases charges will be deducted at the time of withdrawal by the account provider and paid monthly to HMRC.

Paragraphs 3 and 9 provide that regulations will set out the administrative detail of how account providers will claim lifetime ISA bonuses and how providers should pay to HMRC the withdrawal charges that they deduct, along with details of the associated information requirements. There will also be provision for account holders to ask for an HMRC consideration, and to appeal where their bonus claim is refused or they believe a withdrawal charge has wrongly been made, in line with other products of this sort.

Paragraphs 5, 12 and 16 set out penalties for material inaccuracies in information provided to HMRC or non-compliance with information requirements. We believe that those penalties are proportionate, as they are in line with those already in operation for similar failures in relation to tax matters. The general safeguards that operate for tax penalties will apply, including the right to appeal and the right for a penalty not to be applied where there is a reasonable excuse for a failure to provide information.

Paragraph 17 provides for a penalty when a person dishonestly seeks to obtain a bonus they are not entitled to or avoid a withdrawal charge. That penalty is intended to cover serious cases of dishonesty, not innocent errors. Again, individuals will have the right to appeal any such penalty. Finally, schedule 1 sets out withdrawal rules and compliance arrangements, which are necessary to ensure that the lifetime ISA operates effectively and is targeted appropriately.

New clause 3, tabled by the hon. Member for Bootle, requests that the Government assess the impact of the lifetime ISA on house prices in the UK within the first year of the Act coming into force. The Government are committed to supporting people to get on to the housing ladder. I have mentioned some of the products that have come out to support that, as well as the substantial investment in the housing market—particularly the house building market. The lifetime ISA will support younger savers. As we have already discussed, the Government will provide a generous 25% bonus on contributions up to £4,000 a year, which can be used to purchase a first-time home up to a value of £450,000. The lifetime ISA targets a small sector of first-time buyers.

Determining whether the lifetime ISA has had any impact on UK house prices in its first year will be complex. The independent Office for Budget Responsibility has said that savings products that support people to get on to the housing ladder, such as the lifetime ISA, could cause an increase in house prices, but it noted that that effect was highly uncertain, and its predicted impact of 0.3% by 2020-21 is much smaller than overall house price movements. The Committee may be interested to know that the average absolute monthly change in house prices over the past three years has been 0.6%, and that monthly increase is significantly larger than the impact forecast by the OBR for this product.

As we all know, many factors impact house prices, including changes in household incomes, interest rates, mortgage availability and the rate of house building—the supply side. Changes in those factors will have a much greater impact on house prices than the lifetime ISA. In truth, separating out the different causes of changes to house prices is challenging, which will make it difficult to assess the impact of the lifetime ISA in isolation, particularly after just a year of it coming into effect. However, like all policies, the Government will keep the lifetime ISA under review. The Government already publish a monthly UK house price index, which people can use to look at changes in average house prices.

We think that the new clause is unnecessary, and I have outlined the practical problems in coming to the definitive picture that the hon. Member for Bootle seeks. I therefore urge him not to press the new clause. In conclusion, schedule 1 sets out some of the important and detailed rules for how the lifetime ISA will operate, and I therefore ask Committee members to support it.

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To start with, I telegraph the fact that we will not pursue this matter. However, it is important to get on the record the fact that where Government policy has an effect on house prices, it is important—given the current state of the housing market, which is overheating due to lack of supply—to have that logged and noted, however marginal the effect appears to be. I am not suggesting that the Minister has brushed that point aside, but it is our responsibility to bring that effect to account.

The Minister quoted some figures on seeking advice for particular products, but 0.3% inflation on housing is a fair old amount of money. If that is 100,000 transactions a year of around £750, that is the best part of £70 million-odd a year added to house prices by this policy alone. If we are to introduce policies that add to an already overheating sector, it is important that as a nation, a Government and a Parliament, we take into account their impact. That additional £750 for that person is £750 not going somewhere else in their budget. I only say that to try to get that issue into the smorgasbord of issues that we have to take into account. I will not be pursuing the matter.

Question put and agreed to.

Schedule 1 accordingly agreed to.

Clause 2

Government contributions to Help-to-Save accounts

Question proposed, That the clause stand part of the Bill.

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The Prime Minister has set out the Government’s mission to build a country that truly works for everyone, not just the privileged few. Clause 2 introduces the Help to Save product, and we can be extremely encouraged that it speaks directly to that mission. Evidence from the Joseph Rowntree Foundation cited in the House of Commons Library briefing paper shows that between a quarter and a third of households have said that they are unable to make regular savings for rainy days. According to the family resources survey, a household with less than £25,000 in income is twice as likely to have no savings as a family with more than £50,000. We heard from the debt charity StepChange in its written submissions—this point was amplified in its contribution to the evidence session—that access to a £1,000 savings pot can reduce the likelihood of the average family falling into debt by almost half.

Faced with that evidence—and the evidence we all know from our constituency surgeries of people living fragile financial lives, where one thing going wrong can tip them into debt or other problems—it is only right that we provide a strong incentive and reward for working households on lower incomes to build a savings buffer.

Help to Save will support up to 3.5 million people on lower incomes who are just about managing but may be struggling to build up their savings. It will help them develop their financial resilience and ability to cope with unexpected financial pressures. Clause 2 sets out the main characteristic of Help to Save: the Government bonus or contribution, which will be paid by the paying authority. The bonus will be paid at 50% of the highest balance achieved in the account. Over the four-year maturity period of the account, an eligible individual can save up to £2,400 and earn a Government bonus of up to £1,200. We intend that HMRC will pay any bonus amounts due and that that will be passed to eligible individuals by the account provider. Schedule 2, which we will consider shortly, makes further provision in relation to Help to Save accounts and the Government bonus.

Help to Save will meet a real need and will support many of those who are just getting by, helping them to build their financial resilience and supporting their ability to cope with financial shocks.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.

Schedule 2

Help-to-Save accounts: further provision

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I beg to move amendment 6, in schedule 2, page 16, line 31, at end insert—

‘(1A) The conditions specified under sub-paragraph (1) shall not include the condition that the individual be over 25 years old if that individual meets all other specified conditions relating to the working tax credit.’

Currently those aged under 25 only qualify for Working Tax Credits if they work at least 16 hours a week. This amendment would ensure any individual aged under 25 would qualify for a Help-to-Save account if they met other specified criteria.

In relation to later amendments to the schedule, I declare an interest as a member of the North East Scotland Credit Union. I tabled the amendment with my hon. Friend the Member for Ross, Skye and Lochaber. In contrast to the LISA, the Help to Save product offers genuine benefits for low and middle-income savers. All our amendments today seek to strengthen it and address some of the limitations that have emerged in the written and oral evidence.

Currently, the under-25s will not qualify for Help to Save unless they are in receipt of the disabled element of working tax credit, or they are responsible for children and are working 16 hours a week or more. Many young adults under 25 who are in full-time work could benefit greatly from Help to Save. The amendment would ensure that those under 25 could qualify for a Help to Save account on the same basis as those over 25 if they meet the specified criteria.

We know that the under-25s need some encouragement to save. As we heard from the Minister, having some savings can be incredibly advantageous; it cushions them against unexpected financial shocks and prevents them having to use the excruciatingly expensive payday lenders and getting into problem debt when they face unplanned costs.

Help to Save is probably a more realistic way for people to save for a first home than the LISA. Extending it to more young people in that age group can only help to incentivise early saving and improve financial literacy. It seems wrong to deprive young adults who are already working more than 30 hours a week of the opportunity to benefit from this scheme just because of their age.

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The amendment would ensure that individuals aged 25 or under would be eligible for an account if they meet the conditions relating to working tax credit eligibility. It is worth making it clear that under-25s will be eligible to open accounts if they meet the relevant criteria for working tax credit or universal credit. A person under 25 is eligible for working tax credit if they work a minimum of 16 hours a week and have a child or a disability.

Our intention is for eligibility for a Help to Save account to be determined by people passporting from working tax credit and universal credit. That is a well established way of targeting support to people on lower incomes. The Government recognise that some people of working age with lower incomes may not be eligible for Help to Save, but passporting is the simplest and most effective method available for determining and notifying eligibility; it is fundamental to the efficient operation of the scheme.

In particular, passporting means that people will not be required to complete a means test to prove that they are eligible for an account, or to contact the Government. It avoids the need to develop bespoke systems to determine eligibility that would be an additional cost to the Government and could deter many savers. That is why we will resist the amendment and I ask the hon. Member to withdraw it.

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I would rather press the amendment to a vote.

Question put, That the amendment be made.

Division 1

27 October 2016

The Committee divided:

Ayes: 3
Noes: 9

Question accordingly negatived.

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Ordered, That further consideration be now adjourned. —(Stephen Barclay.)

Adjourned till this day at Two o’clock.

Savings (Government Contributions) Bill (Fourth sitting)

The Committee consisted of the following Members:

Chairs: † Mr Christopher Chope, Sir Roger Gale, Albert Owen, Phil Wilson

† Barclay, Stephen (Lord Commissioner of Her Majesty's Treasury)

† Blackford, Ian (Ross, Skye and Lochaber) (SNP)

Cartlidge, James (South Suffolk) (Con)

† Caulfield, Maria (Lewes) (Con)

† Dowd, Peter (Bootle) (Lab)

† Ellison, Jane (Financial Secretary to the Treasury)

† Frazer, Lucy (South East Cambridgeshire) (Con)

Hepburn, Mr Stephen (Jarrow) (Lab)

† Hopkins, Kelvin (Luton North) (Lab)

† Howell, John (Henley) (Con)

Long Bailey, Rebecca (Salford and Eccles) (Lab)

† Merriman, Huw (Bexhill and Battle) (Con)

Onn, Melanie (Great Grimsby) (Lab)

† Quin, Jeremy (Horsham) (Con)

† Rutley, David (Macclesfield) (Con)

† Smith, Jeff (Manchester, Withington) (Lab)

† Whiteford, Dr Eilidh (Banff and Buchan) (SNP)

† Williams, Craig (Cardiff North) (Con)

Katy Stout, Committee Clerk

† attended the Committee

Public Bill Committee

Thursday 27 October 2016

(Afternoon)

[Mr Christopher Chope in the Chair]

Savings (Government Contributions) Bill

Schedule 2

Help-to-Save accounts: further provision

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I beg to move amendment 9, in schedule 2, page 17, line 31, at end insert ‘( ) a credit union;”.

It was terribly remiss of me not to say that, as a relatively new Member, I appreciate your helpfulness in the Committee, Mr Chope. Thank you very much for that.

On Second Reading, my hon. Friend the Member for Harrow West (Mr Thomas) expressed concern that credit unions, which in many areas have an excellent community base, command huge levels of trust and are embedded in communities, are not, in effect, one of the account providers. Hon. Members who were present at Second Reading, or who no doubt assiduously read the report of the proceedings subsequently, will know that my hon. Friend made a number of very important points, including about qualification periods and the role of credit unions in the scheme. His arguments were listened to with attention and deserve fair consideration in relation to product flexibility, and the Economic Secretary to the Treasury gracefully agreed to meet him and the Association of British Credit Unions. Given that, I suspect that part of those discussions will be wide and may encompass the role of credit unions as providers, so I will not push the matter today. I just wanted to get the point across that we know that a meeting will be held and we hope that it will lead to constructive discussions and outcomes.

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I will be brief in supporting the amendment in the name of the hon. Member for Bootle. Including credit unions as providers is critical, given the vast number of savers who use community credit unions to build up incomes for later life. Many credit unions set up local pay-in points such as shops or community centres and are increasingly important, given the withdrawal of the banks from many of the communities that credit unions represent. Therefore I wholly support the amendment.

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I echo the comments that have been made about credit unions. I am sure that many of us, on both sides of the Committee, have credit unions in our local area. There is an excellent one in Wandsworth, which I do what I can to support with publicity and signposting for constituents. I certainly place on the record our admiration for the credit union movement. As the shadow Minister, the hon. Member for Bootle, said, there will be a meeting. His colleague the hon. Member for Harrow West made a very good speech on Second Reading, and I am glad that that meeting will take place.

This debate is about who provides the Help to Save product. We were clear in our consultation that the options for delivery were to engage a single provider to guarantee nationwide provision, or to open the opportunity to offer the account to a wider range of providers on a voluntary basis. Although we are keen to explore the potential for credit unions to be involved and we of course acknowledge, as I have done, the valuable work that they do in our communities, we believe that they could not guarantee the nationwide provision of accounts that we seek.

Appointing National Savings and Investments as the scheme provider, which we have obviously made public, does involve our funding it for nationwide account provision, but it also means that we can work with a single provider to ensure that accounts are easily accessible to all eligible people, and it removes what could be the significant administrative and compliance costs associated with allowing a range of providers to offer accounts. Those could include costs associated with approving providers, checking for multiple account opening, checking and paying bonus claims from different providers and ensuring that each provider is operating the account correctly.

An option whereby we funded NS&I to provide accounts while we also allowed other providers to offer accounts on a voluntary basis would not provide value for money in this environment. A product such as this operates very much at the value-for-money end of the market. However, I am clear that we should not rule out the option for a range of providers, including credit unions, voluntarily to offer accounts in the future if that would deliver national coverage, and I reassure the Committee that the Bill has been drafted to accommodate different models of account provision, should that situation arise. In the meantime, we will work with the credit union sector to explore further options for Help to Save that work for it.

The hon. Member for Bootle has indicated that he will not seek to press the amendment to a vote, and with those points and that clarification in mind, I urge him to withdraw it.

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I thank the Minister for those words. I think it would be inappropriate to take up the Committee’s time pursuing the amendment any further at this stage, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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I beg to move amendment 2, in schedule 2, page 18, line 16, leave out “maximum” and insert “average”.

See explanatory statement for amendment 5.

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With this it will be convenient to discuss the following:

Amendment 3, in schedule 2, page 18, line 19, leave out “maximum” and insert “average”.

See explanatory statement for amendment 5.

Amendment 4, in schedule 2, page 18, line 19, after “means”, insert “an average of”.

See explanatory statement for amendment 5.

Amendment 5, in schedule 2, page 18, line 19, after “£50” insert

“across every two month period within the maturity period”.

Together with amendments 2 and 3, this amendment would allow HTS to provide for “top-up” monthly payments above £50 so long as the average payment for every two months is £50.

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The amendments would allow Help to Save to provide for top-up monthly payments above £50 as long as the average monthly payment in every two-month period was £50. Many people in the target group will have fluctuating incomes. Allowing people to save a maximum of only £50 per month will reduce applications from people who may have, say, £20 spare one month and £70 spare the next.

A survey by StepChange revealed that 34% of respondents

“would prefer to be able to pay in an average maximum of £50 per month.”

The amendments would allow Help to Save account holders to save an average of £50 per month over the course of the account period. That would allow account holders to overpay to catch up following lower payments in previous months and maximise bonus payments. I hope that the Minister will look favourably upon the amendments as a way of strengthening the Bill.

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The amendments are about the scheme rules on monthly deposit limits. They would provide that rather than the maximum monthly deposit being set at £50, a saver could add an average of £50 per month to their account, calculated over a two-month period. That would allow individuals to make additional catch-up payments to their Help to Save accounts in the event that they did not use their full £50 deposit allowance in a preceding month.

We consulted on whether individuals should be able to pay in excess of the £50 monthly deposit limit to catch up on either unused monthly allowances or withdrawals. Respondents were clear that that would add complexity to the scheme for savers and account providers, and given the objectives of the scheme and our desire for the product to be straightforward and simple, it was vital that the account rules were kept as simple as possible to ensure that the scheme was easy to understand and accessible to the target group. Having an average monthly deposit limit would complicate the simple position that we propose in relation to account limits.

I entirely understand the spirit in which the amendments were tabled, but we consulted on this issue and the feedback that we received was that that was not the most straightforward way to proceed for the target group. It may also help the Committee to know that the Office for Budget Responsibility forecasts that on average people will deposit £27.50 into their accounts each month. That suggests that a £50 monthly limit is adequate. We have actually raised that limit from the £25 limit that was proposed for the Saving Gateway scheme—a scheme that, as some Members will know, contained elements similar to Help to Save. Quite a lot was learned from it, because it was piloted.

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The Committee heard evidence from Joseph Surtees of StepChange that

“When it was introduced in the Budget, the potential eligibility for the scheme was 3.5 million, but the impact assessment says that it will probably only reach about 500,000”

and asked

“how do we get…to the 3.5 million figure?”––[Official Report, Savings (Government Contributions) Public Bill Committee, 25 October 2016; c. 28, Q49.]

Does the Minister agree that, if we are to get a higher level of engagement, the scheme may need to be more flexible, as suggested by the hon. Member for Ross, Skye and Lochaber?

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It is certainly fair to say that we want to look at all aspects of how we grow the scheme and reach as many eligible people as possible. At this stage, we disagree about offsetting greater flexibility against perhaps great simplicity, and how we balance the two. Because of the way we have structured the Bill and its consequent regulations, there is quite a lot of flexibility built into the scheme in the future. We have the £50 monthly limit in the schedule, but there are ways that we might be able to return to the product and look at it in the future. I come down on the side of simplicity in this argument, and that is why we have proposed what we have—notwithstanding the evidence we heard on Tuesday.

The Saving Gateway, which was essentially the partial forerunner of this scheme, had a proposed limit of only £25. Given the OBR’s forecast that £27.50 will be the average deposit, doubling the limit from Saving Gateway effectively allows for people to make almost twice that average deposit. In effect, the upper limit offers the flexibility that the hon. Member for Ross, Skye and Lochaber proposes. It is also worth noting that the four-year duration of an account will allow savers to dip in and out of saving when they can afford to put money aside. Savers will still earn an attractive Government bonus even if they are not in a position to save the full amount each month. With those points in mind, I hope that the hon. Gentleman will consider withdrawing the amendment.

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I thank the Minister for her remarks, but I am both a little surprised and a little disappointed. I thought the Government were in favour of freedom and choice and what we seem to have here is a Government who are trying to shut down freedom and choice. The Minister talks about complexity; I cannot see why giving consumers the choice of being able to get to £50 over an average will bring additional complexity. I think that this is really just a software issue for those who are going to be providing the scheme, so I do not accept that argument. We will be pressing the amendment to a vote, because it is the right thing to do. This is about growing the market for Help to Save, and the amendment has been put forward with a genuine desire to help the Government make this policy more attractive. The Minister talks about coming back to the scheme in the future, but I think we should put that flexibility in today. On that basis, I wish to press the amendment.

Question put, That the amendment be made.

Division 2

27 October 2016

The Committee divided:

Ayes: 2
Noes: 7

Question accordingly negatived.

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I beg to move amendment 8, in schedule 2, page 19, line 11, at end insert—

“(e) make provision for eligible persons to be auto-enrolled into Help-to-Save accounts from benefit entitlements unless the individual chooses to opt-out.”

This amendment would enable an “auto-enrolment” workplace saving scheme which would see an individual automatically signed up to a Help-to-Save account. He or she then must “opt-out” to stop money being deducted from their pay or benefits into a savings account.

The amendment would enable the establishment of an auto-enrolment type of workplace saving scheme that would allow individuals to be automatically signed up for a Help to Save account. Individuals could of course opt out of this entirely, but for many it could help overcome the inertia and procrastination sometimes associated with getting started in setting up a savings account. These days, there are fewer and fewer high street outlets, banks and building societies—indeed, several are closing in my constituency tomorrow—and that is going to make it even harder for people to talk to somebody face to face about savings products. I believe that if an incentivised savings scheme is made easily accessible and available the likelihood of participation is greatly increased. More people who would be well advised to save but who do not do it would find it an awful lot easier to get started.

