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Grand Committee

Volume 684: debated on Tuesday 4 July 2006

Grand Committee

Tuesday, 4 July 2006.

The Committee met at half-past three of the clock.

[The Deputy Chairman of Committees (VISCOUNT ALLENBY OF MEGIDDO) in the Chair.]

Before the Minister moves that the first order be considered, I remind noble Lords that in the case of each order, the Motion before the Committee will be that the Committee do report that it has considered the order in question. The Committee is charged only to consider orders, not to approve or not approve them. The Motion to approve will be moved in the Chamber in the usual way. I also remind noble Lords that if there should be a Division while the Committee is sitting, the Committee will adjourn at the earliest convenient moment after the Division Bells are rung and will resume after 10 minutes.

Budget (No. 2) (Northern Ireland) Order 2006

rose to move, That the Grand Committee do report to the House that it has considered the draft Budget (No.2) (Northern Ireland) Order 2006.

The noble Lord said: We are considering this draft Budget Order today due to the continuing suspension of the Northern Ireland Assembly. For that reason the Government must come to Parliament to seek approval for the resources and associated cash requirements for Northern Ireland departments.

I think that all of us, without qualification, would prefer to see the Assembly doing the job that it is paid and elected to do; we want decisions on the Budget to be made by local politicians. That would include debating and approving departmental spending plans such as those that will be considered by the Committee today. We want to see that happening as soon as possible. Everyone knows what the agenda is: we want to see the full restoration of the Northern Ireland Assembly by 24 November. It is no good anyone coming to us on 23 November saying, “We need another three or four days”. We have repeatedly made it clear that that is the date.

For as long as direct rule continues, we need to allocate public expenditure to help secure our objectives—there should be no complaint about the fact that they must be the Government’s objectives and cannot be those of Northern Ireland politicians—of investment in priority public services and in securing the reform of how those public services are managed and delivered.

The main purpose of the draft order is to authorise the balance of resources and cash in the 2006-07 main estimates for the Northern Ireland departments. These are in addition to the amounts in the Vote on Account approved by Parliament in March of this year. That Vote on Account amounted to approximately 45 per cent of the total provision for the previous financial year. It has enabled funds to continue to flow to public services during the early months of this financial year until the main estimates before us can be considered and approved.

I shall explain the kinds of sums that we are talking about. The balance of the requirements for 2006-07 amounts to almost £7.1 billion of resources and some £6.2 billion of cash. When we add those to the Vote on Account, which has already been approved, it will bring the total amount authorised for 2006-07 to some £13.3 billion of resources and £11.1 billion of cash.

This draft Budget Order also seeks approval for the use of excesses in resource and cash expenditure that occurred during the year ending 31 March 2005. Details are contained in the statement of excesses provided to Members of the Committee. The excesses have already been subject to scrutiny and report by the Public Accounts Committee of the House of Commons, which has recommended that the excesses should be authorised by Parliament by means of excess votes.

The Budget Order before us reflects the expenditure plans announced by my right honourable friend the Secretary of State and by me in December 2005. Those expenditure plans clearly demonstrated the Government’s strong commitment to improving the quality of frontline public services and to ensuring that people in Northern Ireland, now and in the future, are equipped with the education, skills and training they need to respond to the challenges of a national and international economy which places a premium on highly skilled and flexible workforces. To do this, we are targeting resources on key public services, on investment in education and training and on our infrastructure, accompanied by a radical and wide-ranging programme of public sector reform.

Providing a high quality health service remains a top spending priority, and that is reflected in the spending plans before us today. The proposed allocation to current health spending has increased by 7.5 per cent over last year’s allocation. Those additional resources are accompanied by a far-reaching reform and modernisation agenda in the health service. That is being given the highest priority by the department, and we are determined that it will lead to further improvements in waiting times for patients; that is, shorter waiting times for patients.

The proposed allocation to current education spending has increased by 4.2 per cent over last year’s allocation. As with health, this extra investment is being accompanied by a programme of major education reforms that will change and improve what our children learn, how they learn, and the environment in which they learn. They include actions to introduce revised arrangements for post-primary education. These reforms will produce significant benefits for our children, for our society and for our economy. They will allow us to maintain our focus on improving literacy and numeracy standards, particularly among disadvantaged pupils, and to continue to address the requirements of children with special educational needs.

Beyond providing for the improvement of key public services in Northern Ireland, we have also put in place a major strategy to provide for sustained investment in the public sector infrastructure that will extend over the next decade and beyond. This will provide for a potential investment of up to £16 billion over that period, and over the next few years alone our planned capital expenditure is almost £4 billion. This level of investment in Northern Ireland’s future is unprecedented, and its fruits can already be seen on a daily basis by the community, whether in new construction work on hospitals and schools or the major roads improvements under way in Belfast. They are major road improvements, but while they are taking place they cause a slight hiccup from time to time, as some noble Lords have found on a daily basis, and as I discovered over the weekend. Part of that infrastructure is improving they key routes to other parts of Northern Ireland and to the south.

I am aware that the rates increases announced last year attracted considerable comment in the community. I want to make it clear that the increases were to generate revenue for the creation of three new priority funding packages: for children and young people; for skills and science; and for the environment and energy. We make no apology for what was a hefty rate increase of 19 per cent because the money was wanted for those programmes. No one has since said to me or to other Ministers that they think we should not have done the packages or that we should have chopped other expenditure to keep the rates down. We did it so that we can make a difference and we intend to make a difference to improve the prospects and life chances of future generations.

We want to see society and the economy transformed by using public spending wisely to invest in the services that make real differences to people’s lives: in health and education; in children and young people; in promoting long-term economic growth through investment in skills and training; and in protecting the environment through the development of new sources of renewable and clean energy.

Investment must also be accompanied by radical reform of the way that public services are managed and delivered to make them even more efficient and responsive to the needs of the citizens who use them. That is why we have begun the process of implementing in full the announcements that I recently made following the Review of Public Administration. It is this combination of investment and reform that will ensure the delivery of public services and a public sector infrastructure that meet the needs and expectations of this and future generations in Northern Ireland. The resource allocations to departments proposed in the main estimates and in the accompanying draft Budget Order will help to ensure that this wide-ranging programme can be taken forward for the remainder of this year.

I will not attempt to summarise the financial detail contained in the Budget Order and supporting documents, as that would not be the normal practice in this unelected House. However, I will of course try to address any specific points of detail that noble Lords may wish to raise on the expenditure covered by the order. I would much rather that I was not doing this and that it was being dealt with by elected politicians in Northern Ireland. I commend the draft order to the Committee, and I look forward to what I hope will be an interesting debate. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the draft Budget(No. 2) (Northern Ireland) Order 2006.—(Lord Rooker.)

I thank the Minister for laying the order before us so clearly. I agree that we are not well equipped to debate the details of the order in this Committee. Would that it were being debated in Stormont.

I, too, have today read the Hansard debate, and noted a number of the issues raised there. I also noted that that debate did not go into a great deal of detail. Considering the huge amount of money—£13.3 billion—being spent in Northern Ireland, the amount of democratic examination of it is tragic. It is just not right. However, that is where we are today, and let us hope that by this time next year it will have changed.

From this side of the Committee, I have a duty to challenge the Government on how it managed that money over the past year, and look to the Minister to reassure me that things are improving. In particular, the Department of Education was reported for overspend and incompetence by the national audit committee. I may have come on too strong in saying “incompetence”—certainly, it wasted significant amounts of money. We had, and have, a wonderful education system for some. I accept that, and always have. Our education system has failed in what used to be the ghetto areas. They are no longer ghetto areas; they are nice houses, sometimes, sadly, with ghetto-type people—paramilitaries and so on—controlling and managing them. It has been extremely difficult trying to ensure that people in places such as north Shankill—I see the noble Baroness, Lady Blood, in her place—get a fair crack of the whip.

We will have another debate on that at some stage, but destroying what is in place is not the way forward. That must be to spend the education budget wisely: capital spend, new and improved curriculum systems and supporting those who work with children in difficult areas to live in—whether they be Armagh, parts of Derry or east, west or north Belfast. That must be part of the Government’s supervisory role when looking after this Budget.

On the administration of Northern Ireland, the Minister and I agree, by and large, on where we should be going. I am a bit disappointed at the pace, however. I would like some reassurance that cuts in administration services will lead not to a loss of benefits but to more efficiency. I hope that we will see the reorganisation of local government and education processes, and that the fact that the Minister is no longer part of the Northern Ireland team does not mean that impetus will have drifted away. I have great faith in his ability to drive that on at the necessary speed, so I hope that is going ahead.

Once upon a time, in my young days, Northern Ireland probably had the best part of the National Health Service. Now, according to the Secretary of State, it appears to be the worst. Not long ago, he said it was even worse than Wales. I know we are spending extra money, but what action is being taken to carve out the waste? How is the structure to be changed to make better use of this money?

I want to make a point about refuse, particularly technical refuse. I took part, as I think the Minister did, wearing a different hat in a different debate about the Department of the Environment and the WEEE directive, which has come to bite Northern Ireland administrators quite severely once again. It has cost a lot of money, and I would like to know that the necessary systems are in place to manage the meeting of the WEEE directive requirements on refrigerators, radios, batteries and all the other things that have to be disposed of under the directive.

I am afraid that we on this side of the Committee are not comfortable with the Government’s ability to organise and govern this country by direct rule. I am sure that the money is spent wisely—I do not challenge many of the decisions—but I would like to see it managed more tightly, more fiercely and more aggressively in a business sense and producing better results in all the key services. I welcome in some ways the rates and water rates increases. I know that they are unpopular and that they would be difficult to bring through local government in Stormont, but we do have very low rates and we do need more money to be spent on the national infrastructure, and I very much welcome the huge capital expenditure on the Northern Ireland infrastructure today. With those few rather uneducated comments, overall I support the order.