Such schemes have proved very successful in other countries—notably in the US, where some have secured participation rates of more than 90% of the workforce. In one, the introduction of auto-enrolment boosted participation from 49% to 86%. The debt charity StepChange has been mentioned quite a few times today. It has been at the forefront of calls to introduce a similar scheme in the UK. It emphasises the importance of people having some money set aside for the proverbial rainy day, or, more likely, the broken washing machine or cooker, the boiler that has packed up, or a big MOT repair bill. StepChange’s research with people in the target income bracket found that more than 40% said they would be

“much more likely to save”

if their savings were deducted from salary at source—obviously, with their consent.

There are big challenges in encouraging people on lower and average incomes to save, and we need to make it easier. What I have outlined is one way for the Government to push that forward.

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The amendment is about auto-enrolling individuals into Help to Save accounts. I understand the motivation, and given the evidence from StepChange the Government do not doubt the sincerity of the intention and the desire to help people to save. However, we have concerns, and I shall explain why we cannot support the amendment.

The amendment would provide for arrangements allowing employers or benefit paying bodies to divert money from employees’ pay or benefits into a Help to Save account, unless they chose to opt out. To return to an earlier debate about auto-enrolment, we all believe that it has been a huge success in pension saving. However, while there is a strong case for auto-enrolling people into long-term pension savings, we do not think that is the case for the rainy-day savings that Help to Save is designed to support.

We want a decision to save into an account to be an active choice made by eligible individuals at a time that is right for them. Given the focus on rainy-day savings, we think that many will want to use the account flexibly, putting aside what they can afford each month rather than committing to a fixed amount being deducted from their salary or tax credit payments. For those looking to make regular payments into a Help to Save account, a standing order that they control will be the best option. That is because many people who are eligible for Help to Save could well have more than one job or other changes in circumstances over the four-year period when they have an account. The target group for a Help to Save account is disproportionately more likely to have a series of different jobs or more than one job at the same time.

Nevertheless, an employer that wants to offer payroll deduction into a Help to Save account to its employees is perfectly free to do so—nothing in the legislation would stop them. The Government are aware of successful voluntary workplace savings schemes and we are keen to explore the role that employers and other local organisations can play to support people in getting access to Help to Save, but we have no intention of making that a statutory requirement at a time when we are still working with businesses to roll out and embed automatic enrolment into workplace pensions—particularly given the forthcoming rises in contribution rates. We think that that must remain the priority for employers. That takes us back to an earlier debate about the support we all give to auto-enrolment, and the desire not to confuse that picture.

I hope that, with those points in mind, the hon. Lady will withdraw her amendment.

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I take on board the Minister’s concern, particularly for people who may be in multiple employment; that is a fair point. I am not sure that the arrangement would not be hugely beneficial for employers too, or that they would be all that resistant. The amendment is intended as an enabling provision, but in the interest of making progress, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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I beg to move amendment 7, in schedule 2, page 19, line 31, at end insert—

‘(2A) Where a bankruptcy order is made against a person with a Help-to-Save account any bonus paid into the Help-to-Save account will not form part of a debtors estate during insolvency proceedings.

(2B) Any bonus paid into a Help-to-Save account shall not be liable to be taken as repayment via third party debt orders.’

The amendment would ensure that those subject to a bankruptcy order would not be stripped of their assets. Currently, Help to Save affords no protection to the Government bonus paid into accounts from insolvency proceedings or third-party debt orders from creditors. The Government need to look closely at the debt collection and insolvency implications of the scheme. Given the target audience of Help to Save, it is likely that many will face financial difficulties while holding a Help to Save account. That would leave them vulnerable to third-party debt orders and potential insolvency.

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I wonder why the hon. Gentleman is proposing this provision for protection from insolvency when we know that under section 283 of the Insolvency Act 1986 the bankrupt’s home is not protected from insolvency. A pension that is already in payment is also not protected.

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I would not agree with the last assertion, because pension payments—certainly pension pots—are protected under the Welfare Reform and Pensions Act 1999. That condition exists, so I do not agree with the hon. and learned Lady on that point.

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They are not protected once they are already in payment.

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That is not the point that I made, which was about when payments are in the pension pot. We are arguing that the pots should be protected under the Help to Save scheme. Given that a key purpose of the Help to Save scheme is to promote long-term financial resilience, it would be counterproductive if creditors could take the money saved, or even the bonus, to satisfy existing debts. That would result in creditors benefiting from public money intended to help low-income families build precautionary savings. At the very least, the bonus should be protected. For the absence of doubt, there is a precedent for that in the 1999 Act, which states that approved pension arrangements do not form part of the bankrupt’s estate.

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The amendment seeks to prevent creditors from accessing the Government bonus in the event that the account holder is subject to insolvency proceedings or a third-party debt order. Obviously I appreciate that the objective is to protect the account holder, but the Government also need to consider what is fair to creditors by not providing people with an opportunity to shelter from debt proceedings when a creditor has a legal right to be repaid.

I am aware that it has been argued that a special case should be made for ring-fencing the Government bonus to avoid taxpayers’ money being used to repay debts, but I underline that the scheme rules mean that account holders will be entitled to a bonus on the highest balance achieved in the account. That represents an asset for the account holder, and it should be treated as such in any insolvency proceedings.

It is worth noting that there was a Government policy change that meant that, from October 2015, the minimum debt on which creditors can ask the court to declare an individual bankrupt rose to £5,000 from £750, ensuring that people with low-level debts are taken out of that. This measure is consistent with Government policy in other areas—that is the point my hon. and learned Friend the Member for South East Cambridgeshire made—such as the rules around when funds to pay creditors can be deducted from benefit payments.

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I concede that there is some worth in what the hon. Member for Ross, Skye and Lochaber was saying, but my concern is that if all sorts of accounts were protected from insolvency prosecutions, people might pile all of their cash into those accounts while knowing that they were going to go bankrupt or behaving in a financially irresponsible way. That protection would not help creditors.

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A fair point—I certainly acknowledge what the hon. Gentleman says. What we propose in the Bill around creditors and insolvency is consistent with Government policy in other areas. For those reasons, I urge the hon. Member for Ross, Skye and Lochaber to withdraw the amendment.

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I am flabbergasted that some Government Back Benchers do not even understand their own legislation. The amendment would put Help to Save on the same footing as pension pots, and I will certainly press it to a vote.

Question put, That the amendment be made.

Division 3

27 October 2016

The Committee divided:

Ayes: 2
Noes: 8

Question accordingly negatived.

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I beg to move amendment 1, in schedule 2, page 20, line 21, at end insert

“which must be paid no later than six calendar months beginning with the calendar month in which the account is opened”.

This amendment would reduce the time before the holder of a Help to Save account would receive a government bonus to six months.

I will be extremely brief. This amendment is very simple: it would reduce the amount of time before a Help to Save account holder receives their Government bonus to six months, which simply reflects the reality of the timeframe in which people on lower incomes are likely to have to dip into their savings to cover unexpected costs. Again, the amendment builds on research by StepChange, whose users are the target group for the product. According to StepChange, more than three quarters of people in the target income band will need to dip into savings more than once in a year, and a significant proportion will need to do so within six months. Two years is probably too long for them to see the full benefit of the bonus. A more frequent bonus payment will make the product more attractive to the people it is aimed at.

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The amendment would require the Government to pay the bonus on Help to Save accounts within six months of the account opening. On Second Reading, hon. Members expressed concerns about the bonus being paid after two years and on maturity, and not more regularly. The Government are not requiring people to lock their money away in Help to Save. People will still have full access to their savings and will be paid a bonus on the highest balance obtained. Even if people are able to save for only six months, they will still be entitled to receive a bonus at the two-year point and on maturity.

We have said a number of times that the purpose of Help to Save is to support rainy-day saving over a four-year period to help people to build a buffer against unexpected financial shocks or changes in circumstances. In light of that objective, we have looked carefully at how frequently we should pay the bonus.

Similar accounts in the Saving Gateway pilots run by a previous Government ran for 18 months. Published research shows that participants had different views on account duration, but many were in favour of extending the period. Additionally, there is peer-reviewed research by US academics on individual development accounts, a similar savings scheme in the US that also provides match funding to help people on low incomes to save. The research concluded that 19 to 24 months is the optimal time period to embed a savings habit.

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I am somewhat persuaded by the hon. Member for Banff and Buchan. In the American case, is that the convenient time period for those organising the scheme, or is it the optimal time period for the saver?

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My understanding—I have not read the detailed research, although I suspect I will before Report—is that it is what people who were in the scheme fed back about how they felt. That is certainly the case with the Saving Gateway research, which was published in the Journal of Economic Psychology, and I will certainly read it before we get to the next stage of the Bill. Research was published on the Saving Gateway pilot showing that participants were generally in favour of extending the period. We have the right focus there.

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I remember that when people on lower or ordinary incomes were paid monthly instead of weekly, it was sometimes felt that that was uncomfortable, and that short timescales were better for those on low incomes than those on high incomes.

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We risk straying slightly off the point, but there has been a lot of debate about weekly and monthly pay in the discussions about the many changes to the welfare system in recent years. Universal credit, which like many other benefits is moving to a monthly-by-default payment, is subject to the same argument about striking the right balance. We think that paying the bonus at two years and on account maturity strikes the right balance, because it gives people enough time to build up their savings and develop a saving habit, while allowing them to access the bonus within an appropriate timescale.

The Government bonus is designed to provide support and a real incentive to those building up their savings over a long period, rather than supporting or incentivising short-term spending. A bonus of up to £600 after two years is an attractive target to save towards, and will encourage people to keep saving, if they can. We do not believe that smaller bonus amounts paid at more frequent intervals would provide the same incentive for regular saving over the long term.

Given the rainy-day nature of the scheme, Members may be concerned to ensure that savers can access their bonus early if they face an unexpected cost or change in circumstances, and I stress that savers can access their money at any time and still earn a bonus on their savings. The four-year duration of the account allows people to start saving again, so they can earn an additional bonus. While I recognise the strong views on this issue, the motivation behind the amendment, and that no one solution will work perfectly for all savers, I think—in light of the argument I have made and some of the evidence I have cited—that we have got the balance right in this regard. I ask the hon. Member for Banff and Buchan to withdraw her amendment.

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I am disappointed that the Government have not taken on board a simple and straightforward amendment. I am minded to push the amendment to a vote, simply because many Members expressed concern about this matter on Second Reading, and the amendment could be made fairly easily.

Question put, That the amendment be made.

Division 4

27 October 2016

The Committee divided:

Ayes: 3
Noes: 8

Question accordingly negatived.

View Details

Schedule 2 agreed to.

Clauses 3 to 5 ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Stephen Barclay.)

Adjourned till Tuesday 1 November at twenty-five minutes past Nine o’clock.

Written evidence to be reported to the House

SGCB 03 Prospect

Digital Economy Bill (Ninth sitting)

The Committee consisted of the following Members:

Chairs: Mr Gary Streeter, † Graham Stringer

† Adams, Nigel (Selby and Ainsty) (Con)

† Brennan, Kevin (Cardiff West) (Lab)

† Davies, Mims (Eastleigh) (Con)

Debbonaire, Thangam (Bristol West) (Lab)

† Foxcroft, Vicky (Lewisham, Deptford) (Lab)

† Haigh, Louise (Sheffield, Heeley) (Lab)

† Hancock, Matt (Minister for Digital and Culture)

† Hendry, Drew (Inverness, Nairn, Badenoch and Strathspey) (SNP)

† Huddleston, Nigel (Mid Worcestershire) (Con)

† Jones, Graham (Hyndburn) (Lab)

† Kerr, Calum (Berwickshire, Roxburgh and Selkirk) (SNP)

Mann, Scott (North Cornwall) (Con)

† Matheson, Christian (City of Chester) (Lab)

† Menzies, Mark (Fylde) (Con)

† Perry, Claire (Devizes) (Con)

† Skidmore, Chris (Parliamentary Secretary, Cabinet Office)

† Stuart, Graham (Beverley and Holderness) (Con)

† Sunak, Rishi (Richmond (Yorks)) (Con)

Marek Kubala, Committee Clerk

† attended the Committee

Public Bill Committee

Thursday 27 October 2016

(Morning)

[Graham Stringer in the Chair]

Digital Economy Bill

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If hon. Members wish to take off their jackets, they have the Chair’s permission to do so.

Clause 38

Disclosure of information by civil registration officials

Amendment proposed (25 October): 107, in clause 38, page 36, line 12, leave out from “that” to end of subsection and insert—

“(a) the authority or civil registration official to whom it is disclosed (the “recipient”) requires the information to enable the recipient to exercise one or more of the recipient’s functions and,

(b) the data subjects whose information is being disclosed have given valid consent under data protection legislation.”.—(Louise Haigh.)

This amendment would remove bulk sharing while allowing certificates to be shared to support electronic government services.

Question again proposed, That the amendment be made.

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I remind the Committee that with this we are discussing amendment 97, in clause 38, page 36, line 15, at end insert—

‘(2A) An authority or civil registration official requiring the information must specify the reasons for requiring the information to be disclosed.

(2AA) Information disclosed under this section shall not be shared with any other public or private body beyond those specified in subsection (1).”

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It has been a couple of days since we last met, but my hon. Friend the Member for Sheffield, Heeley made a very important point in her speech regarding where we should look for best practice. The UK is one of the Digital 5, and she brought up Estonia as a country that, when we consider big data, we should reflect on. In dealing with the Bill, we are casting our eye around to see how we can manage big data, personal information, between public bodies. She made the valid point that a fundamental question seems to run throughout the Bill and the clause: does the individual own the information or does the state own it? Because the Government have taken the view, unlike what happens in Estonia, that the state owns the information, we have a series of such clauses. We are primarily trying to find a way to balance the rights of the individual, while the state retains ownership of the information in any form, but, particularly as we move forward, in digital form; that is what I am concerned about.

Let me explain what is done in Estonia and why the Bill in years to come will probably need to be usurped by a new Bill. Estonia has transferred the ownership of data from the state to the individual. When the individual owns the data, there is no need for these complex fudges to try to find a way in which people’s privacy and the integrity of data can be respected, while ownership remains with an umbrella organisation.

The criticism that I make to the Government, and my hon. Friend’s point, is that a fundamental rethink or reset will have to occur at some point because of what is missing from the Bill and the clause. It talks about public bodies, but the Government do not address in this or any other clause the fact that private corporations hold enormous amounts of personal data on people and the ownership of that lies with them, not with the individual. That is why the point that she made was so pertinent. The ownership of data should lie with the individual. As a country, as a nation, we should be looking to transfer that ownership. That is why we cannot address what happens in the private sector. Absent from the Bill are any clauses or even subsections tackling data and information in the private sector. It is solely about the public sector and trying to square off those conundrums and contradictions.

The Government have missed an opportunity to empower people and to be on the side of the individual, the ordinary person, who feels disempowered by all this. They are on the side of big government and, by absence, of big corporations, which in my view is a fundamentally flawed position. That question was asked in Estonia, and it is why it reversed the answer: ownership should lie with the individual.

I can see the Parliamentary Secretary, Cabinet Office, chatting to the Minister for Digital and Culture, and he will probably provide an answer that talks about a destination, saying that if someone gets on a bus, they only get off at the end destination. We all know that when someone gets on a bus, there are many stops before the destination on the front of the bus. They do not have to go all the way. I presume the Minister will explain why the clause is correct from the Government’s point of view and why my argument is flawed. He will say, “If you are going to empower the individual with data, you would need a national identification card system, as in Estonia. The empowerment of the individual must correlate with a national ID card scheme.”

The Minister will make that argument, but that is like getting on a bus and only being able to get off at the final destination, with a national ID card scheme. No one is saying that. There are many bus stops we can get off at before the end. The issue is not binary, with the place we get on the bus and the place we get off. The destination is not necessarily ID cards. The principle that these are the individuals’ own data should be at the heart of the Bill, and the clause does not represent that. The absence of any mention of the private sector is alarming.

Moving on, I want to touch briefly on another aspect that is missing from the Bill and should be considered. This is the Digital Economy Bill, but it is all about the public sector. There is an absence of any reference to the private sector per se. This part of the Bill deals with the digital economy and the provision of public services. Returning to the Estonia example and empowering the individual, people in Estonia can set up a business or company in three or four minutes online. Where is the pro-business element of the Bill? It is certainly not this clause, which relates to data and information in relation to the state and public bodies. Why can individuals here not set up businesses in four minutes? Why is it not a pro-business Bill? Why does it not talk about business? Nothing in the Bill talks about being pro-business.

The clause is simply about public bodies holding big data, and in that respect, it lives in the past, not the future. I urge the Government to think about the fundamental principles and to not make the argument that the amendments would lead to an ID card system, although Estonia does have ID cards. I would have ID cards tomorrow—it is well known across the patch that I would not be on the list of soggy, wet liberals—but that does not mean that the principle that the individual owns data would lead to ID cards. It does not. I ask the Minister, with all due respect, not to suggest that I am making that argument, because I am not.

The Bill is not pro-business and is fundamentally flawed. The clause is simply about trying to manage all the conflicts and contradictions from yesterday’s age. It does not deal with the future. The Government have fallen short. I emphasise the word “economy” in the Bill’s title—it is not about public services, but the economy. I put that word up in bright lights. Where does the Bill talk about the economy? We are talking about public bodies and public authorities.

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That was an impressive Second Reading speech. I am here to speak to amendment 97 and 107.

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And stand part.

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Not necessarily; that has not been called yet. The amendments have been tabled in the name of the hon. Member for Sheffield, Heeley. She finished her speech on Tuesday, and I put on record my thanks for her impressive scrutiny of the Bill, which she has done almost single-handedly. I note that she made a weighty speech about Concentrix yesterday, so I do not know how she finds the time to sleep. I am sure that it will be noted in the Lords that we have gone through a full process of scrutiny in Committee.

The Government will ensure that citizens can access future Government digital services effectively and securely, while removing the current reliance on paper certificates. That will provide more flexibility and modernise how services are delivered.

Amendment 97 would require registration officials and public authorities requesting information to specify reasons for requiring disclosure. In considering a request to share information under those powers, a registration official would first need to be satisfied that the recipient requires the information to enable them to exercise one or more of their functions.

In her speech on Tuesday, the hon. Lady raised some issues about the Data Protection Act 1998 and said that the Government should set out clearly that it is being honoured, particularly for registration. The hon. Member for Hyndburn talked about fundamental principles, and I can confirm that the Bill’s fundamental principle is its compliance with the Data Protection Act. Data should not be disclosed if to do so would be incompatible with that Act, the Human Rights Act 1998 or part 1 of the Regulation of Investigatory Powers Act 2000.

The Data Protection Act is Magna Carta of the data world, and we want to ensure that all parts of the Bill comply with it. When disclosing information, only minimal information will be provided, in accordance with the requirements of the data recipient.

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I am grateful to the Minister for his kind and polite words. If that is the case, why does the Bill contain the words “clear and compelling”, rather than “necessary and proportionate”, which is the term associated with the Data Protection Act?

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I have taken legal advice about that issue, which the hon. Lady raised in her previous speech, and I have been told that those words do not in any way, shape or form challenge or change the interpretation of and compliance with the Data Protection Act. We will be happy to look again at the wording and reflect on it if that gives her confidence that we are absolutely committed to ensuring that the Data Protection Act runs through the core of the Bill. Registration officials are required to be aware of the reasons for the request, so the intention behind the amendment is already achieved by the clause.