My Lords, I, too, thank the Minister for introducing the order. I also share his view that it would be much better if Stormont was handling it rather than we here in the House of Lords. Like the noble Lord, Lord Glentoran, I, too, read the House of Commons debate, which was rather thick on generalities and rather thin on specifics. If the House of Commons is meant to provide the detailed scrutiny and the financial implications for the Budget but is not doing it—we, by convention, are not meant to do it—no one is really doing it. That very serious failing is all too typical of the way in which Northern Ireland business is treated in the Palace of Westminster.

On education and the Council for the Curriculum Examination & Assessment, there is an enormous increase from some £12.5 million in 2004-05 to just over £23 million in 2006-07. I would like an explanation. How is the issue of falling school rolls dealt with, and does this provide an opportunity for increasing the amount of integrated education in rural areas? It seems irrational and pointless to have two systems of education when there are falling rolls, and it is an opportunity to increase the amount of integrated education in Northern Ireland.

This is a mere detail, but nevertheless we had better look at details. The district councils have served a writ of summons of well over £500,000 on the Department of the Environment. Why cannot this sort of thing be sorted out without involving the lawyers? Northern Ireland is terribly prone to giving employment to lawyers, of which this is a classic example.

The spend for the Department for Social Development details the community and voluntary sector funding. Formerly, £47 million came from the EU. Now, £21 million is being voted for the community and voluntary sector. That is a significant reduction by any standards—it is more than 50 per cent. One cares about that because in an economy that is too heavily reliant on the public sector the role of community and voluntary organisations is vital. Yet it is very difficult for them to get funds from such a small private sector. They do not have the opportunity that those in England and Wales, for example, have to get large donations from donors in the private sector, simply because the private sector is so small there, and a great deal of what does exist is dependent on public sector funds.

On the Department for Social Development, what is the reduction, which I think is over 50 per cent and will the community and voluntary sector be able to operate with such a considerable reduction in its funds?

I am most grateful to the Minister for outlining the details of the order. I associate myself with the remarks of the noble Lord, Lord Glentoran, in that I am sorry that the noble Lord, Lord Rooker, is not a Minister in the Northern Ireland Office any more. I always appreciated his plain speaking even if I was at the butt end of it, which I was on a fair number of occasions.

I shall make a few general remarks on the Budget before going into more detail. It would appear that the Department for Regional Development’s expenditure Budget has been cut by £16 million over the next two years. Will this hit road maintenance? That will underline the original transport strategy.

The Department of Enterprise, Trade and Investment’s revenue Budget is reduced by £36 million over three years. While Invest Northern Ireland spending is more or less at previous levels, it has significant liabilities from some large projects to contend with over the next few years. The draft Budget provides little scope to support new projects if they arise. Will the Minister comment on that?

Northern Ireland needs to create more wealth and grow the overall tax-take if it is to reduce the overall subvention, currently running at about £6 billion per year. The draft Budget gives no indication that this has been considered. Indeed, the priorities that will help creation and the growth of the private sector have not yet been given the priority they deserve. The draft Budget is too expenditure-focused and no significant thought appears to have been given to the consequences of the Budget on the potential increase of the overall tax revenue.

The governance of the public sector is recognised as an issue, but the Budget is very light on how it will be addressed. Although I recognise that some progress is on the way, it is outsourcing various activities. The public sector is becoming an even more attractive environment to work in. Some of the initiatives of this Budget will create more administration. The Budget does not set out actions, which are to be taken to reduce the scale and scope of the public sector in Northern Ireland. Why?

Last December’s Budget set administrative cost limits of £896 million per year for each of the three years 2005 to 2008. This is an increase since 2003-04 of £138 million; in other words, 18 per cent. However, the priorities in the Budget have increased the administrative limits to £919.9 million per year, then £921.4 million, and £922 million for each of the next two years. That is a further increase despite promises of delivering efficiencies of 2.5 per cent. Will the Government be a little more ambitious in reducing the overall administrative costs?

Perhaps I may now turn to the section that refers to the Department of Regional Development and a topic which I have raised in this forum before; that is, the development of the Northern Ireland railway system. More significant funding is required for Northern Ireland Railways over the next few years. Consideration should be given to the expenditure for the years 2008-09, 2009-10 and 2010-11. The 23 new trains that are now in service have been a tremendous success. Already there is a 30 per cent growth in just over one year on the Portadown and Bangor lines. The additional capacity provided by the new trains has been fully utilised. East Antrim services continue to be operated by old trains and there is no growth on that line. In fact, if the truth were to be told, there is still a decline in passengers.

Northern Ireland Railways has demonstrated major successes already with these new trains and needs to replace the remainder of the fleet as quickly as possible. I believe that the further 20 plus trains could deliver the 60 per cent growth targets in the regional transportation strategy 2002-12. As a matter of urgency, I would ask Her Majesty's Government to look at an indicative funding requirement of around £100 million over the years 2008-11. I should like to pay tribute to the staff and management of Northern Ireland Railways. Having been set a target of 60 per cent over 10 years, to reach half its targets with the new trains inside 18 months is a tremendous achievement.

On the Department of Health, Social Services and Public Safety, what is being done to fund adequate numbers of GPs and registrars, and adequately fund those appointed to ensure that the Northern Ireland Medical and Dental Training Agency does not stop GPs and registrars receiving their car allowances after they have been appointed? In Northern Ireland, it is estimated that there is a need for between 75 and 90 trainee general practitioners annually. The department will fund only 50, but is committed to just 49. Then there is a refusal to pay the car allowance of around £4,500 per GP. Will the Minister confirm those figures and comment? When will the Department of Health, Social Services and Public Safety become part of the Doctors’ and Dentists’ Review Body so that it can give Northern Ireland evidence and accept the recommendations without the annual delay in implementing doctors’ pay awards?

I shall turn now to the sections in Schedules 1 and 2 which refer to the Department of Culture, Arts and Leisure. As soon as July comes, with it comes the annual Civil Service rush to find money from anywhere to pass the West Belfast nationalist festival and its partners in Ardoyne and New Lodge. The past three years’ funds were not made available easily to Unionist groups and were paid at a rate of £9 to Nationalist and £1 to Unionist festivals. Despite assurances from the Minister last year that he would not support any funny-money funding, the officials are at it again. Just for the record, last year the Ardoyne Nationalist festival funding was paid out on the previous year’s application, and the names and dates had not even been changed. Of course, the Department of Culture, Arts and Leisure does not have a wonderful record of fairness or even good bookkeeping. It once managed to pay far too much unasked-for money to Nationalist festivals. Thisgoes against a background of the impossibility of obtaining meaningful resources for Unionist or Ulster Scots projects from the department. The tricks and double-talk used by DCAL to mess around and withhold funding from projects which are not Irish will be the subject of disclosures at a later date.

This year DCAL is caught banged to rights again. It is supporting a massive £700,000 sponsorship of Rally Ireland, which is of little value to Northern Ireland, while giving only £33,000 to Orangefest each year for three years to turn the Battle of the Boyne celebration on 12 July into a tourist festival, which will benefit us all—£700,000 for a little show against £33,000 for a massive contribution to peace. What is more, DCAL is urgently trying to find extra funding for the Nationalist festivals in Belfast, which already get the best part of £1 million a year. I want to make it clear that I am not opposed to Nationalist festivals. They are entitled to funding and I like to see them get it, but I would also like to see funds being handed out on a fair basis. I am certainly not against the West Belfast festival this year, as I propose to take part in it.

Let us for a minute examine the Rally Ireland event—£700,000 for a rally that few have ever heard of. I support the concept of the tourist trade in Fermanagh but not at outrageous cost—£700,000 for a rally against £33,000 for the Orange Order. Is it any wonder that people in the Protestant community feel aggrieved and marginalised? Let us look at an interesting document produced by the University of Ulster in support of the case for Rally Ireland. As the noble Lord, Lord Smith of Clifton, is aware, I have had a relationship with that university over the years. The document makes interesting reading. I am always alerted by a document, especially from an academic institution, which refers to a position as relatively unique. Section 9 of The Case for Rally Ireland makes interesting reading. The report states:

“The majority of those who attended the rally from Northern Ireland were protestant males. Their willingness to cross the border was significant and, in fact, unprecedented”.

Has no one ever heard of the Circuit of Ireland or rugby internationals in Dublin? Besides, how can you calculate that a significant number of the people who watched the rally were Protestants? The follow-up reports for Rally Ireland were based on figures and information provided and paid for by Rally Ireland, therefore removing any independence. The information was not challenged by the university, but accepted.

The spectator figures for the events are grossly exaggerated—2,000 to 5,000 people over three days, but the report claims that there were 34,000. Bed nights were also claimed to be very high, but the Northern Ireland Tourist Board hotel bed-and-breakfast guesthouse survey for that month shows a reduction in occupancy as compared with the same period the previous year. During the event you could still book hotel rooms within four miles of it. That is not a sign that it is attracting tourism. There was an excessive fee of £200,000 for the promoter, which HMG do not normally accept but find acceptable in these circumstances Why? We should look at the internal event expenditure document which DCAL has. A general manager for one event cost €80,000; a finance manager €37,000; a sporting adviser €20,000, the helicopter €20,000; the helicopter co-ordination €10,000 and the police €50,000. To whom did the PSNI funding go? Will the noble Lord give me a breakdown of how much was spent in Northern Ireland? Were the normal tendering procedures adopted at all times? In normal circumstances that information is required by DCAL before payment is made. I calculate that the economic return for Northern Ireland was very low.

The Secretary of State publicly committed funding of €945,000 for the event without consultation with Government officials. Will the Minister explain from where DCAL got the money? This event was a waste of public money and a scandal. The event seems to operate on a political lobbying basis mainly orchestrated by a consultant for Rally Ireland. Accountable issues are being pushed aside. At a time when budgets are being cut elsewhere, this is a complete waste of public money. The case for funding was a joke as the announcement had already been made in front of the Republic of Ireland’s Tourism Minister last October. DCAL went through the motions of preparing a case to secure the money.

I will investigate this case in minute detail. The announcement of £33,000 for the Orangefest event is being used to allow DCAL to give an extra £100,000 funding to the West Belfast festival this year without evaluation or proper process. This announcement is expected to take place before 12 July. Officials hope that it will not be noticed in the lead up to the 12th and that Sinn Fein can make plenty of noise about the money going to the Orangefest to balance it. I will follow this trail as long as it takes. This is more money that is not available to unionists. It is interesting to think of all the people who have been turned down by the Community Relations Council, the Northern Ireland events companies and others—people struggling in small communities to run festivals to show off their culture to best advantage to those from other cultures. Yet the organisers and promoters of this event in Fermanagh, which no one in Belfast has ever heard of, get £200,000 of HMG’s money—and for doing what? Is it any wonder that there is a grievance? Who do you have to know in the Northern Ireland Office to get that sort of funding? Is it the political adviser to Mr Hain?

I am not aware of people who drive around in rally cars creating inter-community strife, and I am not aware that they have caused problems in years gone by. But a lot of us have worked extremely hard with no government support and not even a word of thanks or praise to help to turn 12 July in Belfast into a tourist attraction which we can all enjoy and show off our culture, not being offensive to anybody else, and bring tourists into Northern Ireland. No wonder we are disgusted.

It is still necessary to have expenditure and additional workloads associated with both the Department of Culture, Arts and Leisure and the Arts Council for Northern Ireland. In conjunction with the review of public administration in Northern Ireland, has any consideration been given to removing this additional and seemingly unnecessary tier of bureaucracy? It is feasible that the management of art and culture in Northern Ireland could be handled perfectly well by a combination of DCAL and the revised groups of local councils. Indeed there is already some confusion and duplication of the activities of the department and the Arts Council.

If, however, the Arts Council is to remain in existence, can we be assured that its remit will be closely reviewed and clearly spelt out, and its performance regularly monitored? There is growing concern throughout the artistic and the wider community in Northern Ireland that the Arts Council has unilaterally abdicated responsibility for promoting excellence, innovation and most activities generally viewed as high art, and overseen by the British Arts Council. It has instead taken on itself the role of social commentator and community developer and appears to be a government agency intent on spending public money on its own whims without direction or scrutiny.

There is also a strong view, for which I could give endless amounts of evidence, that there is what I would describe as discrimination against the Ulster Scots and Unionist community in the allocation of funds by the Arts Council for Northern Ireland. I am not sure who is in charge of affairs, but it seems that at every turn and cut, it is not possible to promote anything that is not pure Irish. We have the Northern Ireland Tourist Board, which I should tell noble Lords is still paying out grants owed to people for the past two years. How can you run events or create tourist activities in Northern Ireland if you do not get paid by the tourist board for two years?

I also find it extremely difficult to understand why tourism which supports Ulster Scots is not more readily available. Some 22 million Scots Irish live in America, all thirsting to come back to their homeland. The only part of the world where you can get Ulster Scots culture is in Ulster, yet when I talk to the tourist authorities, they say that they are promoting Irish culture. You can get Irish culture in Northern Ireland and anywhere else in Ireland, but the only place where you get the Ulster Scots culture is in Northern Ireland. Look at some of our tremendous sites—the battlefield at the Moy, the castle at Castlecaulfield, and the Black Pig’s Dyke. But because these sites do not suit the Irish version of history, we are not allowed to develop them. Of course the major part of tourism is in the hands of a cross-border body. When you are run from Dublin, you cannot expect too much support, but the Northern Ireland Tourist Board should at least be helping to put money into regeneration and creating tours for people who are interested in the Ulster Scots diaspora.

Tourism could be one of the major industries of Northern Ireland, and if tourists are going around the Province, people are not likely to cause trouble or throw stones. If your existence is dependent on tourism, and if you want a lot of Americans drinking coffee in your coffee houses and creating wealth, you are not going to create difficulties in your home town. That stands to sense. Tourism is not just a good industry, it is actually a part of the peace arrangements for Northern Ireland. It is not a couple of cars skipping across the border in South Tyrone every now and again and 3,000 people per day watching them. That is not tourism. That is simply a rip-off.

I have concluded my opening remarks.

I rise only to make certain that the two new Members, the noble Baroness, Lady Paisley, and the noble Lord, Lord Trimble, are aware that, should they wish to say anything in this Grand Committee, this would be the appropriate time to do so. I am conscious that this is their first attendance at our proceedings. I just wanted to make sure that they were aware of that before the Minister replies.

I congratulate the noble Lord and the noble Baroness. I have not yet had a chance to have a chat with them because I was not present at their incoming. I hope that they enjoy the House of Lords as much as I have enjoyed it for the past five yeas. I did not plan to come here either, but nevertheless we have interesting debates.

I have to say to the noble Lord, Lord Laird, that I am still answering his quota of Written Questions every day. He must be aware of that because I have just finished another lot before I came to the Moses Room. Indeed, some of the questions I have answered will respond to some of the issues he has raised today. I am not using that to make a point of not giving him a considered response now, but given the amount of detail he raised, it is not possible to answer in full. However, anything that is not answered today he will get from me in writing.

A Division has been called. The Committee will adjourn for10 minutes and we shall reassemble at 21 minutes past four o’clock.

[The Sitting was suspended for a Division in the House from 4.11 to 4.21 pm.]

I shall give a few figures in respect of the headlines for education and health before seeking to answer some of the more detailed questions.

The Northern Ireland budget for education is over 20 per cent of the Northern Ireland Budget of£9 billion, which is second to the health department. It is a substantial part of public expenditure. Since 1997, the funding has increased by more than 60 per cent; and that is with a decrease of about 6 per cent in pupil numbers. Also since 1997, funded pre-school places have doubled, so over 90 per cent of children get a better quality start to their education. Some £210 million is being invested to bring interactive learning into all classrooms. Over the past seven years on capital, there have been 230 major project schemes with an investment of over £1.3 billion. In the past two years, over £600 million has been invested, covering 91 schemes. In 2006-07, the Department of Education allocated £20 million to the education and library boards for maintenance.

There is a problem with surplus places. I do not think that it needs to be addressed here today, but it is a serious issue. There are 50,000 surplus places and two-thirds are in the primary sector. Only 8 per cent of them are in small schools. There are many—too many—small schools in Northern Ireland, but that is not where the surplus places are. The issue is going to get worse with, we reckon, a decline by a further 30,000 places over the next 10 years. In terms of achievements, 61 per cent of school leavers are achieving five or more GCSEs, compared to 57 per cent in England. Some 97 per cent of pupils achieve two or more A-level passes, compared to 95 per cent in England. On both those fairly narrow but important indicators, the success rate is better than England. A lot of reforms are under way, whether it is post-primary education—on which we will have a debate of substance next Monday evening, and the revised curriculum arrangements are included in that—new procurement and delivery arrangements for the schools estate, or a single education and skills authority.

I have few figures on health. I said initially that there is an increase of 7.5 per cent from the 2005-06 into this year. Much of the additional development resources will be spent on tackling waiting times in Northern Ireland. Some £140 million is required to meet the increased pressures on the pay bill. About £217 million will be available for capital development and health and social services.

I was asked about the effect of the money on waiting lists. When the new team of Ministers arrived in May 2005, the waiting list situation was a bit of a surprise to us; we had been quite ignorant about the situation in Northern Ireland. We put additional investment in, and this year there has been a further investment of another £12 million and a further £18 million, to bring the total to £35 million. The major reform programme is under way, and the number of people waiting more than 12 months for hospital treatment has fallen from about 4,000 to zero, so there has been a substantial difference in the past year. Waiting times will be further reduced over the coming year, and by March 2007 our estimate is that no one will be waiting more than six months for surgery. That was a major issue that we discovered in 2005 and, frankly, people in Northern Ireland do not deserve anything less in terms of health than the rest of the UK. The Government have put a lot of effort into reducing waiting times across England, Scotland and Wales and we have started to do that also in Northern Ireland.

Following the education and library boards’ overspend last year, an inquiry was initiated. The department has been monitoring progress against the action plans agreed with both the boards—the Belfast board and the South Eastern board—and the Jack report made 49 specific recommendations. The review of the implementation recommendations has been initiated and a report is due to be made to the Department of Education’s permanent secretary later this month. I will make sure that noble Lords are made aware of the findings.

Efficiency savings of some £580 million have been targeted for delivery by March 2008. The latest monitoring shows that we are well on target for that delivery and further efficiencies are being pursued by the work streams relating to the Comprehensive Spending Review, which all departments will have to go through. The noble Lord, Lord Glentoran, is right that we want to get efficiency savings, but they must be efficiency savings and not just savings. We do not want to create savings by denuding services.

The noble Lord also asked about the implications of the Review of Public Administration. It is designed to deliver better services. Following the implementation of the review, there should be a clear separation between policy formation and operational delivery in the education service. That should result in the transfer of some functions from the Department of Education to the new education and skills authority. There are major changes. A lot of the PR about the Review of Public Administration centred on local government, but we always made it clear that the Assembly had set up a three-strand approach: education; health and local government.

The noble Lord, Lord Smith, asked about falling pupil numbers. I do not have all the answers. As part of the Comprehensive Spending Review, we have asked Sir George Bain to take a strategic view so that we can look at what school provision can be made to encourage greater sharing, collaboration and achieving higher standards. As I have said before, it is possible to do that, and there are good examples. You can operate more than one school in a building, which at least gives some shared services and a shared community, although you can maintain separate schools. The noble Lord, Lord Smith, asked me about integrated education. In 2006-07, approximately £25 million has been allocated for capital development in grant-maintained integrated schools. The recurrent grant aid totalling £56 million will be paid to the grant-maintained integrated schools in 2006-07. That compares to £3.9 million in 1991-92.

In addition, the Department of Education funds the Northern Ireland Council for Integrated Education. The grant is a modest £528,000 for 2006-07. That provides support for the sector. It has provided a total of more than £4 million to the Integrated Education Fund. That level of funding is consistent with the Department of Education’s statutory duty underthe education reform order to encourage and facilitate the development of integrated education.