Amendment 97 seeks to prevent the onward disclosure of information by the data recipient to any other public or private body beyond the specified public authorities listed in proposed new section 19AB(1) of the Registration Service Act 1953. Disclosures under the power will be restricted to the specified public authorities listed in proposed new section 19AB(1). In addition, personal data will be shared only in accordance with the power and in adherence to the Data Protection Act, by which the recipients will also be bound. As an additional safeguard, under the code of practice, data-sharing agreements can place restrictions on onward disclosures of data, which will be adopted where appropriate.

Amendment 107 would retain the requirement for a civil registration official to be satisfied that the information was required by a recipient to fulfil one of more of their functions before disclosing data. It seeks to add a requirement that an individual must have given valid consent under data protection legislation before any disclosure of their personal data. The data protection legislation referred to is believed to be the Data Protection Act, to which these clauses are already subject. They already state that personal data must be processed fairly. In practice, it will sometimes be necessary to share information in the public interest, where it is impractical or inappropriate to seek or rely on the consent of the individual concerned, but that is already permitted under the Data Protection Act, which we are determined to ensure remains in force.

In the hon. Lady’s speech on Tuesday, she talked about the uses of bulk data and asked me to give examples of where the powers will be used and where they are already used. The powers will allow registration officials to disclose birth data to other local authorities. Currently, a registrar is unable to notify another local authority if a birth takes place in their district but the child’s parents reside in another. Being able to disclose data across district boundaries will assist healthcare, school and wider local authority planning. Being able to share bulk information will ensure that children are known to the local authorities in which they reside and that action can be taken to address any needs of the child or parent.

Another example relates to blue badge fraud. It is estimated that about 2.1% of blue badge fraud relates to use of a blue badge following the death of the individual to whom it belonged. The new powers will allow data to be shared with the local authorities to help reduce that fraud.

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The Minister gives an important example—blue badge fraud—in which data are accessed rather than shared. The local authority will have an access point into Department for Work and Pensions data to determine whether someone is disabled, but there is absolutely no need for bulk data sharing across local authorities. That is the kind of example that we should follow in the rest of the public sector.

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The hon. Lady mentions legal portals through which data can be shared. The key point is that although we have specific examples of data being accessed or shared, every new data-sharing arrangement has to be established within a very specified remit. A great example of a data-sharing arrangement for registrars that is already happening is the Tell Us Once service, in which birth and death registration information is shared across local and central Government. That system has been developed by Government, is envied by the private sector and clearly demonstrates the benefit of sharing civil registration information for both citizens and Government, but the problem is that it is very limited.

We cannot move forward by having endless tiny data-sharing agreements; we need to be able to create a wider platform. For instance, to share death data, individual local authorities have to forge individual relationships. We need to ensure that that is far broader, so that local authorities and Departments can work together to help to prevent unwarranted and unwanted mail from being sent to the family of a deceased person, which can often cause a great deal of distress.

This is evolution, not revolution. We are following the Data Protection Act 1998 and the codes of practice, which the Committee will discuss, will be reviewed every year. We can now share data effectively on a bulk level but without using personal details apart from for the benefit of those it will serve: children, local authorities, planning numbers. This is absolutely the right thing to be doing.

Disclosure will take place without consent only where that is consistent with Data Protection Act rules on fair disclosure. At all times, data can be shared only with specified public authorities as defined in section 19AB of the Registration Service Act 1953. The code of practice makes it very clear that if there are any data breaches or any of those authorities do not follow the code—we will discuss the code when we consider debt measures—they can be removed from that list. With that explanation, I hope the hon. Member for Sheffield, Heeley will agree that the necessary measures are already included in the clause and will withdraw her amendment.

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My hon. Friend the Member for Hyndburn made important points about the absence from the Bill of clauses dealing with the private sector. In the evidence session, we heard from the chief executive of a tech start-up in Canary Wharf who made it very clear that nothing in the Bill would help his business or others operating in the digital economy. We will certainly return to that theme. I draw my hon. Friend’s attention to new clause 31, which the Committee will consider on Tuesday morning and which will require a review of data ownership across the public and private sectors.

I am grateful that the Minister has confirmed that the Government will consider a rewording of “clear and compelling”, because I think it could lead to some confusion regarding the compliance of part 5 with the Data Protection Act. It is great to hear him praise the Tell Us Once scheme, which was set up by the shadow Secretary of State for Culture, Media and Sport, my hon. Friend the Member for West Bromwich East (Mr Watson)—I will pass on the Minister’s congratulations to him.

The Minister referred to a platform; will he confirm whether he is referring to a central database of citizens’ civil registration information? That is a key concern. I am also glad to hear that sharing information without consent will take place only in explicitly defined circumstances, but I am still not clear why chapter 2 of part 5 will not—as our amendment 97 would—require civil registration officials to disclose why they are sharing information, as all the other chapters in part 5 require data-sharing arrangements or specified persons to do. If the Minister can explain that to me in an intervention, I will happily withdraw the amendment.

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I used the word “platform” as part of a process argument about being able to look at data in the round, rather than to suggest that there would be any centralised data collection. That is certainly not the case. For public confidence, measures in the codes of practice set out clearly that when it comes to the data-sharing measures, once data have been used for the required purpose, they are then destroyed. They are not kept on any register for any historical purpose.

Turning to the hon. Lady’s second point—

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Minister, this is an intervention. I call Louise Haigh—you may intervene again, Minister.

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My question stands: why is there not a requirement in this chapter of this part for the reasons for disclosure, as there is in all the other chapters? I would be grateful if the Minister intervened regarding that point.

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The registration codes of practice clearly set out that the purposes will need to be defined and that a business case will need to be made. None of that can take place until we ensure that there is a specified public function defined on the face of legislation, particularly when it comes to the code of practice that registrars will have to follow and which will be reviewed yearly. I believe that measures are in place to ensure that any data-sharing is done through a due process that is incredibly tight, restrictive and respectful of the use of individuals’ data.

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I am afraid I am still not satisfied with why that requirement is not on the face of the Bill as it is in other chapters, so I will press amendment 97 to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: 97, in clause 38, page 36, line 15, at end insert—

‘(2A) An authority or civil registration official requiring the information must specify the reasons for requiring the information to be disclosed.

(2AA) Information disclosed under this section shall not be shared with any other public or private body beyond those specified in subsection (1).”—(Louise Haigh.)

Question put, That the amendment be made.

Division 7

27 October 2016

The Committee divided:

Ayes: 7
Noes: 9

Question accordingly negatived.

View Details

Amendment made: 119, in clause 38, page 37, line 35, at end insert—

‘( ) The code of practice must be consistent with the code of practice issued under section 52B (data-sharing code) of the Data Protection Act 1998 (as altered or replaced from time to time).”—(Chris Skidmore.)

This amendment requires a code of practice issued under section 19AC of the Registration Service Act 1953 by the Registrar General and relating to the disclosure of information under section 19AA of that Act to be consistent with the data-sharing code of practice issued by the Information Commissioner under the Data Protection Act 1998.

Question proposed, That the clause, as amended, stand part of the Bill.

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The clause amends the Registration Service Act 1953 to introduce new flexible data-sharing powers that allow registration officials to share data from birth, death, marriage and civil partnership records with public authorities for the purpose of fulfilling their functions. That will provide more flexibility and modernise how Government services are delivered.

Being able to share registration data will bring many benefits, for example, in combating housing tenancy fraud. The National Fraud Authority estimates that housing tenancy fraud—for example, a tenant dies and someone else continues to live in the property when they have no right to—costs local authorities around £845 million each year. Being able to provide death data to local authorities will assist in reducing that kind of fraud. The sharing of data will provide benefits for the public in a number of different ways, including the removal of barriers when accessing Government services. It will pave the way for citizens to access Government services more conveniently, efficiently and securely, for example by removing the current reliance on paper certificates to access services.

Data will continue to be protected in accordance with data protection principles, and a number of safeguards will be put in place. Registration officials will be able to share data with only specified public authorities, as defined in new section 19AB—which also includes a power for the Minister to make regulations to add, modify or remove a reference to a public body, thereby providing reassurance that the data will only be disclosed in a targeted way to the Departments listed. As set out in paragraph 58 of the code of practice, the Registrar General has a responsibility to review the code annually, which will involve the national panel for registration. As an additional safeguard, such regulations will be made under the affirmative procedure, requiring the approval of both Houses.

All data sharing will be underpinned by a statutory code of practice, as set out in section 19AC. As I have said, when revising the code the Registrar General will have an obligation to consult the Minister, the Information Commissioner and other relevant parties. The code of practice will act as a safeguard by explaining how discretionary data-sharing powers should be used. The code will require data-sharing agreements to be drawn up, which will includes safeguards on things such as how data will be used and stored and for how long they are to be retained, and forbidding data to be cross-linked in any way.

Question put and agreed to.

Clause 38, as amended, accordingly ordered to stand part of the Bill.

Clause 39

Consequential provision

Question proposed, That the clause stand part of the Bill.

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Several questions relating to the clause remain unanswered because we were cantering through on Tuesday afternoon. Will the Minister confirm, and give examples of, what the powers in this part of the Bill will exclude? Will he give some guidance on how officials are meant to determine where the line is for what is and is not included? Will there be more guidance issued for non-public sector authorities that will come under the legislation? Will he assure us that the codes, in their next iteration, will provide further guidance on how officials should deal with conflicts of interest when sharing data, how they should identify any unintended risks from disclosing data to organisations, and how sponsoring public authorities should assess whether their systems and procedures are appropriate for the secure handling of data? I would also be grateful if the Minister confirmed what lessons have been learned from the recent National Audit Office report that found more than 9,000 data incidents in the past year alone, and how the Government are improving their data processes to address those issues.

Will the Minister assure us that nothing in the Bill will undermine patient confidentiality? I am aware that the British Medical Association has written to him but has not had a response. The BMA is unclear about whether the scope of the Bill includes the disclosure of personal health and social care information, which would significantly weaken existing protections for confidential data. Will the well established rules that already protect such confidential information continue to apply, and will he assure us that these powers will not override common law in this vital area?

Finally, on a significant area that has not yet been addressed, do the Government intend to implement the EU’s general data protection regulation? If they do, why is the Bill not compliant with it?

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On the European directive, which is to be introduced in May 2018, the codes will be revised and will reflect that. That is why the flexibility we have from the codes not being written into the Bill is so important—so that we can deal with instances in which there will be change in the future. They will be updated to reflect that change in May 2018.

Civil registration officers—public servants who want to share data for the benefit of the public—are not trying to do anything that would compromise those whom they serve. In the code of practice, paragraph 47 states that privacy impact assessments will be put in place to ensure that there will be compliance with data protection obligations and that they meet individual expectations of privacy. All Departments entering into data-sharing arrangements under the powers must comply with privacy impact assessments and publish the findings. We want to ensure transparency so that members of the public understand why it is necessary for those data to be shared.

An application to share data is not simply a permissive path by which new data-sharing arrangements can be established without going through due process and regard. In the fairness and transparency section of the data code of practice, there are many questions that must be addressed in order to establish the data-sharing arrangements. They are clearly laid out.

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The Minister says that civil registration officials will be required to publish their findings. What exactly will they be required to publish, under either the code or the measures in the clause?

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Paragraphs 47 and 49 of the civil registration data-sharing code of practice clearly state:

“All government departments entering into data sharing arrangements under these powers must conduct a Privacy Impact Assessment and to publish its findings. The Information Commissioner’s Conducting Privacy Impact Assessments code of practice provides guidance on a range of issues in respect of these assessments, including the benefits of conducting privacy impact assessments and practical guidance on the process required to carry one out…Registration officials entering into new data sharing arrangements should refer to the following guidance issued by the Information Commissioner on Privacy Impact Assessments which includes screening questions…to determine whether a Privacy Impact Assessment is required.”

On health care data, the Government are considering Dame Fiona Caldicott’s recommendations. The consultation closed on 7 September, and I confirm that the Bill’s powers will not be used in relation to health and care data before we have completed that process.

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The Bill explicitly says that health and social care information should be excluded, but there are concerns that it is drafted so widely that it could be used for that, and I think that the Minister has just confirmed it. He is saying that it is wide enough that should the Government decide on the basis of Dame Fiona’s review that they want to share health and social care information, the Bill will enable it. Is that the case?

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The Government will respond to the National Data Guardian’s review. It will not have an impact on the Bill at this stage. The Department of Health recently concluded a public consultation and is considering how to implement her recommendations. As it will take time to make the changes and demonstrate that the public have confidence in them, it would be inappropriate for the Government to seek new information sharing powers in respect of health and care data at this time. I note that we will come to health and care data when we debate a later group of amendments on research, and I hope to provide more information when we do.

Question put and agreed to.

Clause 39 accordingly ordered to stand part of the Bill.

Clause 40

Disclosure of information to reduce debt owed to the public sector

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I beg to move amendment 190, in clause 40, page 39, line 21, leave out “have regard, in particular, to” and insert “must comply with”.

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With this it will be convenient to discuss the following: amendment 191, in clause 44, page 42, line 8,  leave out “have regard to” and insert “comply with”.

Amendment 192, in clause 52, page 49, line 8, leave out “have regard to” and insert “comply with”.

Amendment 193, in clause 60, page 55, line 20, leave out “have regard to” and insert “comply with”.

Amendment 194, in clause 67, page 66, line 15, leave out “have regard to” and insert “comply with”.

Amendment 198, in clause 82, page 80, line 18, at end insert

“and only after the codes of practice required under sections 35, 44, 52 and 60 have been approved by a resolution of each House of Parliament.”

New clause 35—Public register of data disclosures—

‘(1) No disclosure by a public authority under Part 5 shall be lawful unless detailed by an entry in a public register.

(2) Any entry made in a public register under subsection (1) shall be disclosed to another person only for the purposes set out in this Part.

(3) Each entry in the register must contain, or include information on—

(a) the uniform resource locator of the entry,

(b) the purpose of the disclosure,

(c) the specific data to be disclosed,

(d) the data controllers and data processors involved in the sharing of the data,

(e) any exchange of letters between the data controllers on the disclosure,

(f) any other information deemed relevant.

(4) In this section, “uniform resource locator” means a standardised naming convention for entries made in a public register.

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These are further amendments tabled by my hon. Friend the Member for Cardiff West and me to make the codes of practice, on which officials have obviously worked so hard and which were developed in consultation with the Information Commissioner, legally binding. With your permission, Mr Stringer, I will come to specific issues about the data-sharing measures and fraud during debate on clause stand part.

I appreciate what the Minister said about sanctions being enforced on those authorities that do not have regard to the code of practice, but it says on the front page of the code:

“The contents of this Code are not legally binding”;

it merely

“recommends good practice to follow when exercising the powers set out in the Bill.”

That is not really a strong enough message to send to officials and all those involved in data-sharing arrangements. I would be interested to hear examples from the Minister of when it would be considered reasonable not to follow the code, as I assume that that is why he does not want to build it into primary legislation. I know that he will tell me that his real reason is that he wants to future-proof the codes. That is all well and good, but the Bill is already outdated. One witness wrote to us in evidence:

“Part 5 seems to imply an approach to ‘data sharing’ modelled on the era of filing cabinets and photocopiers when—quite literally—the only way to make data available to others was to send them a duplicate physical copy. Modern technology has already rendered the need for such literal ‘data sharing’ obsolete: data can now be used without copying it to others and without compromising security and privacy.”

Furthermore, data sharing is not defined, either legally or technically, in the Bill or in the codes of practice. Does data sharing mean data duplication—copying and distribution—or does it mean data access, or alternatives such as attribute exchange or claim confirmation? These are all quite different things, with their own very distinct risk profiles, and in the absence of any definition, the term “data sharing” is ambiguous at best and potentially damaging in terms of citizens’ trust, cyber-security and data protection. Let me give an example: there is a significant difference between, and different security risk associated with, distributing personal information to third parties, granting them controlled and audited one-time access for the purpose of a specific transaction, or simply confirming that a person is in debt or is or is not eligible for a particular benefit, without revealing any of their detailed personal data.

What is more, there is no reference in the clause to identity and how officials, citizens, or organisations, or even devices and sensors, will be able to prove who they are and their entitlement to access specific personal data. Without this, it is impossible to share data securely, since it will not be possible to know with whom data are being shared and whether they are an appropriate person or organisation to have access to those data. Security audits, of who has accessed which data, when and why, require a trusted identity framework to ensure that details of who has been granted access to data are accurately recorded. Presumably, it will also be mandatory to implement good practice security measures, such as protecting monitoring, preventing in real time inappropriate attempts at data access, and flagging such attempts, to enable immediate mitigating action to be taken.

As I said on Tuesday, all these details are moot, as are the codes of practice and indeed the Information Commissioner Office’s excellent code of practice, if the existence and detail of data sharing is not known about to be challenged; hence the need for a register, as set out in new clause 35. That is why we have tabled our amendments and we would like the Minister to give serious consideration to the inclusion of these important principles and safeguards in the Bill. We are not talking about detailed regulations, we are certainly not talking about holding back technological advances, and we are not talking about the “dead hand of Whitehall”, as the Minister said on Tuesday. We are talking about vital principles that should be in primary legislation, alongside any new powers to share information. The most important of those principles is transparency, which is exactly what new clause 35 speaks to. It would require public authorities to enter in a public register all data disclosures across Government.

The Minister did not know the detail of the audits that are mentioned in the codes of practice. We really need more detail on those audits, as it may well satisfy us in our request for this register. Will all data-sharing agreements be kept in a single place in each Department, updated as data are shared and disclosed across Government, with Government agencies and with non-public sector organisations? Will these additional agencies keep similar audits and—crucially—will those audits be publicly available? Also, will the audits include the purpose of the disclosure, the specific data to be disclosed, how the data were transferred, how the data are stored and for how long, how the data are deleted at the end of that time frame, what data controllers and processors are involved in the sharing of that data, and any other restrictions on the use of further disclosure of that data?

If we have, in a single place, data-sharing amendments, as this amendment would establish, the public can see and trust how their data are being used and for what purpose. They can understand why they are getting a letter from Concentrix about Her Majesty’s Revenue and Customs, or why they have been targeted for a warm home scheme, and—crucially—they can correct or add to any information on themselves that is wrongly held.

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Does the hon. Lady agree that, if there is an opportunity to access a proactive notification service that indicates to the member of public that their data are being used and for what purpose, that should be included in any future consideration of this matter?

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I completely agree, and I believe that the gov.uk Notify service would be an excellent means by which to go about that. I hope that the Minister will consider it.

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My hon. Friend is making a valid point, which I referenced in my point about getting on the bus and the destination. She is suggesting that individuals have rights to own their information; there is a register that they could accept. This is the journey that we have to make. It is about empowering the individual. My hon. Friend is making a powerful point. I am pleased that the Opposition are making this point, because it needs to be made. The future will be about individual ownership of information. I hope that my hon. Friend prosecutes the argument as well as she can.

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The point is vital and it is the point that was made earlier in our proceedings. Unless we get this right at this stage, it will become a scandal that the Government will then have to deal with and it will hold back progress on sharing data, as we saw with the care.data scandal. We do not want to see the Government embroiled in another scandal like that and we hope that they heed our warnings in order to avoid one in the future.