The noble Lord, Lord Laird, asked various questions. I have said that I will come back to the questions on Invest Northern Ireland that I am unable to answer today. The 2006-07 budget is £152 million for financial assistance. That is based on the funding requirement for existing contracts with companies coupled with an estimate of the funding needed to support new businesses and those projects which are under negotiation. It covers a very wide range of areas such as start up support, research and development, selective financial assistance and business improvement services. I wholly agree with what the noble Lord said about the small private sector and the ability to give grants to the voluntary and community sector. There is a disproportionately small private sector in Northern Ireland. The economy will never grow while it stays as small as it is; there is no question about that. The Government can do an awful lot. We want to do it not necessarily by cutting the public sector, although there can sometimes be transfers of activity, but by deliberately setting out to grow the private sector in every way we can. I realise that comparisons have been drawn and questions have been asked about the different tax rates that apply in the north and the south and about the various incentives that apply, but certainly there is a positive effort to do what I have mentioned.

Positive Steps is the Government’s response to the report of the Taskforce on Resourcing the Voluntary and Community Sector, Investing Together. The actions in Positive Steps will help to ensure that the voluntary and community sector is better placed to cope with social and economic change. Twenty-one million pounds has been allocated to the voluntary and community sector in 2006-07. The admin costs can look high and the noble Lord, Lord Laird, was quite right to subject the accounts to forensic examination. Although the admin costs appear to rise in 2006-07, that is not the case. If that is not the case, it should not look as if it is. I acknowledge that everything is my responsibility, but nevertheless I do not remember the relevant line. However, the flat line figure for admin costs has been adjusted upwards to take account of technical changes in recognition of superannuation liabilities, which would always have been there. That brings Northern Ireland into line with the accounting approach adopted in Great Britain. It may look as though there is an increase in that regard, but that is not the case. The underlying trend in our view is a real reduction.

I have mentioned the reduction in waiting list times of more than 12 months from 4,000 to zero. Of course, I shall give way.

I thank the noble Lord for giving way. Going back to the administration figures that he mentioned, Mr Lidington has referred in the other place to the provision for administrative costs for Northern Ireland departments in 2005-06. If we compare that with the provision for 2004-05, and the actual expenditure for 2003-04, we find a consistent pattern. Actual administration costs in 2003-04 were £802.8 million, rising to£854.7 million for 2004-05 and to £954 million for 2005-06.

Without the benefit of technical advice I am not sure whether the figures are comparable, but certainly I will get an answer to that. Our view on the overall trend is that there is a reduction. There is obviously a paradox there but I shall seek to explain that in writing, as I can probably explain it better in writing than verbally. However, the point is well made by the noble Lord.

The road maintenance budget was mentioned. Funding for road maintenance over the two-year period 2006-08 is £45 million to £57 million. Some reductions were necessary in the structural maintenance budget. I believe that I mentioned that point in an earlier discussion. Last autumn we were faced with a dilemma in putting the budget together. We had to get money from other areas. We had to put the rates up by far more than we had wanted for the reasons that I have given and restructure some priorities, and that budget was one of them.

In the past three years, £735 million has been spent on developing and maintaining the road network in Northern Ireland. Over the next 10 years, £1.9 billion will be invested in roads. We were conscious when putting the Budget together that all necessary health and safety projects are going ahead. We did not cut anything with a specific health and safety rationale.

On festival funding, I realise that festivals come around annually and so do the questions. I suspect that the answers will probably come around annually as well. The noble Lord, Lord Laird, raised a lot of detailed questions, to which it is clearly impossible—even with the number of officials here today—to do justice. Nevertheless, I will get him answers to all his questions. The Northern Ireland Events Company administers the community festivals fund, which was £550 million for 2006-07 and 2007-08, including admin costs.

Perceived community background is not a factor in determining the recipients of festival funding. Assistance is provided solely on the basis of the merits of the individual festival. The first tranche of funding for festivals, between 1 April and 31 July, has been decided. Details of the successful applicants have been announced on the website. There are no plans to allocate any further funding to the Northern Ireland Events Company at this stage.

I am grateful to the Minister for giving way. Can he give an undertaking that there will be no extra money provided to the nationalist West Belfast Festival, Ardoyne or New Lodge? I understand that £100,000 is going to the West Belfast Festival, but it is not coming from the events company. I would be reassured if the Minister can assure me that I am wrong.

I shall have to come back to the noble Lord. Given what I have just said about there being no further plans to allocate further funds to the Northern Ireland Events Company—that is a statement of policy—I do not know if any money is still in the system. Over the past nine years, the slow flow of money through the system when one makes allocations—either as a Minister or, I suspect, in the voluntary sector—has been a mystery to me. I cannot say that there is no money in the events company’s system that would not end up at one of the festivals, but I will seek a proper answer to that.

On health service pay, the Government intend that the Department of Health will join the doctors’ and dentists’ pay review body, and plans for that are in place. I do not have a date, but it will change how pay and ration issues are dealt with.

On Northern Ireland Railways, a programme for replacement of the trains is in place. When completed, the Government will consider the need for further investment in the rail network as part of the regional transport strategy. That does not take matters much further forward, except that it is not finished; we have not said that that is the end. Obviously, we must consider further.

My final note on a detailed answer for the noble Lord, Lord Laird, is on funding for the Ulster-Scots Agency. The budget for 2006 is sufficient for it to meet its objectives and targets laid out in the corporate and annual business plan, which was approved after consultation. I understand that the budget for 2006 is £2.132 million, an increase of 17.9 per cent on 2005. The Northern Ireland contribution is £1.6 million.

There is no discrimination against Ulster Scots in government policy on funding. The Ulster-Scots Agency sought an increase of £487,000 in its budget for the 2006 business plan. My colleague, the Minister David Anderson, agreed an additional £200,000 for the agency as part of a package of confidence-building measures. I understand that the department in the south provided an additional £67,000, in keeping with the agreed funding ratio. It does not quite meet what they asked for, but is nevertheless substantial extra funding.

I am conscious that I have been unable to respond to the noble Lord, Lord Glentoran, on waste and refuse, but I shall come back to him in writing; as, indeed, I shall with other issues on which I have been unable to go into detail today. I know that the rally is the subject of some of the parliamentary Answers I have given the noble Lord, Lord Laird, and I will come back to him on the other points of detail.

On Question, Motion agreed to.

Water and Sewerage Services (Miscellaneous Provisions) (Northern Ireland) Order 2006

rose to move, That the Grand Committee do report to the House that it has considered the Water and Sewerage Services (Miscellaneous Provisions) (Northern Ireland) Order 2006.

The noble Lord said: The order paves the way for Government’s wider programme of investment in, and reform of, water and sewerage services in Northern Ireland. It also strengthens legislative controls on the abstraction and impoundment of water. I say at the outset of my remarks—which will not take too long—that this is not the order bringing in the water charges. That will come later this year.

The reform of water and sewerage services will improve water quality, give more robust environmental protection and clearer rights for consumers, and enable sustained infrastructure investment which has been sadly lacking. The draft legislation which provides the framework for the reforms was recently published for consultation on 1 June. That is, of course, currently undergoing consultation.

The wider reform proposals include the introduction of domestic water and sewerage charges. That is a contentious issue in Northern Ireland—a fair and honest way to put it. During the general election, not knowing what I was going to be doing afterwards—it certainly never crossed my mind that it would be Northern Ireland—I remember watching an interview on “Newsnight”, when Mr Paxman kept going on about security and the constitution. Whoever it was from Northern Ireland—I forget—kept saying, “Forget that. The biggest issue in Northern Ireland is water charges!”. I thought “What’s all this about?”, as Mr Paxman attempted to say that it was a local issue. The politician in question made it clear. It is therefore a contentious issue.

The Government have responded to concerns about low-income households by proposing an affordability tariff which will benefit nearly a third of Northern Ireland domestic consumers. The measures contained in Articles 3 and 4 of the order ensure that the Government’s commitment to assist people who need help with the new charges is delivered. Basically, they enable the sharing of information between government departments in Northern Ireland. The creation of an accurate billing and contact system for all customers will be facilitated, and up to 200,000 domestic consumers will benefit from automatic payment of the proposed affordability tariff.

We have a duty to protect information in our possession, reflected in the introduction of criminal sanctions for unauthorised disclosure. The purpose of this transfer of information is to put together a process and package which will help poorer people, but this discloses personal financial information and must therefore be protected. The order will come into operation on 1 August, allowing time to put systems in place. The arrangements will be superseded by the main water reform legislation in April 2007.

Article 5 strengthens the department’s enabling powers under the Water (Northern Ireland) Order 1999 to introduce regulations to control water abstraction. It is over seven years since these powers were introduced, and the proposed changes are necessary for the department to introduce a modern and comprehensive abstraction licensing scheme in line with other environmental licensing schemes. The enabling provisions were added to the draft order after it was issued for public consultation, when it became clear that it would be necessary to use the proposed powers to introduce regulations as soon as possible to avoid the imposition of financial penalties by the European Court of Justice. Details of the new controls to be introduced under the extended powers provided for by those provisions are set down in the draft Water Abstraction and Impoundment (Licensing) Regulations which were published for consultation on 8 May 2006. This provides the opportunity for all interested parties to make their views known. The department will consider carefully all the comments made before making the regulations.

The introduction of new controls on water abstraction will help to facilitate the wider process of water reform in Northern Ireland and will also ensure that the Government can meet its European obligations and provide increased protection for the water environment. It is a valuable asset in Northern Ireland’s environment and deserves to be protected for the future. The order is very narrow and is the first relating to water charges. It is purely to have the powers for Northern Ireland government departments to talk to each other and set up a system to be able to help the poorer section of the community in alleviating the water charges. The other is a result of, more or less, European Court decisions to bring a more modern system of abstraction licensing. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Water and Sewerage Services (Miscellaneous Provisions) (Northern Ireland) Order 2006.—(Lord Rooker.)

I thank the Minister once again for clearly introducing this order. I support it in principle, particularly Schedules 3 and 4—which I hope that I have got right. I hope that whoever is put up as the rate charging agency—RCA—performs considerably better than the agency that currently collects rates. It has failed on a number of occasions and has caused myself and itself embarrassment on a personal front, which I will not go into.

Speaking as a farmer, I hope that the enforcement of this order and future orders on water and sewerage will be more readily, more quickly and more thoroughly enforced. We have some pretty bad examples of sewerage and chemical discharges. We had very fine publicity for one of the worst beaches in Europe not long ago, if I remember correctly. That sort of thing is simply intolerable for Northern Ireland, particularly with its growing and badly needed tourist industry. In principle, I support the order. I just raise the issues of better enforcement, stronger enforcement of the environmental regulations associated with water and sewerage, and better attention to leakages. I have also had problems with significant leakage and being charged for water that my and other people’s cattle could not possibly have used, but the comeback is unbelievably cumbersome if one tries to improve anything. I sincerely hope that that will not happen. I imagine that communities, if not every house, will be fitted with water meters in due course. I wonder what the costs of that will be and where it will lie. Having said that, I support the order.

I, too, thank the Minister for introducing the order. I fully recognise that this is not the main order which will introduce water charging in Northern Ireland, but the proposals in this order are linked to that main order—it is a bit of a trailer. It is therefore relevant to raise some of the concerns that I have about water charging as a whole. The Northern Ireland Assembly is suspended, so Ministers in Westminster have proceeded with proposals to introduce additional charges for water and sewerage services. Ratepayers in Northern Ireland already pay for water and sewerage services through their rates. These new charges would be on top of the payment made through the regional rate. It is somewhat unfair to expect the people of Northern Ireland to pay twice for the same services.

We accept the need for improved water and sewerage services, but ratepayers are not to blame for historical underinvestment. Home owners have paid their rates. It would be a cruel injustice if they were expected to pay twice. Therefore, depending on what the Minister has to say, we will reserve our position on this order until we have heard what he has to say when he sums up.

I, too, thank the Minister for his introduction on the matter. It is, as he says, a fairly modest measure. I am glad to see that finally some steps are being taken to comply with European directives. In the Department of the Environment in Northern Ireland there is a serious backlog, and has been for a long time.

As the Minister says, the measure paves the way for water charging in the next year or so. I do not want to get involved in arguments about levels of local taxation in England and Wales and comparing them with those in Northern Ireland. I am familiar with the argument that the noble Lord, Lord Smith of Clifton, has put forward about there being a payment for water in the rates. That is accurate, of course. Then there are arguments about comparability between Northern Ireland and the rest of the United Kingdom.

The point I want to make to the Minister is a different one. The local taxation rate in Northern Ireland is increasing sharply. In the previous debate, the Minister remarked on how it had to be increased more than Ministers would have wanted. All the indications are that it will continue to go up sharply over the next few years, and water charges will be introduced on top of that. Although there may be arguments about lower levels of local taxation in Northern Ireland compared with the rest of the United Kingdom, I ask the Minister to ensure that people are looking at the rate of increase in Northern Ireland. We still have many people who are on lower incomes than here. To increase the combined rates and water charges so steeply over the next few years will cause considerable hardship and will manifest itself in considerable discontent. We do not need that at the moment.

I am grateful to the Minister for introducing this matter. I pick up on a point made by the noble Lord, Lord Glentoran. Can we be sure that metering will go in eventually? The noble Lord is talking about the benefit system. I know a lot of people, as we all do, who are perhaps just slightly over the rate for claiming benefit. They will suffer greatly because of this water order. Is the idea that we will eventually get meters?

I am grateful to the noble Lord, Lord Trimble, and my noble friend Lady Blood for raising the issues and giving us a chance to put some information on the record. We are committed long term to widespread domestic metering. The intention is that as soon as possible every household will be able to choose whether a metered tariff is best for it, but that will take between five and 10 years. In the short term, the availability of domestic metering will be targeted on pension households who request an installation.

The noble Lord, Lord Trimble, made a highly relevant point. I do not have the figures with me. He is quite right to say that there was a hike in the rates; that was the 19 per cent figure. We were very mindful of that when planning the two-year Budget. The commitment was that the water rates should have started this year. That is why the Treasury made the assumption it did and we had a £50 million gap in the Budget. That caused us a little difficulty. The plan is for the water rates to start from next year, and it will be phased in. It is not intended that that large increase in domestic rates will be repeated, simply because if it was, and you brought in water rates on top, you have a recipe for a bit of a problem.

We do not accept that people are paying twice. Everywhere I turned on a tap, water came out; basically that was Stormont and Hillsborough. I did not turn taps on anywhere else. The Water Service in Northern Ireland, with the best will in the world to the people working in it, is, compared with the rest of the UK, a rubbish service. That is the reality. You have to put it as boldly as that. There are areas in Northern Ireland where people turn on the taps and water does not come out. That is, in a way, because of the funding arrangements.

I am not saying there is a magic solution to this, as has been said twice in Question Time in the past week. The Water Service is currently funded out of general taxation. It would take almost the entire Northern Ireland rate to fund the water and sewerage services, so one can see how much extra money is required. Therefore, we have a dilemma; Northern Ireland has the highest rate of public spending per head and the lowest levels of revenue in the UK. Something has to give. The short answer is that Northern Ireland households are not contributing enough to sustain investment in public services. I know that averages can be very misleading, but I have global figures for England, Wales, Scotland and Northern Ireland. They show that in Northern Ireland the average level of household taxation—that is, property charge per household as well as water rates—is £668. For England and Wales, it is £1,337 and Scotland it is just over £1,200. There is a substantial difference there. There is not a figure for water; the water is not being paid for to the amount that it should be even out of local charges.

This will be a bone of contention, but the prize is getting a decent water service, which will require a good level of investment. It is on target for the economic level of leakage for next year. The Northern Ireland water company will be subject to full normalised environmental regulation; it will not benefit from Crown immunity as the Water Service currently does, which is basically how it has got away with providing a less than good service. Over the five-year period up to 2007-08, over £1 billion in capital investment will have been made available to upgrade the water and sewerage infrastructure. The water reform is about enabling that investment to be sustained, which we will not be able to do unless we can find other streams of income; doing it out of general taxation will not work.

On the rate of increase, of those entitled to the affordability tariff 80 per cent are entitled to full housing benefit and do not therefore pay rates. We have developed a unique affordability tariff to assist those households with water charges, so there is an important element of changing over. Also, we are hoping to do it automatically, because when people have to apply for something, you always find people who do not apply and then lose out. At the end of the day, in terms of paying for what you get, metering is the long-term objective, to answer the noble Baroness. There must be a vastly improved Water Service. When people are paying more, they must see a much better service; but we need more resources for that.

On Question, Motion agreed to.

Law Reform (Miscellaneous Provisions) (Northern Ireland) Order 2006

rose to move, That the Grand Committee do report to the House that it has considered the Law Reform (Miscellaneous Provisions) (Northern Ireland) Order 2006.

The noble Lord said: The purpose of the draft order is to take account of two decisions of the European Court of Human Rights and therefore bring Northern Ireland law back into line with the European Convention on Human Rights. It will be helpful if I comment briefly on the background to the order and say a few words about its substantive provisions.

In the case of A v the United Kingdom in 1998, the European Court of Human Rights held that the United Kingdom had breached Article 3 of the convention by failing to provide a young boy with adequate protection against inhuman and degrading treatment in the form of beatings from his stepfather. When the matter was before the domestic courts, the stepfather had relied on the defence of reasonable chastisement. Following the judgment, the United Kingdom undertook to review the operation of the defence and to introduce measures that would prevent a repeat of the violation found by the Court. Article 2 of the order effects the required amendments.

In the case of B and L v the United Kingdom, the European Court ruled that the United Kingdom law breached Article 12, which refers to the right to marry, by placing limitations on the right of parents-in-law to marry their former children-in-law. Article 3 of the order remedies this breach.

Article 1 sets out the title and interpretation provisions of the order, and provides that the order will come into effect two months after it has been made. Article 2, which relates to children, largely follows Section 58 of the Children Act 2004. It restricts the defence of reasonable chastisement to a charge of common assault and precludes its use for more serious charges, such as wounding, causing grievous bodily harm, assault occasioning actual bodily harm, or cruelty to persons under 16. It also precludes the use of the defence in a claim for civil damages where the harm caused amounted to actual bodily harm.

Article 3 repeals the offending provisions of Article 18 of the Family Law (Miscellaneous Provisions) (Northern Ireland) Order 1984, which prohibits a man from marrying his former daughter-in-law unless both his son and the mother of his son are dead. The article removes any restriction on the marriage of in-laws.

Article 4 repeals corresponding provisions preventing a man or woman from forming a civil partnership with the former spouse or civil partner of his or her child. These civil partnership provisions were not commenced on 5 December 2005, and the order provides an opportunity to remove these redundant provisions from the statute book.

Article 5 also tidies up the statute book by removing legislative provisions relating to prohibited degrees that have been superseded by subsequent amendments. Article 6 makes a minor technical correction to Schedule 16 to the Civil PartnershipAct 2004, which applies only in Northern Ireland, to ensure that courts of summary jurisdiction have the full range of powers to vary orders for financial relief on relationship breakdown.

The order provides necessary law reform in these two areas, both of which result from European Court judgments, to ensure the law in Northern Ireland is compliant with the convention. Article 2 in particular is a vital step towards offering added protection to children. It has been a long time coming, and there has been a good deal of debate about it, but I hope that, with the passing of the order, we will comply with the European Court of Human Rights and offer children in the United Kingdom approximately the same protection wherever they live. I beg to move.

Moved, That the Grand Committee do reportto the House that it has considered the Law Reform (Miscellaneous Provisions) (Northern Ireland)Order 2006.—(Lord Rooker.)

As the Minister said, Article 2 largely replicates Section 58 of the Children Act 2004 by restricting the defence of reasonable chastisement, but it does not remove it altogether. Children in Northern Ireland need protection equal to that enjoyed by adults under the laws on assault, but in fact Section 58 does not give it to them. Although we welcome the fact that the Government are now turning their attention to protecting children in Northern Ireland, why has it taken since 2004 to address the matter? The Government have claimed that Section 58 makes them compliant with their obligation under the convention, but it is not for the Government to rule on this; it is for the Council of Europe, which has not done so.