The objective behind the register is that it could be considered an amnesty for all existing data-sharing projects, with the disclosure assisting understanding of the problem and improving public trust. Let us not kid ourselves that the Bill covers the only data sharing that happens across Government. In a recent interview with Computer Weekly, the new director of the Government Digital Service, Kevin Cunnington, said:

“The real work is going on in”

places such as “Leeds and Manchester”—I would disagree with him on that point for a start, because we are not fans of Leeds in Sheffield—

“as well as London. We need to be part of that. The example I use is where DWP now runs a whole set of disability benefits. It would be incredibly helpful if DWP had selected and consensual access to some of”—

those people’s—

“medical data. Right now, NHS Digital and DWP are having that conversation in Leeds and we’re not in the conversation. Why wouldn’t GDS be in a conversation like that? If we’re going to be, we’ve got to be in Leeds—we can’t do that from here.”

We know that that conversation is happening between the DWP and the NHS—despite assurances that sharing of health and social care information is not happening across Government—only because a random official mentioned it in a random interview, so I ask this question again: does the Minister have an audit of data-sharing agreements and arrangements across Government, or is it the case, as I fear it is, that not only do the public not know which data are shared across Government, for what purpose and how they are stored, but Ministers do not know either?

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The hon. Lady is making an excellent point. What this cuts back to is the underlying theme of transparency. Rather than the Government acting in a paternal way—“We’ll do what is best for the citizens”—they should be transparent and make it clear to citizens why and where data are being used.

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That is exactly the kind of attitude that underpins these elements of the Bill: “Trust us. We’ll sort it out. Give us your data. No problem. We’re going to share them freely and fairly.” The Government may well do. The problem is that the public do not have that trust in them. As I said on Tuesday, this is not a party political point. The previous Labour Government were not up to scratch in handling data either. This is not a party political attack at all. It is a genuine attempt to get these proposals in the best shape possible, to aid Government digitisation and deliver efficient public services.

Just as the Government give taxpayers a summary of how their tax money has been spent so they should give citizens information on how they have used data on them. If there is transparency through a register, there can be an informed conversation about whether a data disclosure will solve the problems that it claims to. There has been data sharing to prevent fraud for decades and a complete absence of audited and accurate results from that work. Arguing that current data sharing has not prevented fraud and so there should be more data sharing equates to doing the same thing over and again and expecting a different result.

The amendment is vital to restore and build on public trust in the Government handling of data. It is not in my nature to call on my constituents to trust this Government, but if they enacted the amendment, I absolutely would. I would be able to tell my constituents in good faith that they were right to trust their data to this or any future Government, because they and the data community could see exactly how and why their data were being used and exert some control over it. If the Government do not heed this lesson now, I am afraid that they will learn the hard way when things go the way of care.data or worse, as they inevitably will.

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I thank the hon. Lady for her speech, and I appreciate the caution with which she approaches the subject. We have been determined that our definition of data sharing should be in the ICO’s code of practice, and we have adopted that definition in our own draft code. We will comply with ICO’s best practice, which of course means keeping careful records of all data-sharing agreements. We already keep registers of data sharing by Department, and they are FOI-able. We need to take public confidence with us. We will not allow data to be shared with a public authority that does not have appropriate systems in place.

To reassure those whom the hon. Lady seeks to assure that their data can be shared without any compromise to individual security, I will take a journey through the data sharing code of practice. When we come to establish some of the fraud elements, it will be an incremental process. Debt and fraud data-sharing pilots will be set up, and the UK Government are establishing a review group to oversee UK-wide and England-only data sharing under the fraud and debt powers. The review will be responsible for collating the evidence that will inform the Minister’s review of the operations powers as required under the Bill after three years. Devolved Administrations will establish their own Government structure for the oversight of data-sharing arrangements within their respective devolved territories.

Following that, a request to initiate a pilot under the debt and fraud powers must be sent to the appropriate review groups in the territory, accompanied by a business case. The business case must detail its operational period, the nature of the fraud and debt recovery being addressed, the purpose of the data share and how its effectiveness will be measured. Absolutely rock-solid requirements need to be put in place. For instance, the public service delivery debt and fraud powers require a number of documents to be produced as part of the case for a pilot.

Those documents will be a business case for the data-sharing arrangement, which can be collated by all the organisations involved; data-sharing agreements; and a security plan. Furthermore, as part of any formal data-sharing agreements with public authorities that grant access to information, security plans should include storage arrangements to ensure that information is stored in a robust, proportionate and rigorously tested manner and assurances that only people who have a genuine business need—

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The Minister is making an argument to which I would extend my previous comments. He is arguing that there will be security because we will have a data repository—it will inevitably be a single data repository—with secure firewalls around it. However, the architectural principle for which he is arguing is that all data will be kept in one place. From a security perspective, that is the most dangerous way to store data. To return to why Estonia leads the world, there is a distribution—

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Order. That is an intervention. I am quite happy if the hon. Gentleman wants to catch my eye, but interventions should be short. I have been very lenient with that one.

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To return to the security angle, we must have assurances that only people with a genuine business need to see the personal information involved in a data-sharing arrangement will have access to it; confirmation of who will notify in the event of any security breach; and procedures in place to investigate the cause of any security breach. Paragraph 104 of the code suggests:

“You should ensure that data no longer required is destroyed promptly and rendered irrecoverable. The same will apply to data derived or produced from the original data, except where section 33 of the DPA applies (in relation to data processed for research purposes).”

At all times, we want to ensure that public confidence is taken forward with the pilots. They will be put in place only once all the boxes have been ticked. Paragraph 108 of the code states:

“You should make it easy for citizens to access data sharing arrangements and provide information so that the general public can understand what information is being shared and for what purposes. You should communicate key findings or the benefits to citizens derived from data sharing arrangements to the general public to support a better public dialogue on the use of public data.”

Security is not discretionary. Amendment 190 would not reinforce that requirement. It is not a question of compliance with systems in place. Instead, there must be adequate systems in place and Ministers must have regard to those systems to ensure they meet the essential security specifications that the Government demand.

Amendments 191 to 194 concern the codes of practice and present a similar discussion to the one we had about using “have regard to” or “compliance to”. The powers cover a range of public authorities in devolved areas, and we want to ensure flexibility in how powers will be operated, so that we can learn from what works and adapt the code as necessary. If bodies fail to adhere to the code, the Minister will make regulations to remove their ability to share information under the power as set out in paragraph 11 of the code of practice.

As I mentioned, the requirement to have regard to the code of practice does not mean that officials have discretion to disregard the code at will. They will be expected to follow the code or they will lose their ability to share data. There could be exceptional reasons why it is reasonable to depart from the requirements of the code. To fix a rigid straitjacket creates a system of bureaucracy where officials must follow processes that run contrary to logic. This is standard drafting language adopted for the above reasons in the Immigration Act 2016, the Children and Families Act 2014 and the Protection of Freedoms Act 2012, to name a few recent pieces of legislation.

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It is welcome to hear how detailed and extensive these audits will be. If they are subject to the Freedom of Information Act 2000, will the Minister consider proactively publishing them anyway, so that we can be assured that they are all kept in one place and that data sharing happens only in accordance with data-sharing arrangements that are in the public domain?

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When we set up new data-sharing arrangements, we must remember that the ICO and the devolved Administrations must be consulted and that the powers must go before Parliament again. We will have further scrutiny when considering the regulations under the affirmative procedure for secondary legislation.

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Given that the arrangements have to go through all the obstacles that the Minister has just outlined, I do not understand why not then include them in a central register, so that they are all in one place. We could then be confident that not just those cases in the Bill but all data sharing across the Government is made public and people can have confidence in how and why their data are being used and shared.

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The hon. Lady refers to new clause 35, so I would now like to address that and take her points on board. This is about informing the public about what information is being shared by public authorities and for what reason.

The Bill’s provisions already include a number of commitments to transparency and proportionality, which I have already discussed in disclosing information by public authorities. There is a consistent requirement to uphold the Data Protection Act, including its privacy principles that govern the secure, fair and transparent processing of information.

We require the publishing of privacy impact assessments and privacy notices as set out in paragraph 82 of the code of practice. The research power requires the UK Statistics Authority, as the accrediting body, to maintain and publish a register of all persons and organisations it has accredited, and they can be removed under clause 61(5), which mandates that a withdrawal of accreditation will take place if there has been a failure to have regard to the code of practice.

The requirements of the new clause would inevitably create a new set of administrative burdens, which in turn would carry significant cost implications. It is not clear how the uniform resource locator referred to would be agreed upon, or what assessment has been made of the administrative changes that may be required across the public sector. The requirement might have an unintended consequence. For example, it is possible that including information on the specific data to be disclosed would raise difficult questions about whether the public register would interfere with the duty of confidentiality or breach the provisions of the Data Protection Act. Some of the new powers—in particular, the research provisions—would involve the sharing of non-identifying information, so it is not clear how citizens would understand from a register which datasets contain information relating to them or any particular group of reasons.

The key purpose of the new powers is to simplify the legal landscape to enable public authorities to do their job more effectively and deliver better outcomes for the citizen. The new clause, however well intentioned—I respect the hon. Lady’s point—risks working against that purpose and I therefore invite her to withdraw it.

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The Opposition drafted the amendments and I accept that they may not be perfect, but the principle behind the idea of a data register is impossible to argue with. If the Minister claims that these audits will be done thoroughly and that they will be subject to the Freedom of Information Act anyway, I see no reason why they should not be proactively published, so that the public and Opposition Members can have full confidence that everything in the codes of practice, which are not statutory, is being properly adhered to.

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Does my hon. Friend concur that a proactive publication might be a lot more cost-effective than chasing after hundreds or, indeed, thousands of FOI requests?

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Absolutely. This is where the Government often miss a trick: the interrelationship between FOI and open data could drive significant efficiencies across the Government and provide citizens and the data community with valuable data, including data that are valuable to the digital economy. I appreciate that our amendment might not be perfectly drafted, but I hope that the Minister will give serious consideration to the proactive publication of these audits and of all data-sharing arrangements across the Government.

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There are existing mechanisms across Europe whereby information can be given to the public proactively. Does the hon. Lady agree that the public should not have to go through the process of making an FOI request—they should not have to go through all that hassle—to get the information that pertains to them and their lives?

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Exactly. The data belong to them; that is exactly right. They should not have to jump over legalistic hurdles to find out how and why the Government are using data that should belong to them, and the Bill completely turns the view that they should not have to do so on its head. I take the Minister’s point about the amendment not being properly drafted. We will go away and redraft it and we will absolutely return to this issue on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

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As I have already set out, the Opposition broadly support the objectives outlined in the clause, but, as we have said on several occasions, those objectives must be set within strict safeguards to enable the better management of services.

Indeed, the open data policy process, which has been referenced several times, was a practical and commendable way in which to establish key principles for data to be handled, and to seek the views of industry experts. It is just a shame that it was completely ignored.

Polls show that the public consistently approve of the better use of data across Departments to help to improve customer service; nobody could really dispute that. However, our concerns are not related to the broader principle but to the practicality of these measures.

As we heard in the evidence we received, if these new powers are used appropriately in the management of debt, they could help put a stop to aggressive, unco-ordinated approaches from Government agencies to debt. There is little doubt that debt collection for central Government Departments leaves a lot to be desired. Vulnerable citizens facing multiple hardships are being pursued in a way that is to the detriment of the overall policy of reducing debt.

Citizens Advice said in its evidence to the Committee that there has been a big growth in demand for help with debt, as policies such as the bedroom tax and complex tax credit arrangements are pushing people, through no fault of their own, into debt. The Government’s haphazard approach often compounds matters and creates perverse outcomes, whereby thousands of individuals who are claiming exactly what they should be claiming are targeted in profiling exercises, which amount to nothing short of a mass Government-sponsored phishing exercise. Such an exercise has no place in necessary Government efforts to reduce error.

Shocking research by the charity StepChange has found that these aggressive debt collection methods have resulted in Government Departments having the dubious accolade of being second, behind bailiffs and ahead of mobile phone companies, in the list of those organisations that are considered most likely to treat debtors unfairly.

Again, there is little doubt that the Government’s move to help Departments to better share necessary information on debt could help reduce the unco-ordinated approach that currently harms debtors. However, there are two problems. First, as we have heard, the Government’s debt collection process is flawed and suffers from a lack of trust; and, secondly, the clause will furnish the Government with an extension of their power in matching data, yet this year alone the Government have demonstrated an abysmal failure to match their powers to their responsibility to the users of their services. That leaves public trust hanging by a thread.

The Minister mentioned Concentrix earlier—an outsourcer I am particularly obsessed with, and an example of how data matching can go wrong and how the safeguards surrounding the match can be completely ineffective. The Government used credit reference data and data from the electoral roll to target tax credit claimants for error and fraud. Individuals were accused of cohabiting, and their benefits were withdrawn as a result. One 19-year-old girl was accused of failing to declare that she had a 74-year-old partner, even though the man was dead. One of my constituents had her tax credits stopped while she was in a coma, and another young woman went without her benefits because Concentrix assumed that living in a Joseph Rowntree Housing Trust property meant she was shacked up with a 19th-century philanthropist.

I noticed earlier this week that HMRC is up for Civil Service World’s Analysis and Use of Evidence award. If HMRC is the best the civil service currently has to offer in the use of data, we should be seriously concerned about giving it any more powers. As well as failing the hard-working vulnerable people HMRC is supposed to serve, that contract failed on an incredible scale. Concentrix breached its performance standards on more than 120 occasions in less than a year, 90% of mandatory reconsiderations were found to be successful, thousands of people had their tax credits arbitrarily withdrawn, causing severe financial hardship, and letters containing the details of individuals’ claims and why they need to prove they are entitled to tax credits were addressed to the wrong people. Those breaches of data security demonstrate the high stakes involved for the Government with these data-sharing powers.

Although HMRC has done the right thing in announcing that it will not renew that contract, we need to investigate how that happened in the first place and ensure it never happens again. The Government cannot repeatedly get this wrong when chasing error and fraud in the tax credit system and the other areas that these clauses address. There is absolutely nothing to prevent them from employing another private sector contractor, tasking it with relentlessly chasing down cash and enabling it to match data from across central Government Departments with publicly available information and build a picture of individuals and who to target.

Subsection (3)(a) seems to allow for such profiling, which could have a range of unintended and severe consequences. It gives the authority the power to take action not only to collect debt but to identify it. That important distinction extends the power of the Crown. If hon. Members think that is a hypothetical concern, they should take a look at the contract between Concentrix and HMRC, which is not a unique contract in the public sector. Under the section entitled “data analytics and matching requirements”, it says,

“The authority requires that the contractor, as part of the error and fraud compliance service, provide and apply a data matching and analytics solution to enhance the Authority’s own risk and profiling capability”.

The Minister said that the codes will be updated if the GDPR is followed in May 2018, but the Bill will be statutorily non-compliant with the GDPR, which explicitly bans the use of data for profiling.

The contract with Concentrix clearly failed, and the firm was not fit to conduct checks of that kind, but that raises chilling questions about the further extension of data-sharing powers and what can be legally provided to private companies to pursue people legitimately claiming housing benefit, child tax credits or any other benefit. The codes of practice and the legislation are very clear that personal information should be used only for the purpose for which it was disclosed, but if that purpose is so broad a power, that gives no comfort to those of us who think that their sensitive data could be used to target them.

The draft regulations provide that the Home Office, the Lord Chancellor, the Justice Department and other Crown authorities can share information for the purpose of tackling error and fraud. It would help if the Government assured us that the data will be shared only when debt has already been identified to speed up the process. The Government should rule out the type of profiling conducted by Concentrix, which led to the targeting of individuals based on erroneous data. If the power is extended to give companies such as Concentrix access to data from not only HMRC but other Government Departments and local authorities, they could build up such a picture.

However, it is clearly not only private sector outsourcing that is of concern—the public sector has shown itself to have serious flaws in the management of personal information and in debt collection. In recent years, cuts to departmental budgets and staff numbers and increasing demands from citizens for online public services have changed the way Government collect, store and manage information. The many drivers for that change include successive IT and digital strategies since 2010. We need to ensure that the Government as a whole improve their data-sharing practices. That is why we will come back to our amendment, which would make reporting a data breach to the Information Commissioner mandatory if it has met a number of conditions. We simply cannot have personal data being breached and the Information Commissioner and the individual not being informed if it is serious.

We are broadly in favour of the power set out in the clause, but we have serious concerns about its use, even within the bounds of the purpose for which it is disclosed. We are concerned that the power will be used to identify debt, as the Bill clearly states, and we would be grateful for reassurance from the Minister.

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Good debt management is a key part of achieving the Government’s fiscal policy objectives. Clause 40 provides a permissive power that will enable information to be shared for the purposes of identifying, collecting, or taking administrative or legal action as a result of debt owed to the Government. With more than £24 billion of debt owed to the Government, the problem is clearly significant.

Public authorities need to work together more intelligently to ensure that more efficient management of debt occurs. We believe that the new power will assist in achieving that. By enabling the efficient sharing of information to allow appropriate bodies to draw on a wider source of relevant data, informed decisions can be made about a customer’s circumstances and their ability to pay. Sharing information across organisational boundaries will help the Government to understand the scale of the issues individuals are facing, and where vulnerable customers are identified, they can be given appropriate support and advice.

Citizens Advice stated:

“This new power is an opportunity to advance the fairness and professionalisation agenda in government debt collection…Sharing data between debt collecting departments will create improved opportunities for better treatment of people in vulnerable situations, and must be matched with fairer and more effective dispute resolution processes.”

The Government agree with that and have worked with non-fee paying debt advice agencies to develop fairness principles to accompany the power, which are included in annex A of the code of practice.

It is important to dwell on the principles that organisations will adhere to, which state:

“Pilots operating under the new data sharing power should aim to use relevant data to help to differentiate between: A customer who cannot pay their debt because of vulnerability or hardship…; A customer who is in a position to pay their debts but who may need additional support; and A customer who has the means to pay their debt, but chooses not to pay - so public authorities, and private bodies acting on their behalf, can assess which interventions could best be used to recover the debt”,

and that:

“Pilots must be conscious of the impact debt collection practices have on vulnerable customers and customers in hardship”.

The principles go on to cover:

“Using relevant sources of data and information to make informed decisions about a customer's individual circumstances and their ability to pay.”

That process could include:

“An assessment of income versus expenditure to create a tailored and affordable repayment plan based on in work and out of work considerations, including the ability to take irregular income into account; and consideration of the need for breathing space to seek advice, or forbearance, in cases of vulnerability and hardship…Where a vulnerable customer is identified, they should be given appropriate support and advice, which may include signposting to non-fee paying debt advice agencies.”

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I would be grateful if the Minister confirmed that those pilots and the powers enabled in the Bill will apply only to individuals already identified as being in debt, and that they will not seek to profile individuals who may or may not be in debt.

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Yes, I can confirm that. Moving forward, I reassure the Committee that we will continue to work closely with Citizens Advice and StepChange to look at fairness in Government debt management processes. Only HMRC and DWP have full reciprocal debt data-sharing gateways in place, under the Welfare Reform Act 2012. This power will help level the playing field for specified public authorities by providing a straightforward power to share data for clearly outlined purposes. Current data-sharing arrangements are time-consuming and complex to set up, and significantly limit the ability of public authorities to share debt data. This power will help facilitate better cross-Government collaboration that will help drive innovation to improve debt management. The clause will provide a clear power for specified public authorities to share data for those purposes, and will remove the existing complications and ambiguities over what can and cannot be shared and by whom.

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The Minister may have just clarified the point I was seeking to tease out of him. The problems that my hon. Friend the Member for Sheffield, Heeley described show that, far from helping people with debt, the agencies acting on behalf of the Government have created debt that did not exist previously by misusing Government data. The Minister may have just assured us that that will not be the case. If the Minister is really concerned about reducing Government debt, perhaps the Government should have not chopped in half the number of HMRC tax inspectors and instead gone after the people who owe the Government tax.

Question put and agreed to.

Clause 40 accordingly ordered to stand part of the Bill.

Clause 41

Further provisions about power in section 40

Amendments made: 120, in clause 41, page 40, line 5, at end insert—

“(ba) for the prevention or detection of crime or the prevention of anti-social behaviour,”

This amendment and amendment 123 create a further exception to the bar on using information disclosed under Chapter 3 of Part 5 of the Bill for a purpose other than that for which it was disclosed. The amendments allow use for the prevention or detection of crime or the prevention of anti-social behaviour.

Amendment 121, in clause 41, page 40, line 6, leave out

“(whether or not in the United Kingdom)”.

This amendment removes the provision stating that a criminal investigation for the purposes of clause 41(2) may be within or outside the United Kingdom. This is for consistency and on the basis that a reference to a criminal investigation covers an investigation overseas in any event.

Amendment 122, in clause 41, page 40, line 8, leave out

“and whether or not in the United Kingdom”.

This amendment removes the provision stating that legal proceedings for the purposes of clause 41 may be within or outside the United Kingdom. This is for consistency and on the basis that a reference to legal proceedings covers proceedings overseas in any event.

Amendment 123, in clause 41, page 40, line 11, at end insert—

‘( ) In subsection (2)(ba) “anti-social behaviour” has the same meaning as in Part 1 of the Anti-social Behaviour, Crime and Policing Act 2014 (see section 2 of that Act).”—(Chris Skidmore.)

See the explanatory statement for amendment 120.

Clause 41, as amended, ordered to stand part of the Bill.

Clause 42

Confidentiality of personal information

Amendments made: 124, in clause 42, page 41, line 4, at end insert—

“(da) for the prevention or detection of crime or the prevention of anti-social behaviour,”

This amendment and amendment 127 create a further exception to the bar on the further disclosure of information disclosed under Chapter 3 of Part 5 of the Bill, allowing disclosure for the prevention or detection of crime or the prevention of anti-social behaviour.

Amendment 125, in clause 42, page 41, line 5, leave out

“(whether or not in the United Kingdom)”.

This amendment removes the provision stating that a criminal investigation for the purposes of clause 42(2) may be within or outside the United Kingdom. This is for consistency and on the basis that a reference to a criminal investigation covers an investigation overseas in any event.

Amendment 126, in clause 42, page 41, line 8, leave out

“and whether or not in the United Kingdom”.

This amendment removes the provision stating that legal proceedings for the purposes of clause 42(2) may be within or outside the United Kingdom. This is for consistency and on the basis that a reference to legal proceedings covers proceedings overseas in any event.

Amendment 127, in clause 42, page 41, line 12, at end insert—

‘( ) In subsection (2)(da) “anti-social behaviour” has the same meaning as in Part 1 of the Anti-social Behaviour, Crime and Policing Act 2014 (see section 2 of that Act).”

See the explanatory statement for amendment 124.

Amendment 128, in clause 42, page 41, line 13, leave out subsections (3) and (4) insert—

‘( ) A person commits an offence if—

(a) the person discloses personal information in contravention of subsection (1), and

(b) at the time that the person makes the disclosure, the person knows that the disclosure contravenes that subsection or is reckless as to whether the disclosure does so.” —(Chris Skidmore.)

This amendment applies to the disclosure of personal information in contravention of subsection (1) of clause 42. It has the effect that it is an offence to do so only if the person knows that the disclosure contravenes that subsection or is reckless as to whether it does so.

Clause 42, as amended, ordered to stand part of the Bill.

Clause 43 ordered to stand part of the Bill.

Clause 44

Code of practice

Amendment made: 129, in clause 44, page 42, line 7, at end insert—

‘( ) The code of practice must be consistent with the code of practice issued under section 52B (data-sharing code) of the Data Protection Act 1998 (as altered or replaced from time to time).”—(Chris Skidmore.)

This amendment requires a code of practice issued under clause 44 by the relevant Minister and relating to the disclosure of information under clause 40 to be consistent with the data-sharing code of practice issued by the Information Commissioner under the Data Protection Act 1998.

Question proposed, That the clause stand part of the Bill.

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In evidence, Citizens Advice told us that an estimated £1 in every £5 of debt in this country is debt to the Government. It found that its clients can suffer detriment when public bodies have overly aggressive, unco-ordinated and inconsistent approaches to debt collection. There is also fairly substantial evidence that central Government debt collection lags behind the high standards expected of other creditors, including water companies, council tax collection departments, banks and private debt collectors.

I ask the Minister to consider extending the common standard financial statement to set affordable payments, as the energy, water, banking and commercial debt collection sectors do. That is demonstrated by research from StepChange, which found that in terms of debt collection, those facing severe financial difficulty were likely to rate the DWP and local authorities only just behind bailiffs as those most likely to treat them unfairly.

We know there has been a big growth in demand for help with debts from Government. Hard-pressed households feel public sector creditors are behaving worse than private companies and even payday lenders. That is a serious indictment of the lack of binding standards that apply to Government bodies chasing outstanding debt. I am pleased to note that the chief executive of HMRC has just announced that it will not be outsourcing anything ever again in relation to tax credits, following the Concentrix debate. We very much welcome that.

I would be grateful if the Minister confirmed, when he has received advice from his colleagues, whether the Government will update the standards relating to public debt collection, so that they are in line with the private sector.

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The Government have started work to look into the common financial statement and standard financial statement alongside non-fee-paying debt advice agencies. That work is in its infancy, but the evidence will help us to decide whether the CFS/SFS could have benefits for Government. Until that work is completed, the Government cannot commit fully to adopt the CFS/SFS.

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Will the Minister give a timeframe for when that work will be completed and when we will have a statement from the Government?

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It is not possible for me to give a timeframe in a Bill Committee discussing clause stand part. I suggest that I write to the hon. Lady, setting out those details in due course.

Government debt is clearly different from private sector debt. It is not contractual. The Government provide a wide range of services to citizens, such as the NHS and education system, and targeted support for those who meet the eligibility requirements to receive benefits. In return, citizens are required to pay taxes and repay any benefit in tax credit overpayments or fines that have been imposed for criminal activity. That revenue helps to fund vital services. The Government aim to ensure that customers are treated fairly. We encourage customers to engage early, so that they can agree on an affordable and sustainable repayment plan that takes individual circumstances into account. We understand that if poor debt collection practice occurs, that can cause distress.

The clause requires in particular that the code of practice must be issued by the Minister. It sets out more detail about how the power will operate and the disclosure and use of data. All specified public authorities and other bodies disclosing or using information under the power must have regard to the code of practice, which sets out in detail best practice of how the data-sharing power should be used. That includes what data should be shared, how data will be protected, issues around privacy and confidentiality and, significantly, the set of fairness principles that I talked about, which must be considered when exercising the power in clause 40. With that in mind, and the fact I have discussed extensively how the codes of practice will help protect the most vulnerable in society, I hope the clause will stand part of the Bill.

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I am grateful to the Minister for the commitment to write to me. It would be welcome if he could write to all members of the Committee. That shows how committed he is to improving the detail of the clause.

Question put and agreed to.

Clause 44, as amended, accordingly ordered to stand part of the Bill.

Clause 45

Duty to review operation of Chapter

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I rise to speak to amendment 130, in clause 45, page 43, line 10, at end insert—

‘( ) The relevant Minister may only make regulations under subsection (5)—

(a) in a case where the regulations include provision relating to Scotland, with the consent of the Scottish Ministers;

(b) in a case where the regulations include provision relating to Wales, with the consent of the Welsh Ministers;

(c) in a case where the regulations include provision relating to Northern Ireland, with the consent of the Department of Finance in Northern Ireland.”

This amendment requires the relevant Minister to obtain the consent of the Scottish Minsters, Welsh Ministers or Department of Finance before making regulations which, following a review under clause 45, amend or repeal Chapter 3 of Part 5 and make provision relating to Scotland, Wales or Northern Ireland respectively.

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With this it will be convenient to discuss Government amendment 141.

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It is envisaged that information-sharing powers will enable sharing arrangements to be set, but they may take place solely within a devolved territory or involving data relating to devolved matters. The amendments intend to require the consent of Scottish Ministers, Welsh Ministers and the Department of Finance in Northern Ireland before making any regulations to amend or repeal the provisions that relate to those territories. Regrettably, we have found technical flaws with the amendments, so we will reconsider this issue and return to it at a later stage.

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I would be grateful if the Minister confirmed what technical issues there are with the amendments.

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There are a number of technical issues in these amendments, and we are determined to consult thoroughly with the devolved Administrations and the relevant offices. We will do so in due course. We will return to that later in the Bill.

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It is unusual for the Government to introduce amendments and then find technical problems with them. That is obviously what has happened and it is very unfortunate. Given that we were expecting to debate the amendments at this point, can the Minister give us an indication of when he will bring back non-defective amendments—or whether, indeed, he intends to bring any further amendments in this area?

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When it comes to the point of process that the hon. Gentleman mentions, we intend to return to this further into the Bill. The particular issue that arose with the amendments as currently drafted is that the need for consent needs to apply correctly only to devolved matters. We found that the amendments do not reflect that, which is why we wish to withdraw them today.

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It would be helpful if that were to happen during the Commons stage of the Bill, rather than in the Lords, so that this House has an opportunity, at least on Report, to consider this aspect.

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I note the hon. Gentleman’s concerns and will reflect on them. I cannot give any further information at this moment. We hope to ensure that the amendments, when later drafted, will reflect the Government’s desire to listen carefully to all devolved nations and ensure that this applies across the UK.

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The amendment is not moved.

Clause 45 ordered to stand part of the Bill.

Clauses 46 to 48 ordered to stand part of the Bill.

Clause 49

Further provisions about power in section 48

Amendments made: 131, in clause 49, page 46, line 43, at end insert—

“(ba) for the prevention or detection of crime or the prevention of anti-social behaviour,”

This amendment and amendment 134 create a further exception to the bar on using information disclosed under Chapter 4 of Part 5 of the Bill for a purpose other than that for which it was disclosed. The amendments allows use for the prevention or detection of crime or the prevention of anti-social behaviour.

Amendment 132, in clause 49, page 46, line 44, leave out “(whether or not in the United Kingdom)”

This amendment removes the provision stating that a criminal investigation for the purposes of clause 49(2) may be within or outside the United Kingdom. This is for consistency and on the basis that a reference to a criminal investigation covers an investigation overseas in any event.

Amendment 133, in clause 49, page 46, line 46, leave out “and whether or not in the United Kingdom”

This amendment removes the provision stating that legal proceedings for the purposes of clause 49(2) may be within or outside the United Kingdom. This is for consistency and on the basis that a reference to legal proceedings covers proceedings overseas in any event.

Amendment 134, in clause 49, page 47, line 6, at end insert—

‘( ) In subsection (2)(ba) “anti-social behaviour” has the same meaning as in Part 1 of the Anti-social Behaviour, Crime and Policing Act 2014 (see section 2 of that Act).”—(Chris Skidmore.)

See the explanatory statement for amendment 131.

Clause 49, as amended, ordered to stand part of the Bill.

Clause 50

Confidentiality of personal information

Amendments made: 135, in clause 50, page 47, line 44, at end insert—

“(da) for the prevention or detection of crime or the prevention of anti-social behaviour,”

This amendment and amendment 138 create a further exception to the bar on the further disclosure of information disclosed under Chapter 4 of Part 5 of the Bill, allowing disclosure for the prevention or detection of crime or the prevention of anti-social behaviour.

Amendment 136, in clause 50, page 48, line 1, leave out “(whether or not in the United Kingdom)”

This amendment removes the provision stating that a criminal investigation for the purposes of clause 50(2) may be within or outside the United Kingdom. This is for consistency and on the basis that a reference to a criminal investigation covers an investigation overseas in any event.

Amendment 137, in clause 50, page 48, line 4, leave out “and whether or not in the United Kingdom”

This amendment removes the provision stating that legal proceedings for the purposes of clause 50(2) may be within or outside the United Kingdom. This is for consistency and on the basis that a reference to legal proceedings covers proceedings overseas in any event.

Amendment 138, in clause 50, page 48, line 11, at end insert—

‘( ) In subsection (2)(da) “anti-social behaviour” has the same meaning as in Part 1 of the Anti-social Behaviour, Crime and Policing Act 2014 (see section 2 of that Act).”

See the explanatory statement for amendment 135.

Amendment 139, in clause 50, page 48, line 12, leave out subsections (3) and (4) insert—

‘( ) A person commits an offence if—

(a) the person discloses personal information in contravention of subsection (1), and

(b) at the time that the person makes the disclosure, the person knows that the disclosure contravenes that subsection or is reckless as to whether the disclosure does so.”—(Chris Skidmore.)

This amendment applies to the disclosure of personal information in contravention of subsection (1) of clause 50. It has the effect that it is an offence to do so only if the person knows that the disclosure contravenes that subsection or is reckless as to whether it does so.

Clause 50, as amended, ordered to stand part of the Bill.

Clause 51 ordered to stand part of the Bill.

Clause 52

Information disclosed by the Revenue and Customs

Amendment made: 140, in clause 52, page 49, line 7, at end insert—

‘( ) The code of practice must be consistent with the code of practice issued under section 52B (data-sharing code) of the Data Protection Act 1998 (as altered or replaced from time to time).”—(Chris Skidmore.)

This amendment requires a code of practice issued under clause 52 by the relevant Minister and relating to the disclosure of information under clause 48 to be consistent with the data-sharing code of practice issued by the Information Commissioner under the Data Protection Act 1998.

Clause 52, as amended, ordered to stand part of the Bill.

Clauses 53 to 55 ordered to stand part of the Bill.

Clause 56

Disclosure of information for research purposes

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I beg to move amendment 142, in clause 56, page 52, line 23, at end insert—

‘(3A) For the purposes of the first condition the information may be processed by—

(a) the public authority,

(b) a person other than the public authority, or

(c) both the public authority and a person other than the public authority,

(subject to the following provisions of this Part).

(3B) Personal information may be disclosed for the purpose of processing it for disclosure under subsection (1)—

(a) by a public authority to a person involved in processing the information for that purpose;

(b) by one such person to another such person.”

This amendment and amendments 143, 144, 146 to 149, 151 to 153, 159, 160 and 162 to 166 relate to the processing of information for disclosure under clause 56 so as to remove identifying features. They make it clear that a person other than the public authority which is the source of the information may be involved in processing that information.

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With this it will be convenient to discuss Government amendments 143 to 153, 159, 160 and 162 to 170.

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The amendments apply to the research power. Together they provide clarity on the conditions that must be met when information provided by public authorities for research purposes is processed, as set out in clause 56. They also require public authorities to obtain accreditation to process personal information with that power, and they provide further clarity on the exclusion of health and adult social care information in clauses 56 and 63.

Personal information must not be disclosed to researchers under the power unless it is first processed in a way that protects the privacy of all data subjects. Those involved in the processing of information must be accredited as part of the conditions under this power. Processing may be carried out by the public authority that holds the data concerned, a different public authority, or specialist persons or organisations outside the public sector, including those providing secure access facilities and other functions, those commonly referred to as trusted third parties, or a combination of the two.

These amendments have been tabled to ensure that the position is reflected accurately in clause 56 and to ensure that it is clear that each accredited processor can disclose information to other accredited processors as required. In addition, they clarify that a person involved in the processing of information other than the public authority holding the information can disclose the de-identified information to researchers.

As drafted, the Bill does not require public authorities to be accredited or to process data for disclosure to researchers. On reflection, the Government recognise the importance of ensuring that all bodies involved in processing information are subject to the same level of accountability and scrutiny. The amendments will enable the UK Statistics Authority, as the accrediting body, to enforce a consistent approach to best practice for handling information.

Finally, it is important that the exclusion of health and adult social care data is defined in a way that is accurate and transparent. As drafted, the research clauses could be interpreted as excluding from the power public authorities that are primarily health and adult social care providers, but which provide some health-related services. That could mean that, contrary to the intention of the Bill, public authorities, including local authorities that provide a range of services, are at risk of being barred from sharing data relating to their functions because they provide some health and social care-related services.

The amendments will clarify that public authorities whose sole function is to provide health and/or adult social care services will be excluded from the power. They also clarify that public authorities that provide health and/or adult social care services as part of a range of services can share information, including health and adult social care data.

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I very much welcome the amendments. Has the Minister considered the Information Commissioner’s recommendation to have an additional offence for re-identifying anonymised personal information, as in the Australian model? I otherwise support the amendments.

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We are obviously working closely with the Information Commissioner. We will consider all her recommendations in due course, but I cannot comment on that at this moment in time.

Amendment 142 agreed to.

Ordered, That further consideration be now adjourned. —(Graham Stuart.)

Adjourned till this day at Two o’clock.

Digital Economy Bill (Tenth sitting)

The Committee consisted of the following Members:

Chairs: † Mr Gary Streeter, Graham Stringer

Adams, Nigel (Selby and Ainsty) (Con)

† Brennan, Kevin (Cardiff West) (Lab)

† Davies, Mims (Eastleigh) (Con)

Debbonaire, Thangam (Bristol West) (Lab)

† Foxcroft, Vicky (Lewisham, Deptford) (Lab)

† Haigh, Louise (Sheffield, Heeley) (Lab)

† Hancock, Matt (Minister for Digital and Culture)

Hendry, Drew (Inverness, Nairn, Badenoch and Strathspey) (SNP)

† Huddleston, Nigel (Mid Worcestershire) (Con)

† Jones, Graham (Hyndburn) (Lab)

† Kerr, Calum (Berwickshire, Roxburgh and Selkirk) (SNP)

Mann, Scott (North Cornwall) (Con)

† Matheson, Christian (City of Chester) (Lab)

† Menzies, Mark (Fylde) (Con)

† Perry, Claire (Devizes) (Con)

† Skidmore, Chris (Parliamentary Secretary, Cabinet Office)

† Stuart, Graham (Beverley and Holderness) (Con)

† Sunak, Rishi (Richmond (Yorks)) (Con)

Marek Kubala, Committee Clerk

† attended the Committee

Public Bill Committee

Thursday 27 October 2016

(Afternoon)

[Mr Gary Streeter in the Chair]

Digital Economy Bill

Clause 56

Disclosure of information for research purposes

Amendments made: 143, in clause 56, page 52, line 31, after “person”, insert

“, other than the public authority,”.

See the explanatory statement for amendment 142.

Amendment 144, in clause 56, page 52, line 32, leave out “this section” and insert “subsection (1)”.

See the explanatory statement for amendment 142.

Amendment 145, in clause 56, page 52, line 35, at end insert—

“() the public authority, if the public authority is involved in processing the information for disclosure under subsection (1);”.

This amendment has the effect that a public authority which processes information for disclosure under clause 56 must be accredited for that purpose under clause 61.

Amendment 146, in clause 56, page 52, line 37, leave out “this section” and insert “subsection (1)”.

See the explanatory statement for amendment 142.

Amendment 147, in clause 56, page 52, line 38, leave out “this section” and insert “subsection (1)”.

See the explanatory statement for amendment 142.

Amendment 148, in clause 56, page 52, line 41, leave out “this section” and insert “subsection (1)”.

See the explanatory statement for amendment 142.