I have received a copy of a formal letter of complaint that was sent to the Office of Law Reform in Belfast, from a group of children’s organisations with the support of the Children’s Commissioner for Northern Ireland. The group points out in a letter that:

“The Office of Law Reform is bound under section 75 of the Northern Ireland Act 1998 to comply with the Department of Finance and Personnel’s approved Equality Scheme. Paragraph 3.5 of the Department of Finance and Personnel’s approved Equality Scheme states that,

‘Consultation with groups and individuals will begin as early as possible and the Department is committed to carrying out consultations in accordance with the Equality Commission Guiding Principles. The Department will consult with the bodies listed in Annex C in relation to Section 75 duties, screening and the Scheme itself …’.

The Children’s Law Centre, Children in Northern Ireland (formerly Childcare NI), Parents Advice Centre and Save the Children are specifically listed in Annex C of the Department of Finance and Personnel’s approved Equality Scheme as organisations which should be consulted with at policy screening stage. There has been no consultation on the screening of the proposals to introduce article 2 of the Draft Law Reform (Miscellaneous Provisions)(Northern Ireland) Order 2006. This is in breach of the Department of Finance and Personnel’s approved Equality Scheme and the failure to consult as part of screening decisions is stated as one of the list of matters that could potentially amount to a breach of an approved scheme at paragraph 5.12 of the Equality Commission’s Guide to the Statutory Duties Revised February 2005 … Having screened in the proposal to replicate Section 58 of the Children Act 2004, the Office of Law Reform is bound to give consideration to carrying out an Equality Impact Assessment … The Office of Law Reform did not make a recommendation to proceed with the carrying out a full Equality Impact Assessment”.

If it had done so, it would have found that,

“there is a clear adverse differential impact on children by the replication of section 58 of the Children Act 2004 in that the defence of reasonable chastisement is not removed from common assault but only from the offences set out in Article 2(2) of the Draft Law Reform (Miscellaneous Provisions)(Northern Ireland) Order 2006”.

This group of organisations,

“request the Office of Law Reform to halt the progress of the introduction of article 2 of [this order] pending the outcome of this formal complaint under Schedule 9 paragraph 10 of the Northern Ireland Act 1998”.

Noble Lords may wonder why these organisations representing children are opposed to a measure that purports to protect them. It is because they and hundreds of other organisations across Northern Ireland and the rest of the UK believe that it represents a step backwards in the campaign to satisfy our human rights obligations by affording children equal protection under the law on assault in all parts of the UK. They believe, as I do, that Section 58 is unjust and unsafe and is bad law. If they had been properly consulted, they would have had the appropriate opportunity to express those feelings. They have six brief reasons and I shall not detain noble Lords long in detailing them.

First, they believe that if this order goes through it would recycle England’s unjust compromise. The four UK Children’s Commissioners made it clear in their 22 January joint statement that there is “no room for compromise”. They said:

“We urge the Government and the Scottish Executive to promote consistent legislation throughout the UK to give children full protection under the law on assault”.

Secondly, both they and I believe that it does,

“not satisfy our human rights obligations … when we need full compliance with important UN and Council of Europe human rights treaties to which the UK is a party. The UN Committee on the Rights of the Child recently reminded all signatories to the Convention on the Rights of the Child, including the UK, that … equal protection for children is an ‘immediate and unqualified obligation’”.

Thirdly, it will,

“promote inequality … when what we need is consistency with Northern Ireland’s equality standards, which means affording children the same protection under the law on assault that adults take for granted”.

Fourthly, in some circumstances it would,

“condone hitting children … when we need the law to say that hitting children is as unacceptable as hitting anyone else”.

Fifthly, it causes parental confusion when what we really need is clarity to help parents move on to using positive non-violent discipline.

Finally, Section 58 creates legal ambiguity when what we need is an unambiguous message that all violence against children, however much we dress it up with cosy euphemisms such as “smacking”, is unlawful and unsafe. Will the Minister say whether there will be an opportunity to address these matters fully on the Floor of the House? What response will be sent to the organisations that have complained about a lack of proper consultation under the Act that I mentioned? Will the Minister also say whether the Government will consider moving further in the light of the change of opinion that has occurred in the House of Commons since the Act was passed in 2004—a very long time ago?

A recent Early-Day Motion on the matter has obtained more than twice the number of signatures obtained by a similar Early-Day Motion before we discussed this matter in 2004, so it is quite clear that the matter is very contentious and deserves airing on the Floor of the House. However, we very much welcome Articles 3 to 5 of the order.

I start by declaring an interest in that I am the chairman of Barnardo’s in Northern Ireland and a trustee in Great Britain.

Before I speak to Article 2 of the order on the physical punishment of children, I must say that I welcome the attention that the Government have recently given to children’s issues in Northern Ireland and the fact that they have made policy and legislative development a priority. The current executive team at the NIO has taken steps to ensure that children in Northern Ireland should be afforded the same protections in the law as those in this jurisdiction, both in this order and in sexual offences legislation and child protection structures. Any additional protections against assault for children must be welcomed. However, I am disappointed that the Government have not yet gone beyond the limited provision in Section 58 of the Children Act, which is replicated in the order, to give children equal protection against assault under the law. It would have been an opportunity to send out a powerful message in a part of the United Kingdom where violence has been institutionalised in both family and community life.

The provisions fall short of what I believe is required under the United Nations Convention on the Rights of the Child. I hope, and firmly believe, that the Government will move to a position of complete legal reform—a move already made by many European countries. What is most important is changing public attitudes to the use of physical punishment, and this legislation provides us with the opportunity to do this. The defence of reasonable chastisement has probably not been used much in Northern Ireland cases, but its availability has acted as a drag on policy making. If we are to make progress on moving away from the use of physical punishment, it is essential that the Government provide a lead and take a strategic approach to the order’s implementation. I therefore seek a number of very specific assurances from the Minister, and I hope, as I have provided advance warning of these, that he will be able to do so for the Hansard record.

First, the implementation of the order needs to have a strategic approach and clear vision. Will the Minister say what this will be and outline timetables? Can he assure me that a component of the strategy will be a regional campaign to raise public awareness for professionals, parents and carers, and will he outline what this will look like? Will he also give an assurance that the legislation will not result in unmerited prosecutions of parents, and that it is ultimately designed to support parents to find positive methods of disciplining children? Does he agree that health visitors and midwives play an important role in primary prevention, and that all should routinely provide advice on positive parenting? I would welcome an assurance that the HPSS will issue a circular alerting both medical and social care staff to this legislative change, and that it will in time issue guidance for staff on this issue.

The Department of Education has an important role in developing a positive parenting strategy. Can the Minister give an assurance that the department will be fully involved in doing this? I would also like some assurance that the development of a strategy will involve all relevant government departments, and that the strategy will be taken forward by a cross-departmental implementation group with appropriate links to the children’s voluntary sector. Will he ensure that both the PSNI and the PPS keep statistical information relating to physical punishment cases that will allow benchmarking and comparisons to be made following implementation of the order? Finally, the United Kingdom Government have indicated that they will review the operation of Section 58 in England and Wales. Can I ask that this corresponding provision in Northern Ireland is also reviewed?

I conclude by saying that I recognise the good intent behind the legislation irrespective of whether it goes far enough. The above actions could make it much more of a success for parents, carers and children by bringing about a change of attitude to the disciplining of children.

I apologise for missing some of the Minister’s remarks, but I want to address the same subject as the last two speakers. My views on this issue are very well known in the House. For more than a decade the UK has been roundly criticised by United Nations and European human rights bodies for having legislation which allows parents and some others to justify assaults on children as reasonable punishment. The legislation which the Government now propose to impose on Northern Ireland through this order allows common assault to be justified as reasonable punishment. As the independent expert leading the current UN Secretary-General’s study on violence against children said at a meeting in Parliament last December:

“There is nothing reasonable about hitting children”.

Our children deserve nothing less than equal protection under the law.

The UK expects other states to take their human rights obligations seriously and to respect the recommendations of human rights monitoring bodies. The four children’s commissioners, including Northern Ireland’s, have strongly criticised this legislation. The Council of Europe’s Human Rights Commissioner, Thomas Hammarberg, recently issued a paper calling for the prohibition of all corporal punishment across Europe. In it he states:

“Children have had to wait until last to be given equal legal protection from deliberate assaults—a protection the rest of us take for granted. It is extraordinary that children, whose developmental state and small size is acknowledged to make them particularly vulnerable to physical and psychological injury, should be singled out for less protection from assaults on their fragile bodies, minds and dignity”.

This Government have done much good for children, but they really should grasp the nettle and stop pursuing unsatisfactory and dangerous compromises like that expressed in this order and in Section 58 of the Children Act 2004. I hope that the Minister can give us an assurance that he will try to do something to ensure that this is not put into law in Northern Ireland.

The noble Baronesses who have just spoken have criticised the substance of these provisions by asking whether they reflect their views of the European Convention and other matters. They point out that this has stemmed from a compromise reached in this House in 2004. The point I want to make, however, is somewhat different. This is an area where the law for Northern Ireland is the same as that for England and Wales, and in a large number of areas the law is the same. It is enormously to be desired that in these areas where for largely historical reasons there is a notional devolution of legislative authority to a body that currently does not exist, the law of Northern Ireland should be kept in step with the law in England and Wales, where these matters are similar. Indeed, it is probably desirable that, so far as possible, any differences between the law in England and Wales and that in Northern Ireland should be removed as rapidly as possible, but that is a wider issue than the one I want to address here.

The law in England was changed in 2004. Now, two years later, the measure is being introduced in Northern Ireland by Order in Council, which means using the very abbreviated parliamentary process that we are currently engaged in compared with normal legislation by passing a Bill. What really should have happened was for the 2004 Act to be extended to Northern Ireland; then we would not have been in a situation where a two-year interval has arisen. If the noble Baronesses are not satisfied with the provision here, they must be even more dissatisfied with the fact that for two years the law has remained unchanged and not brought into line. That is my basic point. We are dealing with a form of legislation that is bad in so many ways, but particularly because it is so slow and inefficient. I have made this point many times over the years, but I just wanted to underline again to the Minister and to those who are listening and taking notes that there is no need for this delay. It should not have arisen. The law in Northern Ireland should have been changed in 2004, not in 2006.