Amendment 149, in clause 56, page 53, line 1, leave out subsection (9).—(Chris Skidmore.)

See the explanatory statement for amendment 142.

Question proposed, That the clause, as amended, stand part of the Bill.

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It is a pleasure to serve under your chairmanship, Mr Streeter. There is little need to dwell on this chapter of the Bill because of the safeguards that, as we have heard, are already in place and are well tried and tested. I was greatly encouraged that the Royal Statistical Society said in our evidence session that there needs to be a clear and well understood framework for the sharing of such information, as proposed in this part of the Bill. As we have said at length, we support that.

Most importantly for this debate, the Office for National Statistics operates transparently and publishes guidance on what data it uses and when, and on the public value that is derived from the data and information supplied to it for the purposes of producing official statistics and statistical research. The ONS’s information charter sets out how it carries out its responsibility for handling personal information, and the ONS’s respondent charters for business surveys and household and individual surveys set out the standards that respondents can expect.

The code of practice for official statistics has statutory underpinning in the Statistics and Registration Service Act 2007. Statisticians are obliged to adhere to its ethical requirements, including its principles of integrity, confidentiality and the use of administrative sources for statistical purposes. The Royal Statistical Society said that consideration could usefully be given to whether a new framework for the national statistician to access identifiable data held across the Government and beyond should require a supplementary code of conduct, to extend further public confidence. I would be grateful to the Minister if he confirmed whether he has responded to that and what steps he intends to take on that point.

Finally, the national statistician recently established the national statistician’s data ethics advisory committee, which provides ethical consideration of proposals to access, share and use data. The majority of the committee are independent and lay members from outside the Government, and it operates transparently with all papers and minutes published. It provides independent scrutiny of data shares and reports to the national statistician, who then reports to the UK Statistics Authority board. That model could easily be transposed to better protect data across the Government, as described in other chapters in the Bill.

We are happy to support the measures given the excellent and long-standing safeguards that are already in place, and we hope that, in time, the codes and other requirements in other parts of the Bill follow suit.

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The clause will create a clear, permissive power for public authorities to disclose information that they hold for the purpose of research in the public interest. It will ensure that any personal information is processed before it is disclosed and that a person’s identity is not specified in the information, so that a person’s identity cannot be deduced from that information. It will establish a set of conditions to ensure that any processing of personal information is undertaken in a way that protects the privacy of individuals.

To maintain a truly innovative and competitive economy and to ensure that decisions taken on a range of economic and social issues are informed by the best possible evidence base, it is essential that we maximise the use of rich and varied sources of administrative information that is held across public data.

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I am not sure whether the Minister is aware, but Scottish universities share all their research on the internet for the public to read, ensuring world-class Scottish research can help the world. Do the Government agree that such rules should apply to all publications resulting from the research and statistics chapters of the Bill?

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I think that it is up to each university to have a policy on what research should be published and when. There is a particular situation in Scotland, but other universities may decide that their research may be used for purposes that remain confidential. Publication is up to the universities and academic bodies to decide.

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The Minister is absolutely right—perhaps I rushed my question. I was trying to emphasise the point that, when data are shared, will he match that transparency, so that citizens can see what public benefit has been drawn from the use of their data?

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I shall come in a moment to the UK Statistics Authority’s position on the use of national statistics; it would benefit enormously from these measures. The potential benefits from increased access to information extend far beyond the research community. It is generally accepted that increased research and development leads to improved productivity and therefore increased economic growth. Information is increasingly a key raw material.

The research community has for some time been prevented from making better use of information held by the public sector, due to a complex legal landscape that has evolved over time. As a result, public authorities are often uncertain about their powers to share information, leading to delays, in some cases lasting years. In the meantime, projects become obsolete or are abandoned.

The Administrative Data Taskforce warned in its 2012 report that the UK was lagging behind other countries in its approach to this issue. It called for a generic legal power to allow public authorities to provide information for research purposes. As well as providing that power, which will remove the uncertainty that has frustrated the research community, the clause will provide a set of conditions that must be complied with if personal information is to be shared.

The conditions can be summarised as the sharing and use only of information that has been de-identified to industry standards to remove information that would identify, or is reasonably likely to identify, an individual, and the requirements that those who process information that identifies a person take reasonable steps to minimise accidental disclosure and prevent deliberate disclosure of such information, that all those who process personal information or receive or use processed personal information are subject to an accreditation process overseen by the UKSA, whether they are researchers, technicians or those who provide secure environments for linking and accessing data, that research for the purposes of which the information is disclosed is accredited and that all those involved in the exercise of the power adhere to a code of practice that is produced and maintained by the UKSA.

The UKSA is the designated accredited body with a duty to maintain and publish registers of all those accredited for any purpose under the power. That includes all those who may be involved in preparing personal information for disclosure to researchers and the research project itself. The results or outcomes of the research project must be publicly available, to demonstrate that the research is for the public good. The UKSA has a duty to maintain and publish the criteria for accreditation, and all activity under the power will be subject to a code of practice issued by the UKSA. I hope that answers the hon. Gentleman’s concerns.

Turning to the willingness for this to happen, the clause represents an important step forward for research in the UK. It will allow greater opportunities to produce high-quality research, which, in the words of the Economic and Social Research Council, can place

“the UK at the forefront of the international scientific landscape.”

It will allow greater opportunities to improve our understanding of our economy and society.

I would like to put on record the comments of Sir Andrew Dilnot, the chair of the UKSA:

“The Digital Economy Bill, currently before the House of Commons Public Bill Committee, represents a unique opportunity to deliver the transformation of UK statistics. The existing legal framework governing access to data for official statistics is complex and time-consuming. The proposals in the Bill, by making use of data already held across Government and beyond, would deliver better access to administrative data and for the purposes of statistics and research, delivering significant efficiencies and savings for individuals, households and businesses. Decision-makers need accurate and timely data to make informed decisions, in particular about the allocation of public resource. This Bill will deliver better statistics and statistical research that help Britain make better decisions.”

Question put and agreed to.

Clause 56, as amended, accordingly ordered to stand part of the Bill.

Clause 57

Provisions supplementary to section 56

Amendments made: 150, in clause 57, page 53, line 24, at end insert—

‘( ) In its application to a public authority with functions relating to the provision of health services or adult social care, section 56 does not authorise the disclosure of information held by the authority in connection with such functions.”

This amendment and amendments 168 to 170 ensure that Chapter 5 of Part 5 applies to a public authority with functions relating to the provision of health services or adult social care and other functions, but that in such a case the powers to disclose in the Chapter only apply to information held in connection with the other functions.

Amendment 151, in clause 57, page 53, line 28, leave out “56” and insert “56(1)”.(Chris Skidmore.)

See the explanatory statement for amendment 142.

Clause 57, as amended, ordered to stand part of the Bill.

Clause 58

Bar on further disclosure of personal information

Amendments made: 152, in clause 58, page 53, line 38, leave out “56(9)” and insert “56(3B)”.

See the explanatory statement for amendment 142.

Amendment 153, in clause 58, page 54, line 2, at end insert “(including section56(3B))”.

See the explanatory statement for amendment 142.

Amendment 154, in clause 58, page 54, line 6, at end insert—

“(da) which is made for the prevention or detection of crime or the prevention of anti-social behaviour,”.

This amendment and amendment 157 create a further exception to the bar on the further disclosure of information which is disclosed under clause 56 (so that it can be processed for disclosure under that section), allowing disclosure for the prevention or detection of crime or the prevention of anti-social behaviour.

Amendment 155, in clause 58, page 54, line 7, leave out

“(whether or not in the United Kingdom)”.

This amendment removes the provision stating that a criminal investigation for the purposes of clause 58(3) may be within or outside the United Kingdom. This is for consistency and on the basis that a reference to a criminal investigation covers an investigation overseas in any event.

Amendment 156, in clause 58, page 54, line 10, leave out

“and whether or not in the United Kingdom”.

This amendment removes the provision stating that legal proceedings for the purposes of clause 58(3) may be within or outside the United Kingdom. This is for consistency and on the basis that a reference to legal proceedings covers proceedings overseas in any event.

Amendment 157, in clause 58, page 54, line 11, at end insert—

‘( ) In subsection (3)(da) “anti-social behaviour” has the same meaning as in Part 1 of the Anti-social Behaviour, Crime and Policing Act 2014 (see section 2 of that Act).”

See the explanatory statement for amendment 154.

Amendment 158, in clause 58, page 54, line 21, leave out subsections (5) and (6) insert—

‘( ) A person commits an offence if—

(a) the person discloses personal information in contravention of subsection (2), and

(b) at the time that the person makes the disclosure, the person knows that the disclosure contravenes that subsection or is reckless as to whether the disclosure does so.

This amendment applies to the disclosure of personal information in contravention of subsection (2) of clause 58. It has the effect that it is an offence to do so only if the person knows that the disclosure contravenes that subsection or is reckless as to whether it does so.

Amendment 159, in clause 58, page 54, line 39, leave out “56(9)” and insert “56(3B)”. (Chris Skidmore.)

See the explanatory statement for amendment 142.

Clause 58, as amended, ordered to stand part of the Bill.

Clause 59

Information disclosed by the Revenue and Customs

Amendment made: 160, in clause 59, page 54, line 43, leave out “56(9)” and insert “56(3B)”.—(Chris Skidmore.)

See the explanatory statement for amendment 142.

Clause 59, as amended, ordered to stand part of the Bill.

Clause 60

Code of practice

Amendments made: 161, in clause 60, page 55, line 19, at end insert—

‘( ) The code of practice must be consistent with the code of practice issued under section 52B (data-sharing code) of the Data Protection Act 1998 (as altered or replaced from time to time).”.

This amendment requires a code of practice issued under clause 60 by the relevant Minister and relating to the disclosure of information under clause 56 to be consistent with the data-sharing code of practice issued by the Information Commissioner under the Data Protection Act 1998.

Amendment 162, in clause 60, page 55, line 24, leave out “56” and insert “56(1)” (Chris Skidmore.)

See the explanatory statement for amendment 142.

Clause 60, as amended, ordered to stand part of the Bill.

Clause 61

Accreditation for the purposes of this Chapter

Amendments made: 163, in clause 61, page 56, line 7, leave out “56” and insert

“subsection (1) of section 56”.

See the explanatory statement for amendment 142.

Amendment 164, in clause 61, page 56, line 9, leave out “section” and insert “subsection”.

See the explanatory statement for amendment 142.

Amendment 165, in clause 61, page 56, line 11, leave out “section” and insert “subsection”.

See the explanatory statement for amendment 142.

Amendment 166, in clause 61, page 56, line 23, leave out “56” and insert “56(1)”.

See the explanatory statement for amendment 142.

Amendment 167, in clause 61, page 56, line 38, at end insert—

‘(6A) The Statistics Board—

(a) may from time to time revise conditions or grounds published under this section, and

(b) if it does so, must publish the conditions or grounds as revised.

(6B) Subsection (6) applies in relation to the publication of conditions or grounds under subsection (6A) as it applies in relation to the publication of conditions or grounds under subsection (2).”—(Chris Skidmore.)

This amendment enables the Statistics Board to revise the conditions and grounds it establishes for the accreditation and withdrawal of accreditation of people and research for the purposes of information sharing under Chapter 5 of Part 5 of the Bill.

Clause 61, as amended, ordered to stand part of the Bill.

Clause 62 ordered to stand part of the Bill.

Clause 63

Interpretation of this Chapter

Amendments made: 168, in clause 63, page 57, line 18, leave out subsection (2) and insert—

‘(2) A person is not a public authority for the purposes of this Chapter if the person—

(a) only has functions relating to the provision of health services,

(b) only has functions relating to the provision of adult social care, or

(c) only has functions within paragraph (a) and paragraph (b).

(2A) The following are to be disregarded in determining whether subsection (2) applies to a person—

(a) any power (however expressed) to do things which are incidental to the carrying out of another function of that person;

(b) any function which the person exercises or may exercise on behalf of another person.”.

See the explanatory statement for amendment 150.

Amendment 169, in clause 63, page 57, line 21, leave out “subsection (2)(a)” and insert “this Chapter”.

See the explanatory statement for amendment 150.

Amendment 170, in clause 63, page 57, line 30, leave out “subsection (2)(b)” and insert “this Chapter”.—(Chris Skidmore.)

See the explanatory statement for amendment 150.

Clause 63, as amended, ordered to stand part of the Bill.

Clause 64

Disclosure of non-identifying information by HMRC

Question proposed, That the clause stand part of the Bill.

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Very briefly, I would be grateful to the Minister if he confirmed why a separate, further clause is necessary on disclosure of non-identifying information by HMRC. The safeguards in the rest of the Bill are sufficient.

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As the holder of some of the most useful datasets in the public sector, HMRC has an interest in sharing data more extensively where it does not compromise taxpayer confidentiality. The clause relates to the current legal constraints for HMRC on the disclosure of non-identifying information, allowing the UK tax authority to share information for purposes in the public interest. It deals with information that does not reveal a person’s identity: either general information that is never related to a taxpayer or information aggregated to such a degree that it does not reveal anything particular to a person.

HMRC consulted on the proposals in 2013 and received a favourable response, subject to the appropriate safeguards being put in place. The Bill introduces a permissive power allowing HMRC to decide on a case-by-case basis whether to share information, based on assessment of the benefits and risks of disclosure and taking into account the impact of HMRC’s resources and the delivery of its business objectives.

The clause will also address the current anomaly whereby HMRC could be legally obliged to provide aggregate, non-identifying information under the Freedom of Information Act, yet its statutory framework might not allow HMRC to disclose the same information to Government Departments. In response to the consultation, the Information Commissioner welcomed the assurance that HMRC disclosures will be subject to the same robust principles and processes currently applied to the Office for National Statistics. The requirement that the disclosure should be for a purpose in the public interest is the same approach that is taken in chapter 5. It includes objectives such as improving policy making across Government and delivering better public services. The clause will enable HMRC to support policy development and research analysis in important areas not linked to its function, such as social mobility and education, and will help to provide added transparency through the greater potential to contribute to open data.

Question put and agreed to.

Clause 64 accordingly ordered to stand part of the Bill.

Clauses 65 and 66 ordered to stand part of the Bill.

Clause 67

Access to information by Statistics Board

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I beg to move amendment 171, in clause 67, page 60, line 37, at end insert—

“() a subsidiary undertaking of the Bank of England within the meaning of the Companies Acts (see sections 1161 and 1162 of the Companies Act 2006),”

This amendment means that the provisions in new section 45B of the Statistics and Registration Service Act 2007 about access to information by the Statistics Board will apply to subsidiaries of the Bank of England as well as to the Bank itself.

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With this it will be convenient to discuss Government amendments 172 to 176.

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These are minor and technical amendments to various definitions in proposed new sections 45B and 45C of the Statistics and Registration Service Act 2007. Sections 45B and 45C give the UK Statistics Authority a right of access to information required for its functions held by Crown bodies and public authorities respectively. Under section 45B, if a Crown body declines to provide information requested by the UK Statistics Authority, the authority may decide to lay the related correspondence before the relevant legislature, including the relevant devolved legislature for the devolved Crown bodies. Under section 45C, before issuing a notice to a devolved public authority that is not a Crown body, the UK Statistics Authority must seek consent from the relevant devolved Administrations.

Amendments 173 and 176 amend the definition of the phrase “Wales public authority” in sections 45B and 45C to refer to a new definition of “Wales public authority” being created by the Wales Bill, which is currently going through the House of Lords. They ensure that sections 45B and 45C are updated with a new definition of “Wales public authority” and will operate consistently with other definitions.

Amendments 172 and 175 amend the definition of “Scottish public authority” in sections 45B and 45C to capture public authorities with mixed functions or no reserve functions within the meaning of the Scotland Act 1998. Amendment 172, which amends section 45B, also refers expressly to a public authority that is part of the Scottish Administration, clarifying that these are Crown bodies to be dealt with under section 45B.

Section 45B states that Crown bodies include

“the Bank of England (including…the Prudential Regulation Authority)…the Financial Conduct Authority…and…the Payment Systems Regulator”.

Amendment 171 clarifies that the reference in section 45B to the Bank of England also includes any of its subsidiaries. That means that section 45B can also cover bodies such as the asset purchase facility fund, which the Bank of England set up in 2009. Amendment 171 also means that any subsidiaries that the Bank sets up in future will be treated in the same way under section 45B as the Bank itself.

Amendment 174 reflects the fact that the Prudential Regulation Authority is currently a subsidiary of the Bank of England formed under section 2A of the Financial Services and Markets Act 2000. This position will change when section 12 of the Bank of England and Financial Services Act 2016 comes into force. Section 12 changes how the PRA is formed and gives the Bank of England functions as the PRA. Amendment 174 therefore ensures section 45B applies during the transitional period before section 12 of the 2016 Act comes into force. It treats the wording in brackets in the relevant part of section 45B as not applying until section 12 comes into force. Until then, the PRA, as a subsidiary of the Bank, will be covered by amendment 171.

Amendment 171 agreed to.

Amendments made: 172, in clause 67, page 61, leave out lines 39 to 43 and insert “the public authority—

() is a part of the Scottish Administration, or

() is a Scottish public authority with mixed functions or no reserved functions (within the meaning of the Scotland Act 1998).”

This amendment modifies the requirement for a request for information under new section 45B of the Statistics and Registration Service Act 2007 and any response to be laid before the Scottish Parliament so that it applies to a request to public authority which is a part of the Scottish Administration or a Scottish public authority with mixed or no reserved functions.

Amendment 173, in clause 67, page 61, line 45, leave out from beginning to end of line 3 on page 62 and insert

“the public authority is a Wales public authority as defined by section 157A of the Government of Wales Act 2006.”

This amendment modifies the requirement for a request for information under new section 45B of the Statistics and Registration Service Act 2007 and any response to be laid before the National Assembly for Wales so that it applies to a request to a Wales public authority.

Amendment 174, in clause 67, page 62, line 13, at end insert—

‘( ) Until the coming into force of section 12 of the Bank of England and Financial Services Act 2016 subsection (1)(b) has effect as if the words in brackets were omitted.”

This amendment makes provision about the reference in new section 45B(1)(b) to the Bank of England in the exercise of its functions as the Prudential Regulation Authority in the period before the coming into force of section 12 of the Bank of England and Financial Services Act 2016. Until that section comes into force the Authority will remain a subsidiary of the Bank and so will be covered by the reference in amendment 171.

Amendment 175, in clause 67, page 62, line 41, leave out from “authority” to end of line 3 on page 63 and insert

“which is a Scottish public authority with mixed functions or no reserved functions (within the meaning of the Scotland Act 1998).”

This amendment modifies the requirement to obtain the consent of the Scottish Ministers before giving a notice under new section 45C of the Statistics and Registration Service Act 2007 so that it applies to a notice given to a Scottish public authority with mixed or no reserved functions.

Amendment 176, in clause 67, page 63, line 5, leave out from “authority” to end of line 10 and insert

“which is a Wales public authority as defined by section 157A of the Government of Wales Act 2006.”

This amendment modifies the requirement to obtain the consent of the Welsh Ministers before giving a notice under new section 45C of the Statistics and Registration Service Act 2007 so that it applies to a notice given to a Wales public authority.

Amendment 188, in clause 67, page 65, line 3, at end insert—

‘( ) The statement must be consistent with the code of practice issued under section 52B (data-sharing code) of the Data Protection Act 1998 (as altered or replaced from time to time).” —(Chris Skidmore.)

This amendment requires a statement issued under section 45E of the Statistics and Registration Service Act 2007 by the Statistics Board and relating to the exercise of its functions under sections 45B, 45C and 45D of that Act to be consistent with the data-sharing code of practice issued by the Information Commissioner under the Data Protection Act 1998.

Question proposed, That the clause, as amended, stand part of the Bill.

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As the Minister has just outlined, clause 67 differentiates access to information held by Crown bodies and a power to require disclosures by other public authorities. In essence, it enables the statistical authorities to request information from Crown bodies and to demand it from other public authorities. I would be grateful if the Minister confirmed why there is that distinction. He may well be aware that the Royal Statistical Society and the ONS would like the Bill to be amended to include the power to require disclosure from Crown bodies in exactly the same way as from public authorities. What consideration has been given to that? Why are the same requirements not on both types of public authorities?

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The clause gives certainty and teeth to data supplied to the UK Statistics Authority. Official statistics are not an optional extra. If they are incomplete, decisions made by the Government and Parliament that rely on those statistics could be misinformed, late and lose impact. UKSA must have the data equipment necessary to produce the numbers that decision makers need to make the best decisions in the interests of the country.

Existing legislation provides precedents for requiring businesses and households to provide information for producing aggregate statistics about the economy and society. For instance, the Statistics of Trade Act 1947 requires businesses to report the data required for the production of UK economic statistics. For the past 100 years, the Census Act 1920 has required every household to provide information once every 10 years so that we can understand our population and society. To put that in context, censuses are long established but expensive. The 2011 census cost us almost £500 million. Census data are the statistical spine of decision making, including the allocation of public funds.

Allowing UKSA access to administrative data the Government already hold is more efficient. We should not be asking people in business questions when we already know the answers from other sources. Under the Statistics and Registration Service Act 2007, UKSA must seek legislation every time it needs access to Government datasets where there is no existing data-sharing gateway. That mechanism is limited and only removes barriers that existed before the 2007 Act, and will become increasingly redundant over time.

The clause realises the expectation that, where UKSA needs access to datasets to produce statistics, it should be given that access. Section 45B requires Crown bodies, in particular central Government Departments, to provide data when UKSA asks for them, or, where necessary, have their refusal put before Parliament. Why treat Crown bodies differently from public authorities? That way of working, set out in sections 45B and 45C, ensures consistency between how a Crown body interacts with another on the one hand, and how a Crown body interacts with a non-Crown body on the other.

Sections 45C and 45D allow UKSA to require data from public authorities and large businesses. In practice, UKSA will focus on businesses that hold data likely to support to UKSA’s data needs, reducing the existing burden of surveys on businesses and individuals. UKSA must be sure that the data it relies on will continue to be provided, to ensure the integrity of the statistics it produces and the integrity of decisions based on those statistics.

Section 45F makes it clear that public authorities and businesses must comply with the notice they receive from UKSA under sections 45C or 45D, which draws on existing precedents for enforcement seen for the census and business surveys. Section 45E also requires UKSA to publicly consult on a statement of principles and procedures it will apply when operating these new powers. UKSA will lay that before Parliament and the devolved legislatures.

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Section 45B lays out that UKSA must

“specify the date by which or the period within which the public authority must respond to the request.”

What kind of period are we are talking about? What kind of period does the Minister consider reasonable in which a public authority must respond to a request from UKSA?

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I will write to the hon. Lady on that particular point with further information. I am more than happy to do that. She correctly noted that timeframes are set out, which highlights the transparency arrangements already set down in the Bill. That has been well thought through, and we are determined to ensure that we work closely with UKSA going forward. UKSA will publicly consult on a new code of practice to support public authorities in consulting it on planned changes to data systems to protect the accuracy and integrity of its statistical outputs. Again, that will be laid before Parliament and the devolved legislatures.

We have spoken previously about codes of practice. Illustrative first drafts of the statement and the code have been made publicly available, including to members of the Committee, and they continue to be developed ahead of a full public consultation in a few months’ time. We are determined to ensure that the research and statistics communities are given the tools to enable them to do their jobs efficiently and effectively going into the 21st century. We want to ensure that the UK is a leader in developing statistics and research.

Question put and agreed to.

Clause 67, as amended, accordingly ordered to stand part of the Bill.

Clause 68 ordered to stand part of the Bill.

Clause 69

OFCOM reports on infrastructure etc

Question proposed, That the clause stand part of the Bill.

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I welcome the other Minister back to his place, and I look forward to the lengthy correspondence that the Cabinet Office Minister and I will be having. The Minister for Digital and Culture and I also had lengthy correspondence when he was at the Cabinet Office, and I look forward to that continuing.

Will the Minister lay out what the clause seeks to achieve? What reports would Ofcom publish under this power that it currently cannot? Would this extend to requesting and publishing information that was referenced in an earlier debate—right at the beginning on part 1—potentially in relation to existing broadband and communications infrastructure and to where Openreach and other providers are rolling out broadband in order to ensure a more effective market? The Opposition welcome all attempts by regulators and Government to make as much data open as possible, so we very much welcome the powers in the clause.

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Clause 69 allows Ofcom to prepare and publish reports on underlying data at times it considers appropriate as opposed to at specified times, as is currently the case. The short answer to the hon. Lady’s question is yes. Before the end of the year, Ofcom will publish a “Connected Nations” report, for example, which typically goes into detail about the connectivity of the infrastructure, but there are restrictions at the moment on when these can be published. We think it is better to allow Ofcom to prepare and publish reports at times that it considers appropriate.

Question put and agreed to.

Clause 69 accordingly ordered to stand part of the Bill.

Clauses 70 and 71 ordered to stand part of the Bill.

Clause 72

Provision of information to OFCOM

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I beg to move amendment 177, in clause 72, page 70, line 15, after “135”, insert “of the Communications Act 2003”.

This amendment makes it clear that the Act amended by clause 72 is the Communications Act 2003.

The amendment corrects a minor error to clause 72. We omitted the words

“of the Communications Act 2003”.

I consider this to be a pretty technical amendment.

Amendment 177 agreed to.

Clause 72, as amended, ordered to stand part of the Bill.

Clause 73

Information required from communications providers

Question proposed, That the clause stand part of the Bill.

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I would like to put on the record again that this Bill was clearly not ready for Committee. We have just seen another example of an amendment that was completely uncalled for. In the last part, amendments had to be withdrawn that were incorrect. I hope that the proposals are properly examined in the Lords and that this is not a recurring theme throughout future legislation that this Government introduce. It is very disappointing to see the lack of preparation for this Bill.

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The hon. Lady is doing a marvellous job for her Front-Bench team, but having sat through several Bill Committees, I assure her that this situation is not particularly unusual. What is important is getting the Bill absolutely right and making sure that we use this opportunity to scrutinise it. We should proceed in the spirit of us all wanting the best thing and stop taking pops at the drafting team.

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I am assured by my hon. Friend the Member for Cardiff West that this was not common practice under the last Labour Government, and I am horrified to hear that it has been common practice over the past couple of years.

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Amendment 177, which was agreed on a cross-party basis, corrects what was in fact a printing error. I hope that the hon. Lady will withdraw her rather pernickety point. I am glad that the Committee has had the opportunity to correct the problem.

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It is good to hear that it was the 177th amendment that the Government have had to table to this Bill.

Let us move on to clause 73. The Minister will be pleased to hear that we welcome the clause, which has clearly been drafted with consumers at its heart. The clause provides Ofcom with powers to require information that will enable and empower consumers to switch, thereby creating a much more efficient and open market with fewer barriers to entry.

Ofcom does not currently have powers to require communications providers to provide information on quality of service, such as how they are doing on customer service, complaints, fault repairs or the speed of installation, and it does not have the power to specify how it would want that information to be provided. We welcome these new powers, which will make it much easier for Ofcom to publish this important comparative information that will help consumers.

I would be grateful if the Minister expanded on the points raised in relation to clause 69. He said that BT is about to be forthcoming with information on its existing infrastructure and on the roll-out of broadband. Can he confirm whether that information has been provided? If not, when does he expect it to be provided?

Subsection (5) of proposed new section 137A of the Communications Act 2003 states that the power conferred on Ofcom

“is to be exercised by a demand, contained in a notice served on the communications provider”.

Prior to that, a draft notice will stipulate a reasonable notice period. Can the Minister give us some examples of what he would consider to be a reasonable notice period for a particular dataset? Will that be in negotiation with a provider, or will it be set by Ofcom? What will be the consequence for communications providers that refuse to comply? Finally, how quickly would he like to see Ofcom publish the publishable data after receiving them from a communications provider?

We are happy to support clause 73 stand part.

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Clause 73 paves the way for greater access to information to help consumers make more informed decisions. The hon. Lady has set out exactly why that is needed. The clause will also enable Ofcom to require providers to collect, retain or generate data for these purposes and to ensure that consumers are easily able to access information that is most relevant to their decision. The power will enable Ofcom to require information in machine-readable formats, for example, so that third parties can mash it and provide it in a usable, meaningful and accessible way for the consumer, thereby helping things such as comparison websites, which we strongly support.

On the hon. Lady’s specific questions, the data will form part of Ofcom’s data publication before the end of the year. She asked about a reasonable notice period, which will be for negotiation with providers. It is for Ofcom to decide when it is appropriate to make a publication, and it will endeavour to do so as soon as possible. On the consequences for providers that do not supply the data, these are highly regulated markets in which Ofcom has significant powers, some of which we are enhancing elsewhere in the Bill, so there will be very serious consequences for a provider that does not abide by a requirement from Ofcom to publish. I hope that answers the questions.

Question put and agreed to.

Clause 73 accordingly ordered to stand part of the Bill.

Clause 74

Appeals from decisions of OFCOM and others: standard of review

Question proposed, That the clause stand part of the Bill.

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The clause will reform the appeals process against Ofcom decisions, speeding up the process and ensuring that consumers’ interests are better prioritised. The Communications Act 2003 states clearly that Ofcom’s principal duty is to further the interests of citizens and consumers, but clearly there are issues with how the current appeals process works.

The current process is that Ofcom makes a decision following full consultation with the industry and the public; under the Competition Appeal Tribunal rules, an affected body can then appeal against the decision. Ofcom has six weeks to lodge its defence, and a month later substantive appeals are considered in a court case management conference, at which procedural and substantive points are raised. Third parties can then intervene, after which the appellant can lodge a reply. About a month before the hearing, the parties can lodge skeleton arguments. The hearing then takes place, and judgment is usually reserved. That judgment can take anything from weeks to up to a year. Parties then have about three weeks to decide whether they want to go to the Court of Appeal.

Not only is that process incredibly cumbersome, but it allows for considerable new evidence and new parties to the appeal, of which Ofcom had no knowledge at the consultation phase, to be brought forward mid-process. Under the new system, both the process of gathering evidence, including for the cross-examination of witnesses and experts, and the general treatment of that evidence are designed to be slimmed down. The system will still allow for an appeal, of course—that is only right for the sake of justice—but it will ensure that the appeals process does not unduly benefit those who can afford to litigate. It is alleged that it is currently those with the deepest pockets who bring forward the greatest number of appeals; indeed, most appellants have far deeper pockets than Ofcom has to defend itself with.

I have heard the concerns of some within the industry about the changes, as I am sure the Minister has. Although we are in favour of the Government’s proposals, I would appreciate the Minister’s response to some of those concerns. In a submission to the Committee, a group of the largest communications providers has claimed that the current appeals regime works well for consumers and has delivered consumer benefits to the tune of hundreds of millions of pounds.

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I understand the rationale behind trying to split up the powers that Ofcom has been given and make the process slimmer, but it is quite an achievement to get BT, Sky, Virgin Media, Vodafone and O2 in agreement. I share the hon. Lady’s concern and look forward to the Minister’s response, which I hope will help to allay it.

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I agree, and although I support the Government’s objective, it is of concern that such a wide range of communications providers—the biggest investors in communications infrastructure in the UK—are so vehemently opposed to the changes. This is exactly what the Committee stage of any Bill is designed for: to test out arguments and make sure that the right thing is being done. Will the Minister confirm what impact assessment of the proposals has been made, and what benefit he anticipates the changes will bring to consumers?

The submission that I mentioned claims that if the proposed regime had been in place, the mobile call termination case in 2007 would have led to a £265 million loss to consumers over the two-year period from 2010 to 2012. It states that

“in each of the cases cited, the Tribunal’s decision was that Ofcom’s decision had not gone far enough in consumers’ favour. The quantifiable financial impact of these appeals totalled a net benefit to consumers of around £350-400m.”

It says that the merits review

“enabled these errors to be corrected, the finding of the Government’s 2013 research was that on a JR”—

judicial review—

“standard, each of these decisions would have stood unadjusted.”

No one is saying that Ofcom will get things right 100% of the time—clearly, it will not. The new appeals process is not saying that either, but it will substantially raise the bar for appeals by allowing only regulated bodies to contest how a decision was made. Is the Minister confident that the decisions cited in the evidence from BT and the other providers would still be corrected under the new regime? The providers claim that they would not.

We have heard mixed messages about whether the proposals will bring the communications regulator in line with other utilities regulators. Ofcom told us in evidence that they would do just that, but is it not the case that the price control decisions of both Ofgem and Ofwat are subject to merits review by the Competition and Markets Authority? Will the Minister confirm why that is the case for other industries but not for communications?

On SMEs, techUK is particularly concerned that the higher bar of judicial review will have a disproportionate impact on smaller providers, which brought 17% of appeals between 2010 and 2015. I would be grateful if the Minister assured us that his Department has fully considered the impact these changes will have on SMEs, and particularly on new entrants to the market.

I understand that there will always be winners and losers in any regulatory change. The Minister will no doubt enjoy basking under the adoring gaze of TalkTalk and Three, but he will have to live with the fact that he is in BT’s and Virgin’s bad books for now. What is also clear is that for most people this appeals regime is far from well understood, as the industry claims. In fact, they would find it very difficult to understand why changes that could benefit them are being held up, sometimes for years on end, and why big communications providers are spending millions of pounds on litigation when they should be ploughing that money into helping their customers.

That is no basis on which to continue an appeals regime that leads to excessive litigation and smothers changes that may help—indeed, in some cases, may transform—consumers’ relationships with their communications providers. Clearly, during the exercise of that duty, Ofcom will be required to intervene and make a ruling, which sometimes the industry may not like.

If the broad contention on this side is that Ofcom should be given further powers to ensure that the industry acts in the best interests of consumers, there is little point in allowing an appeals process to continue that is so lengthy that it can render any changes useless. One particularly compelling example given in the evidence session was about the need for far greater switching for consumers. The chief executive of Three remarked that we are at the bottom of the class in terms of switching, and that despite nearly a decade of campaigning little has been done to get rid of provider-led switching. That was because when Ofcom tried to legislate on it, to enable consumers to switch, one of the major mobile providers was able to litigate and push the matter into the long grass, from where it has not emerged until today.

With all that in mind, and pending answers to the questions that I have put to the Minister, we are happy to support the clause.

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That was an excellent assessment of the pros, cons and challenges around the proposed changes to appeals. Much of the analysis and thinking that the hon. Lady has just set out is what we went through in coming to the same conclusion that it is sensible to change the appeals process.

I will set out some of the detail of the changes and then I will answer the specific questions that were put. The clause alters the standard review applied by the Competition Appeal Tribunal when deciding appeals brought under the Competitions Act 2003 against decisions made by Ofcom. This is in order to make the appeals process more efficient. The changes will not apply to appeals against decisions made by Ofcom using powers under the Competition Act 1998 or the Enterprise Act 2002.

Currently, appeals can be brought and decided on the merits of a case, and this exceeds and effectively gold-plates article 4 of the EU framework directive that requires that the merits of a case are taken into account in any appeal. The result of this over-implementation is an unnecessarily intensive and burdensome standard of review that can result, as the hon. Lady set out, in very lengthy and costly appeals litigation, which can hinder timely and effective regulation, and risks Ofcom taking an overly risk-averse approach to regulating the sector properly.

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Would it also not give Ofcom much more credibility in the eyes of the organisations that it regulates, because they would realise that they had much less ability to overturn its decisions?

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That is right. We heard the evidence from Three and TalkTalk, who are in favour of this change. That is no surprise, as they are essentially the insurgents in the infrastructure market, and the incumbents were less keen on this change. We also heard from Which? and Citizens Advice, which explained that it is no surprise that large companies want to keep the status quo.

It is not my job to bask in the reflected glory of the appreciation from Three or TalkTalk, nor is it to have undue concern, rather than due concern, for the complaints of those who disagree with this change.

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The briefing we received recognises the Government’s line on the current approach but disagrees with the contention. It actually puts forward a form of words that it believes, if inserted, would not risk any issue with the relevant European directive. Have the Government considered that? I am happy to forward that form of words if the Minister does not know what I am referring to; it is in the latest briefing.

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Again, I am happy to look at any detailed representation, but we have had significant and extensive discussions about this, including with techUK and others. On the SME point that techUK specifically raised, that was covered in the impact assessment that the hon. Member for Sheffield, Heeley asked about. It was published on 12 May; on page 15 it sets out the concern that, if we had a separate system for SMEs, we would end up with a yet more complicated process, as opposed to a simpler one, which I think would be an overall benefit.

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I completely accept that we should not have separate regulatory systems for SMEs and larger providers. Will the Minister confirm that the new judicial review process will not unduly hinder SMEs, in contrast to the current “on the merits” appeal process?

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I have looked at that specific point and I am satisfied that the new process does not, because a judicial review can take into account those sorts of concerns but is a more efficient process of appeal.

On the point raised by the hon. Member for Berwickshire, Roxburgh and Selkirk, I should say that we have considered using the language of the directive but we do not believe that it materially changes our approach. I said I would get back to the hon. Gentleman; I was a bit quicker than even I expected.

On that basis, I hope that the use of the well-tried and well-tested judicial review will prove a more efficient regulatory basis in future.

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The Minister has not addressed a couple of points: the potential loss to consumers that the industry claims the new system will create and the cases that would not have been brought under the existing system; and the mixed messages we have heard about whether the Bill brings Ofcom into line with other utilities regulators.

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On the first point, I am convinced that this change will act in the benefit of consumers, because we will have a quicker regulatory approach. The big incumbents will not be able to hold up a regulatory decision through aggressive use of the appeals process. Instead, we will have a more efficient appeals process. I am convinced that this will improve the situation for consumers.

Of course, it is possible to pick out individual cases that may have gone the other way or may not have been able to be considered under the new approach. First, it is not possible to know whether that is the case without testing them. Secondly, looking at individual cases out of context does not allow us to step back and look at the effective operation of the system as a whole. I am sure the hon. Lady agrees with that approach.

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But is it not the point that those decisions were made by Ofcom and were incorrect, according to the tribunal? They were not made with consumers’ best interests at heart and they would not have been appealed under the new system because the method by which they arrived at those decisions was correct. Is there any scope in the proposals to allow certain examples, such as those put forward by the industry, to be given a merits-based review, as with price control reviews by Ofgem?

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The cases that the hon. Lady and the industry cited have been assessed, and we believe that judgment under a JR system would have gone the same way as under the old system—but quicker. I hope that deals with that concern. JR is used in a large number of other areas. Of course there are specific other cases in which it is not, but it is a strong basis of appeal that is regularly used in public sector decisions. If material error is present, it can then be addressed by judicial review. I hope I have answered the hon. Lady’s questions.

Question put and agreed to.

Clause 74 accordingly ordered to stand part of the Bill.