Before the Minister responds, I should like to take up the point made by the noble Lord, Lord Trimble. When the legislation for England and Wales came on to the Floor of the House, I wanted to see if we could get Northern Ireland included in the Bill but was told that that was not possible. I have pursued every avenue in the two years since then. This does not go far enough, which we all know. My point was that I wanted parity for the children in Northern Ireland. That was the sole reason for making that point. I have had conversations about this with a number of organisations in Northern Ireland. As I said to the noble Baroness, Lady Walmsley, I raised the issue with a number of people who are now complaining. I understand that they were not formally approached, and I feared physical punishment getting out of the meeting.

I appreciate the points that have been made. I think I can answer most of them, but I shall certainly not be able to answer some of them satisfactorily. It is distressing that, by and large, in the current circumstances—direct rule with an Assembly that is suspended and that may not exist—Northern Ireland will always be behind the legislative progress and reform in the rest of the UK unless we actually start to legislate for Northern Ireland when we legislate for England and Wales—in the main, we do not do Scottish legislation any more. There is an incredible reluctance to do that for Northern Ireland, simply because of its history, but Northern Ireland should have its own devolved Administration.

By the way—and I do not say this to excuse the delay—the two Section 58s are not word perfect because criminal law in Northern Ireland is slightly different from that in England and Wales. I may be wrong, but I think Section 58 was imported on a free vote in the House. I do not blame the noble Baroness. Indeed, I would do the same myself; I would use every possible parliamentary avenue to fight the other battles that I had lost and to try to undermine those to come back. She is quite right to do that. However, Parliament decided the substance of Section 58 on a free vote, and it was not a complete ban. Whatever our individual views, Parliament took that decision, and we have tried to implement it. The delay is a difficulty.

I accept that Parliament voted for this compromise—the Minister accepts that it is a compromise—but will the Government stop claiming that it now makes us compliant with the European Convention on the Rights of the Child? It is for the Council of Europe and the committee that polices the convention, not for the Government, to decide whether the Government comply. The Government may think that they comply, but they cannot really claim that they do until that claim is endorsed by those organisations.

We shall make the claim until someone disclaims it. That is our view.

I shall also address the substance of the point made by the noble Baroness. I am not knocking the other points, but she made a point about the Northern Ireland commissioner and a number of voluntary organisations that have complained about the handling of the matter under Section 75. Section 75 is incredibly important for Northern Ireland. Great Britain has nothing like it. In some ways, that is to Great Britain’s disadvantage, although I do not want to spark another debate about Section 75. I am informed that it would not be appropriate for me to comment on this issue because of its nature and because the two letters of complaint were submitted only late yesterday afternoon and must be dealt with in due course.

Section 75 of the Northern Ireland Act 1998 imposes a duty to promote equality of opportunity rather than a direction for equal treatment. In our view, the Section 75 duty was appropriately discharged during the policy process, and it was concluded that a provision corresponding to Section 58 was compliant with Section 75. As I say, there is a time lag here, and that is to be regretted. Decisions on this issue were tossed around in the past 12 months that I have been in Northern Ireland. The idea was to try to prepare a policy that was fit for purpose in Northern Ireland. The departments in Northern Ireland are watching what is happening in GB. Section 58 was not in the Bill when it was originally put before Parliament; it was introduced as it made its way through Parliament. The departments in Northern Ireland were aware of the amendment but they wanted to take time to assess the situation and to get it right for Northern Ireland to the best of their ability. It has taken time, and it will take more time unless there is a devolved government. There will be a real dilemma if we do not have any prospect of a devolved government that Northern Ireland will always be behind. I fully accept that the level of scrutiny is totally inadequate. It is not fully democratic. Nevertheless, no one in Northern Ireland is prepared to do it at the moment: it is left to Westminster to do it.

Section 58 of the Children Act 2004, which is what we are talking about in the main, was considered by the Joint Committee on Human Rights and was judged to be compliant with the European Convention on Human Rights. The shift in the law has been generally welcomed at the European Parliament level, although progress on positive parenting will be monitored. We do not want parents smacking kids. Children should be entitled not to grow up under a threat of physical violence; I fully accept that. We are satisfied that at present this is sufficient to bring us into line with the European Convention on Human Rights.

I will try to address the questions asked by my noble friend Lady Blood, who was kind enough to give my office some warning of them, and we have prepared a response which, as she asked, will be placed in Hansard. First, she asked about the implementation of the order leading to a strategic approach and a clear vision, and she asked me to outline timetables. I recognise that Article 2 of the order effects an important amendment to the law in Northern Ireland and that the amendment will be of direct relevance to people in their private, and possibly professional, capacity. I agree that the implementation of that article requires careful thought and a systematic approach.

With that in mind, we have sought approval for the establishment of an implementation group, which will be tasked with managing the roll-out of the new arrangements and securing the links across government departments, the voluntary and community sector and the statutory sector. If approved, that group will comprise high-ranking officials from the Northern Ireland Office, the Department of Health, the Department of Education, the Office of Law Reform and representatives from key children and parents groups such as Barnardo’s, the NSPCC and the Parents’ Advice Centre. We would wish the group to commence its work as soon as possible so we are well placed with the new arrangements coming into effect. We would also wish the group to provide regular progress updates to the ministerial committee on children and young people, which I had the privilege to chair for the year I was there.

The noble Baroness asked me whether a component of the strategy would be a regional public awareness-raising campaign for professionals, parents and carers. She asked me what that might look like. The finer details of the required awareness campaign will be a matter for the implementation group if it so approves them. However, we expect that it would want to use a variety of communication channels to highlight the new law, if we make it, to get the positive parenting message across. We are considering a relaunch of the Safe Parenting Handbook, which would be one way of reaching parents. In the past, circulars have been an effective way of highlighting legislative change for professionals and decision-makers, and we envisage that they would be used again in this instance.

Another way of reaching professionals is to place an article in a professional magazine. For example, on previous occasions the Law Society of Northern Ireland has kindly accepted articles on particular legislation for its magazine The Writ. Ultimately, what is needed is a creative and innovative approach to a public awareness campaign, which must be well targeted. We must use our brains to communicate this change in the law to people in Northern Ireland by using the innovations that have been used for road safety campaigns and drink-drive campaigns. We should use those kinds of messages rather than public notice-type messages in newspapers, which no one reads.

The noble Baroness has asked me to give an assurance that the legislation will not result in unmerited prosecutions of parents, and that it is designed to support parents in finding positive methods for disciplining children. Concerns about unmerited prosecutions emerged in England and Wales during the debates on Section 58. However, the provision was commenced in January 2005, some 18 months ago now, and there is no suggestion that parents in England and Wales have been unfairly penalised. Ultimately the decision to prosecute is a balanced process that takes account of the relevant factors, including the public interest and the circumstances of the alleged offence. We have no reason to believe that the experience in Northern Ireland will be any different.

On the issue of positive parenting, we acknowledge that legal reform is just one side of the coin and that if we are to make real and practical differences to the lives of parents and children, we have to offer sources of support and guidance. I am happy to say that a lot of good work has already been done on the ground through projects such as Sure Start. However, it is important to ensure that sources of help and assistance are appropriately signposted, which is another point that the implementation group wants to consider. The noble Baroness also pointed out that health visitors and midwives play an important role in primary prevention and that they should be provided with advice on positive parenting. She sought further assurances on that point. Without doubt, health and social care professionals have a pivotal role to play in this. We recognise that if they are to discharge their functions efficiently and effectively, they must have clear guidance and sufficient information on important issues such as positive parenting. As I have already mentioned, in the past circulars have been used and we envisage that they will be used again to put these points across to professionals.

The Department of Education has an important role to play in taking the matter forward, and the noble Baroness has asked for assurances on that point. It would be a critical mistake to assume that the positive parenting message should be targeted only at parents and fail to engage with children and young people. Quite apart from their own direct interest in the issue, we must recognise that many have caring responsibilities for younger siblings and may be babysitting for friends and relatives to raise extra cash, or simply doing it as a favour. That being so, they need to be made aware of the positive parenting message, and one way of putting it across is through their local schools. We accept, therefore, that the Department of Education must be fully involved in taking these initiatives forward and, as I mentioned earlier, the department will be represented on the implementation groups.

I turn to the final three questions put to me by the noble Baroness. She asked for an assurance about the development of a strategy that will involve all relevant government departments to be taken forward. I hope it is apparent from my previous answers that we want to do that. Northern Ireland now has an inter-ministerial group with a minister for children; there is a willingness to have our doors banged on. The experience and expertise of the children’s voluntary sector has long been recognised and we hope that we can harness that expertise and work in partnership with organisations such as Barnardo’s and the NSPCC.

As an aside, during my year in Northern Ireland, on only two occasions could I have discussions with representatives of all the parties—in some cases five different parties—around the table where they talked not only to me but to each other. The first occasion was on councillors’ allowances and the other was on children. That was the measure of the issue. Indeed, I should say to the noble Lord, Lord Trimble, that the representatives of six different political parties regularly came together to discuss children’s issues because they were sincerely united in that area. In my opinion, that was a fairly unusual event that demonstrated the importance placed by the political parties on this issue.

Finally, the noble Baroness asked me whether I could ensure that the police service keep statistical information relating to physical punishment cases to allow benchmarking and comparisons to be made. We will be working closely with agencies in the criminal justice system with a view to devising appropriate data retrieval methods. Obviously the methods adopted will depend on the systems in operation, but we are aware that we need to be able to track the operation of this legislation. Let me make it absolutely clear that whatever the arguments, professional or otherwise, saying that it cannot or should not be done is not on and is quite unacceptable. We have to be able to track the operation of this legislation.

It is customary for new legislative provisions to be monitored with a view to identifying and rectifying any operational difficulties. Schedule 2 to this order will be subject to the monitoring process that covers normal legislation. Section 58 will operate in England. It has an 18-month head start. Therefore, it will probably not be productive to say that we join in. Northern Ireland will be watching the monitoring of Section 58 in England. In due course, Schedule 2 will be monitored and reviewed to see whether it is operating as Parliament intended it to.