Clause 75

Functions of OFCOM in relation to the BBC

Question proposed, That the clause stand part of the Bill.

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We do not wish to oppose Ofcom’s new role in regulating the BBC, for which clause 75 provides—as the Minister knows, we supported the BBC charter agreement last week in the House—but we have some concerns, which are shared by the BBC, about how Ofcom’s new role will work out in practice.

Distinctiveness is an absolutely vital characteristic of the BBC and its services. It is one of the things that justifies its public funding. The BBC should deliver its public purposes and mission, and it should serve all audiences, through distinctive services. Critically, distinctiveness should be judged at the level of services, rather than programmes. That does not mean that the BBC should focus on “market failure” programming or never make a programme that the commercial sector might make. Instead, the test should be that every BBC programme aspires to be the very best in its genre. Overall, the range of programmes in the BBC services should be distinguishable from its commercial competitors. There is a concern that Ofcom could be too prescriptive in the standards it expects of the BBC. For example, it might focus on quotas, such as the number of religious or news hours, rather than a substantive, qualitative assessment, and rather than a standard, such as high-quality journalism.

Evidence shows that BBC services are distinctive and have become more so in recent years. Audiences agree: more than 80% of the people responding to the Government’s charter review consultation said that the BBC serves audiences well, almost three quarters said that BBC services are distinctive and about two thirds said that they think it has a positive impact on the market.

The definition of distinctiveness in the agreement and the framework for measuring it are therefore critically important. The section of the charter agreement that relates to the new powers that will go to Ofcom requires Ofcom to set prescriptive and extensive regulatory requirements, which must be contained in an operating licence for BBC services. Ofcom must have a presumption against removing any of the current requirements on the BBC—there are about 140 quotas in the BBC’s existing service licences—and seek to increase the requirements overall by both increasing existing requirements and adding new ones.

Ofcom has been given detailed guidance about what aspects of distinctiveness it must consider for the BBC’s TV, radio and online services. That follows an old-fashioned approach to content regulation based on prescribing inputs, rather than securing audience outcomes, such as quality and impact. The BBC is concerned that it will introduce a prescriptive and inflexible regulatory framework that could restrict the BBC’s editorial independence and creativity.

Clarity about the definition of distinctiveness would be welcome. It should be applied to services, not individual programmes. The extensive content quotas in clause 2 of the charter should be a response to a failure to be distinctive, not the starting point.

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Does my hon. Friend share my concern that, when the Government came up with the idea of distinctiveness, they themselves were not absolutely clear what it meant? Frankly, we are still at the stage at which the Government might say, “We don’t know what it is, but we might recognise it when we see it.”

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That is a very great concern. There is a serious risk of confusion about how the new regulatory regime is going to work for both Ofcom and the BBC. To be frank, I do not think quotas are appropriate in this respect. I have got nothing against quotas—I was selected on an all-women shortlist, which aim to increase the number of women in the parliamentary Labour party.

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You’d have got through anyway.

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The Minister is absolutely correct that I would have won it on an open shortlist. It is very kind of him to say that.

But quotas in this respect restrict creativity and innovation, which are prerequisites of distinctiveness. Ofcom, as an independent regulator, should have the freedom to determine how best to regulate the BBC to secure policy goals. I would be grateful if the Minister confirmed what consideration has been given to the impact this will have on the quality programming we have come to expect from the BBC.

Finally, there is a concern that Ofcom may prejudice value for money over public interest. It would significantly reassure the BBC and the public, and would provide a greater degree of certainty over how Ofcom will behave in its enhanced regulatory role, if the same principles applied to the BBC charter—that there must be parity between public interest and value for money—were applied to Ofcom as well.

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I am glad we have cross-party support for the clause, as we do for the BBC charter. It is incredibly helpful to the BBC’s role that it knows that the basis on which it operates and is regulated is supported on a cross-party basis.

It is very important—I will read this clearly on to the record—that distinctiveness as set out in the framework agreement is about BBC output and services as a whole, not specific programmes. Ofcom has the capability to make judgments about the overall distinctiveness of BBC output and services as a whole. That is the basis on which we expect it to operate under this legislation.

The hon. Lady asked whether there should be guidance underneath that. As she set out, there is existing guidance, and the public are very happy in large part with the result of that. I reject the idea that we cannot have any detail underneath the basis that distinctiveness should be decided on BBC output and services as a whole. At the moment, as she set out, there is detail, and it works well.

This is essentially an incremental approach. The BBC already faces this guidance and operates successfully. The clause is not prescriptive in that regard. Ofcom needs to operate in a reasonable way and exercise its judgment to ensure that we get the much-loved BBC operating as well as it can, as it has in the past and as it should in the future.

Question put and agreed to.

Clause 75 accordingly ordered to stand part of the Bill.

Clause 76

TV licence fee concessions by reference to age

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I beg to move amendment 178, in clause 76, page 74, line 24, at end insert—

‘( ) In subsection (4)(a) after “concession” insert “provided for by the regulations”.”

Section 365A(4) inserted by clause 76(6) gives the BBC power, where they determine that a TV licence fee concession is to apply, to provide how entitlement to the concession may be established. This amendment makes a consequential amendment to the Secretary of State’s power to make similar provision.

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With this it will be convenient to discuss Government amendments 179 to 181.

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Clause 76 will transfer policy responsibility for the concession that provides for free TV licences for those aged over 75 to the BBC. These technical amendments clarify the relationship between the Secretary of State’s power to set concessions and the BBC’s power to set concessions for those aged 65 and over. The amendments provide clarity, making it clear that the power of the BBC from June 2020 to determine age-related concessions for people over 65 extends to any such concession as previously provided for by the Secretary of State, with the exception of the current residential care concession. That was always the intended effect of the clause, and the amendments merely provide greater clarity in the drafting and remove any ambiguity.

Amendment 178 agreed to.

Amendments made: 179, in clause 76, page 74, line 26, after “section” insert “or section 365A”

This extends the definition of “concession” given in section 365(5) of the Communications Act 2003 to section 365A inserted by clause 76(6).

Amendment 180, in clause 76, page 74, leave out lines 28 and 29 and insert—

‘(5A) Regulations under this section may not provide for a concession that requires the person to whom the TV licence is issued, or another person, to be of or above a specified age, unless—

(a) the age specified is below 65, and

(b) the requirement is not satisfied if the person concerned is 65 or over at the end of the month in which the licence is issued.

(5B) Subsection (5A) does not apply to—

(a) the concession provided for by regulation 3(d) of and Schedule 4 to the Communications (Television Licensing) Regulations 2004 (S.I. 2004/692) (accommodation for residential care), or

(b) a concession in substantially the same form.”

This amendment allows the Secretary of State to continue the existing concession in relation to accommodation for residential care, including its age-related element, after May 2020, but after that date any other age-related concession would be a decision for the BBC (see amendment 181).

Amendment 181, in clause 76, page 74, line 33, leave out from “apply” to end of line 39 and insert—

‘(1A) Any concession under this section must include a requirement that the person to whom the TV licence is issued, or another person, is of or above a specified age, which must be 65 or higher, at or before the end of the month in which the licence is issued.

(1B) A determination under this section—

(a) may in particular provide for a concession to apply, subject to subsection (1A), in circumstances where a concession has ceased to have effect by virtue of section 365(5A), but

(b) may not provide for a concession to apply in the same circumstances as a concession within section 365(5B).” —(Matt Hancock.)

This amends the power of the BBC from June 2020 to determine age-related concessions for people over 65, to make clear that it extends to any such concessions previously provided for by the Secretary of State, with the exception of the current residential care concession (see amendment 180).

Question proposed, That the clause, as amended, stand part of the Bill.

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With this it will be convenient to discuss new clause 38—Responsibility for policy and funding of TV licence fee concessions

After section 365(5) of the Communications Act 2003 insert—

“(5A) It shall be the responsibility of the Secretary of State to—

(a) specify the conditions under which concessions are entitled, and

(b) provide the BBC with necessary funding to cover the cost of concessions,

and this responsibility shall not be delegated to any other body.”

This new clause seeks to enshrine in statute that it should be the responsibility of the Government to set the entitlement for any concessions and to cover the cost of such concession. This new clause will ensure the entitlement and cost of over-75s TV licences remain with the Government. It would need to be agreed with Clause 76 not standing part of the Bill.

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I rise to address new clause 38, which is in my name and that of my hon. Friend the Member for Cardiff West. I am sorry to say that this is where any cross-party consensus on the Bill ends. We absolutely do not support clause 76 or any of the amendments to it. Not only the Opposition, but the more than 4 million over-75s in this country who currently make use of this benefit oppose the clause. The benefit was promised to them in last year’s Conservative manifesto, a manifesto that, frankly, many of them will have voted for in good faith. Now, just 16 months into the Parliament, the Government are abandoning that pledge on the pretence that it should now be for the BBC to decide. Well, it will not only be Opposition Members, but millions of over-75s, and indeed future over-75s, who see right through that underhand tactic.

Just to concentrate the Committee’s mind, I did a bit of research at 11 o’clock last night, when I was still in my office writing my speeches for today. Given that more than 89% of over 75-year-olds make use of the free TV licence introduced by the previous Labour Government, in the Minister’s West Suffolk constituency there will be 8,863 over-75s who potentially stand to lose out because of the Government’s tactics—that is one of the highest numbers in the entire country. I do not have good news for the Parliamentary Secretary, Cabinet Office either: 7,121 over-75s in his constituency will be very unhappy with this measure.

An awful lot of disgruntled over-75s will be coming the Ministers’ way in future surgeries. There will be quite a queue at their constituency offices. I would not rule out the pensioners having a copy of the Conservative manifesto in hand, because that manifesto contained a pretty unequivocal promise:

“We will maintain all the current pensioner benefits including Winter Fuel Payments, free bus passes, free prescriptions and TV licences for the next Parliament”.

In fact, the header above that list of pensioner benefits said:

“We will guarantee your financial security”.

Those benefits were all introduced by the previous Labour Government.

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Does the manifesto mention anywhere that the Government might transfer their responsibility for any of those benefits to an unelected body?

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No, that is exactly my point. Whether or not the BBC gains responsibility for this provision is moot. The BBC is an unaccountable organisation when it comes to setting welfare policy. This represents the start of a slippery slope. Where does it end once the Government start asking other bodies to make decisions on who gets benefits? This is yet another broken promise—one promise has already been broken in part 3—so we are not doing very well. I am sure the powerful older voter lobby will not take this lying down.

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Does the hon. Lady accept that this measure was not imposed on the BBC? The deal was negotiated with the BBC in exchange for other things, including opening up revenue opportunities such as by closing the iPlayer loophole.

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It is interesting that the hon. Gentleman makes that point, because I was just about to say that I am sure the Government will argue that the BBC has been rewarded handsomely in the charter renewal process and that the BBC will decide its funding policy for over-75s within that context.

From 2018, the BBC is being asked to shoulder £200 million of the annual cost of free TV licences, and it will assume the full £745 million annual bill from 2020—that amounts to more than a fifth of the entire BBC budget. It is more than enough to fund Radio 4 ten times over, and it is almost enough to fund the entire budget of BBC 1. The BBC has been asked to take control of setting the entitlement for over-75 licences because the Government know that they cannot afford it at its current rate. We accept that the BBC has asked for responsibility for this policy, but that is because the cost of the policy was enforced on it through negotiations. It is outrageous that the BBC is being asked to fund it at all.

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It is interesting that my hon. Friend used the term “negotiations” and the Minister repeated it from a sedentary position. There is a difference between negotiations between equals and being negotiated with by someone holding a loaded gun to one’s head.

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That is absolutely right. The Opposition made clear in the debate on the BBC charter our utter condemnation of the underhand, aggressive, bully-boy way in which the Government “negotiated”. It was not a negotiation. As a former trade union rep, I recognise a negotiation when I see one, and the way the Government handled the previous licence-fee settlement was nothing of the sort. That led us to the position we are currently in. The BBC should never have been given the responsibility for delivering on a Conservative party manifesto pledge. It should have felt able to reject even the suggestion that it take on the cost of free TV licences for the over-75s.

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Is the hon. Lady suggesting that the BBC is not capable of effective negotiations? Its senior executives include Labour’s former Secretary of State for Culture, Media and Sport.

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The point is that, as my hon. Friend the Member for Cardiff West said, the BBC was essentially in negotiations with a gun to its head. It was not a free and fair negotiation. The individual to which the hon. Gentleman just referred does not sit on the BBC board, and I do not believe he was involved in the negotiations with the Government.

The fact that we have reached this point—that the BBC was in essence forced to agree to become an arm of the Department for Work and Pensions—says a lot about the overbearing, menacing way the Government treated an organisation that they should cherish, and the cavalier disregard they have shown to the over-75s to whom they made a promise last year. Call me old fashioned, but I believe that promises should be kept. Behaviour like the Government’s brings disrepute on all Members from all parties. It makes people think that it is exactly what politicians do: we promise things in elections that we have absolutely no intention of delivering. It is a problem for all Members, whether Government or Opposition.

Despite public outcry, the Government have still not ruled out further stick-ups of the type that have got us into the position we are in now. They have refused to establish a transparent process to set the licence fees of the future. The Opposition do not consider it a done deal. With new clause 38, we are seeking to guarantee free TV licences to over-75s. That would give the responsibility for the policy and the funding of TV licences back to the Government, where it belongs. There would be no more wriggling out of a decision that should be laid firmly at the Minister’s door.

If the Conservatives want to rid themselves of the cost of the free TV licence, they should have the courage to say that they are doing it. They should have put it in their manifesto and campaigned on it; they should not have created a non-ministerial branch office of the DWP in the BBC to do their dirty work for them. That is why if our new clause was accepted we would be calling for the scrapping of clause 76 in its entirety.

The new clause is very clear: it should be for the Secretary of State for Work and Pensions to specify the conditions under which people are entitled to concessions, and to provide the BBC with the necessary funding to cover the cost of those concessions. That is how it was set up under the previous Labour Government, and it is under those conditions that it should continue. The responsibility should not be delegated to any body other than the Government themselves. They should not be allowed to get away with delegating the responsibility and effectively forcing the BBC to take the rap.

This is a point of principle for the Opposition. We cannot accept a policy that takes the responsibility for even a tiny part of our social security system and gives it to an organisation with no direct accountability to the electorate. Unaccountable organisations do not have to face the consequences of their decisions, especially given the announcement we have heard today from the chief executive of Her Majesty’s Revenue and Customs. Even HMRC does not want to see private sector involvement in decisions on tax credits. A non-ministerial body has said that the private sector should not be involved in who does or does not receive tax credits, or any other type of benefit. That is exactly the argument we are making.

Private sector organisations are the wrong bodies to be involved in deciding who gets benefits, not only because they are incentivised by profit but because they are unaccountable. They do not have to stand for election based on those decisions, and therefore they should not be allowed to make them. It is the equivalent of outsourcing children’s services to Virgin and, in the process, asking them to pick up the tab for child benefit and requiring them to decide who gets it. Our social security system is far too precious for BBC executives, however noble their intentions or professional their considerations, to decide who is and who is not entitled to a benefit of any description. Labour introduced the free TV licence for the over-75s. It cannot be a BBC executive, unaccountable to the public and unaccountable to all our constituents, who calls time on it.

If the amendment falls, it will be high time that the Government were honest about what they were doing and honest with the voters. If they are not, Labour will do everything in its power to make it clear to those millions of over-75s exactly what is happening: their TV licence entitlement will be reduced or taken away not by the BBC, but by the Government who knowingly and cynically engineered the change.

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What a fantastic presentation of a new clause, which I absolutely agree with.

Having looked into this whole area, I find it staggering. The BBC is faced with the prospect of huge cuts, but I am concerned that it is suddenly being passed the responsibility for setting policy. The Bill shows that the Government like to outsource as much as possible, because they outsourced most of the content to Ofcom in the early stages. However, the proposal relating to free TV licences for the over-75s is an absolute abdication of responsibility. We have all been invited to enough Age Concern events to know how isolated elderly people feel and how important television is for them. This is fundamentally welfare policy.

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On the point about isolation, does the hon. Gentleman agree that what the Government are effectively doing is equivalent to devolving concessionary fares to private bus companies and then letting them decide whether older people should have concessionary fares?

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Absolutely. I see we are on a bus theme, which must be because the hon. Member for Hyndburn has returned to his place.

We must consider the risks inherent in this shift. With its budget potentially squeezed in future, the BBC is the one faced with choosing a priority. The BBC will have to decide whether someone should get a free TV licence. Fundamentally, that is welfare policy. I hope the Government are listening and will reconsider. The new clause is well worded and I fully endorse it on behalf of the Scottish National party.

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I support the new clause and congratulate my hon. Friend the Member for Sheffield, Heeley on an outstanding contribution among numerous outstanding contributions during the Committee’s considerations.

The hon. Member for Berwickshire, Roxburgh and Selkirk is absolutely right that the proposal is an outsourcing of responsibility, but there is more to it than that. The Government are not only putting a further financial squeeze on the BBC, but when, as may be inevitable, the allocation of TV licences to the over-75s has to be reviewed, they will apparently have a clean pair of hands. It will be, “Not us, guv—it was the BBC what did it”, when that may well have been the intention all along. It is, again, outsourcing of responsibility and an attempt to evade responsibility, put on the financial squeeze, take a step back and say, “It’s nothing to do with us. It’s that bad BBC. Because that bad BBC is so bad, we shall cut them even more to punish them for how they have treated pensioners.”

My hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly), who does not serve on this Committee, described the events of June and July 2015 when the so-called negotiation took place as a drive-by shooting when we were in the Culture, Media and Sport Committee. Hon. Members have today talked about negotiations with a gun to the head; a drive-by shooting is an appropriate description of what happened.

The BBC board was taken by surprise by the motives of the then Chancellor of the Exchequer, the right hon. Member for Tatton (Mr Osborne), and the then Secretary of State for Culture, Media and Sport. The Select Committee asked the chairwoman of the BBC Trust whether she and her fellow trust members had considered resigning in protest at what was happening; she declined to answer. I am sure that there were discussions.

I also note that at a later meeting of the Select Committee, we asked the chairwoman about an apparently private meeting that she had with the former Prime Minister, David Cameron, without any officials being present, at which she was appointed to the board of the new BBC Trust. I do not, of course, seek to link the two events in any way. The Conservative party made a pledge in its manifesto, as it was entitled to, but it sought to get a public body outwith responsibility in that area to pay for that pledge.

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Is there not a further cynicism to this? The Government did that in the full knowledge that the policy had what the Treasury often calls “future reach”, as the number of over-75s is likely to go up. Even given that the Government are partially compensating the BBC for this, they know full well that the policy will become more expensive.

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That is an extremely good point, and it reads back to the point that I made earlier: when there has to be a review of the cost of the policy, and perhaps a reduction in the availability of free TV licences, Ministers—perhaps they will be shadow Ministers by that time—[Interruption.] We fight on to win. Conservative Members will be able to point to the BBC and say, “It was the BBC what done it”, in order to evade all responsibility. But they will not evade responsibility, because this will not be forgotten, if they get away with doing it. There is a much better alternative: the excellent new clause proposed by my hon. Friend the Member for Sheffield, Heeley.

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I am appalled by what is, as my hon. Friend is clearly laying out, a naked attempt to evade responsibility. Does he share my concern that this is the beginning of a slippery slope? Where exactly does this end? Once the principle that the Government are attempting to put in the Bill is in legislation, to whom else can they outsource responsibility for their social security policies?

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