We will go back and check the points that were raised to see whether I have missed anything. If so, naturally I will write to noble Lords.

On Question, Motion agreed to.

Pensions Appeal Tribunals (Armed Forces and Reserve Forces Compensation Scheme) (Rights of Appeal) Amendment Regulations 2006

rose to move, That the Grand Committee do report to the House that it has considered the Pensions Appeal Tribunals (Armed Forces and Reserve Forces Compensation Scheme) (Rights of Appeal) Amendment Regulations 2006.

The noble Lord said: I shall speak to the Pensions Appeal Tribunals (Armed Forces and Reserve Forces Compensation Scheme) (Rights of Appeal) Amendment Regulations 2006 and the Pensions Appeal Tribunals (Additional Rights of Appeal) (Amendment) Regulations 2006. Both these draft regulations were laid before Parliament in accordance with Section 11A(5) of the Pensions Appeal Tribunals Act 1943. The statutory instruments are subject to approval by resolution of both Houses and were considered in another place on 26 June.

I make it clear that they refer to two entirely separate and different schemes. First, I shall address the Pensions Appeal Tribunals (Armed Forces and Reserve Forces Compensation Scheme) (Rights of Appeal) Amendment Regulations 2006. This will provide that there is no right of appeal for decisions to make a temporary award under the Armed Forces Compensation Scheme.

In drawing up appeal rights under the Armed Forces Compensation Scheme, we sought to mirror those under the War Pension Scheme and to simplify them where it was sensible and practical to do so. I believe this aim was fully met in the Pensions Appeal Tribunals (Armed Forces and Reserve Forces Compensation Scheme) (Rights of Appeal) Regulations 2005, which came into force on 6 April 2005.

Regulation 3(1) of the 2005 appeal regulations provides that decisions under the Armed Forces Compensation Scheme, which relate either to entitlement to benefit or to the amount of benefit payable, may be appealed to the Pensions Appeal Tribunal. Regulation 3(1) is subject to the exceptions contained in Regulation 3(2) which provides that decisions to make an interim award or to suspend payment of an award do not carry a right of appeal.

It is now proposed to amend the 2005 appeal regulations. Regulation 3(1) is amended to make it clear that a decision on the making of a permanent award carries a right of appeal. Regulation 3(2) is amended to provide that a decision to make a temporary award does not carry a right of appeal.

I shall explain the circumstances in which a temporary award could be made. The Armed Forces and Reserve Forces (Compensation Scheme) Order 2005 contains a tariff that lists the conditions in which compensation may be awarded and specifies for each a tariff level, which determines the amount of compensation payable.

However, in recognition of the fact that it may, on occasion, prove necessary to award compensation for a condition not listed on the tariff, Article 20 of the 2005 order gives the discretion to make a temporary award for a condition that is not listed on the tariff. Within the period of one year following the making of a temporary award, a decision will be taken on whether the tariff should be amended by adding the condition in question to it. If the tariff is amended, a permanent award is made. If the tariff is not amended, then no permanent award is made. I must stress that this power will be used rarely.

This draft instrument provides that temporary awards do not attract a right of appeal. Such awards are, by definition, temporary and full appeal rights will apply in relation to the decision to make or refuse a permanent award.

I assure the Committee that beneficiaries will not lose out by this. No amount that has been paid to an individual as a temporary award will be recoverable if no permanent award is made or if the permanent award is lower than the temporary award. Full appeal rights will, of course, apply in relation to the decision to make, or not make, a permanent award.

It was not possible to include this provision in the 2005 appeal regulations because the decision to include a discretion to make a temporary award within the Armed Forces Compensation Scheme was made at a relatively late stage and after the 2005 appeal regulations had already been laid.

The main ex-service organisations were briefed last year on the inclusion of temporary awards in the new scheme and of our intention not to extend appeal rights to such decisions. These groups did not dissent. Details of the proposal were also contained in a report to the Central Advisory Committee on War Pensions for its meeting on 7 December 2005.

I should now like to turn to the second draft statutory instrument: the Pensions Appeal Tribunals (Additional Rights of Appeal) (Amendment) Regulations 2006. This will introduce a new right of appeal against a decision under the War Pension Scheme to cancel an award.

The rules of the War Pension Scheme are contained in the Naval, Military and Air Forces Etc. (Disablement and Death) Service Pensions Order. The Pensions Appeal Tribunals (Additional Rights of Appeal) Regulations 2001 list the decisions under the Service Pensions Order which attract a right of appeal. The 2001 regulations refer to the Service Pensions Order 1983. That order has now been replaced by the consolidated Service Pensions Order 2006. This order has been restructured and renumbered and contains new provisions. One of the new provisions enables the Secretary of State to cancel an award where a pensioner has unreasonably failed to comply with a request to provide information or to attend a medical examination.

Cancellation can occur only if an award has already been suspended for 12 months. I should stress that the powers to suspend or cancel a war pension will be used only as a very last resort after the Veterans Agency and its welfare service have made every effort to obtain the pensioner’s co-operation. The Committee will nevertheless appreciate the need to ensure that awards remain well founded and to hold in reserve a power to suspend or cancel if necessary.

I reassure the Committee that the ex-service organisations with which the department discussed the matter fully agreed with the principle of suspension and cancellation. Those organisations, particularly the Royal British Legion, did however emphasise the need for appropriate rights of appeal. These regulations respond to that concern and amend the 2001 regulations by providing a right to appeal against the cancellation of an award. They also make it clear which decisions carry a right of appeal under the consolidated Service Pensions Order 2006. Copies of each of the draft instruments have been sent to the presidents of the three Pensions Appeal Tribunals jurisdictions, to the major ex-service organisations and the Council on Tribunals.

In conclusion, the first set of proposed regulations will enable the continuing successful implementation of the new Armed Forces Compensation Scheme. It will ensure a streamlined process that prevents the complexities of two appeals possibly arising within months on what is in essence the same issue in the same case. The second set responds to comments by the Royal British Legion that the power to cancel a war pension award should be subject to rights of appeal, and more generally makes it clear what decisions carry a right of appeal following consolidation of the Service Pensions Order. I assure the Committee that we believe that the statutory instruments are fully compliant with the European Convention on Human Rights. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Pensions Appeal Tribunals (Armed Forces and Reserve Forces Compensation Scheme) (Rights of Appeal) Amendment Regulations 2006 [29th Report from the Joint Committee].—(Lord Drayson.)

I thank the Minister for explaining the regulations. They are essentially a tidying-up exercise and should have been dealt with at the time of the original legislation. It makes me worry how much secondary legislation we will receive after the Armed Forces Bill becomes an Act. My honourable friend Mark Harper raised our concerns over the compensation tariff for mental health, as opposed to physical injury, in some detail in the other place. I will not raise them again this afternoon but, other than those concerns, the regulations appear not to be controversial and to make perfect sense.

I, too, thank the Minister for a clear exposition on the background to the instruments, which seem perfectly satisfactory. I confess to the noble Lord, Lord Astor of Hever, that if some of my amendments to the Armed Forces Bill are accepted we will have even more statutory instruments to look at.

I am generally content with these two instruments, but I shall raise one issue. In the short debate on26 June in the Standing Committee on Delegated Legislation in the other place, tariffs for mental health injuries were raised by a number of speakers. I declare an interest as a member of Combat Stress, and consulted to see whether it is as happy as it has been reported that various organisations are. I understand that it had a meeting with the Minister for Veterans, Tom Watson, on 21 June. The discussion was on concerns over whether the tariffs in this first statutory instrument are at appropriate levels for mental health injuries when compared with physical injuries. That is obviously not what we are discussing today. However, it would affect the sort of temporary awards put in, which we are dealing with. If the Minister cannot tell us today, perhaps he would write. Is there an intention to revisit the tariffs, with particular reference to whether the mental health injury tariffs are appropriate when compared with the physical injury tariffs?

Nevertheless, this order is about temporary awards, which are time limited to two years. Given that they will then go on to the permanent basis and the normal appeal procedure will happen, we are content to support the Pensions Appeal Tribunals (Armed Forces and Reserve Forces Compensation Scheme) (Rights of Appeal) Amendment Regulations 2006.

The Pensions Appeal Tribunals (Additional Rights of Appeal) (Amendment) Regulations 2006 seems to be a helpful, additional right for people in what one hopes are very rare circumstances. The Royal British Legion has asked for it and the Ministry of Defence has responded, so we will support that as well.

I am grateful to noble Lords for their comments and support. I note what has been said on the Armed Forces Bill and the role of statutory regulations within it.

The noble Lord, Lord Garden, raised the representations that Combat Stress has made to my honourable friend the Under-Secretary of State. We want these tariffs to sensibly reflect the disability that may have been suffered by our veterans, whether physical or mental. I will pass on to my honourable friend the comments the noble Lord has made, to fully reflect that.

On Question, Motion agreed to.

Pensions Appeal Tribunals (Additional Rights of Appeal) (Amendment) Regulations 2006

I beg to move the Motion standing in my name on the Order Paper.

Moved, That the Grand Committee do report to the House that it has considered the Pensions Appeal Tribunals (Additional Rights of Appeal) (Amendment) Regulations 2006.—(Lord Drayson.)

On Question, Motion agreed to.

European Organization for Nuclear Research (Privileges and Immunities) Order 2006

rose to move, That the Grand Committee do report to the House that it has considered the European Organization for Nuclear Research (Privileges and Immunities) Order 2006.

The noble Lord said: This order was laid before the House on 25 May 2006 together with an explanatory memorandum, which is now required for all affirmative statutory instruments.

The draft order will confer legal capacities of a body corporate and privileges and immunities on the European Organization for Nuclear Research. It also confers privileges and immunities on representatives of state parties, the director-general and officials of the organisation. These privileges and immunities are conferred in accordance with the protocol on the privileges and immunities of the European Organization for Nuclear Research, which was signed on behalf of the United Kingdom on 18 March 2004.

The European Organization for Nuclear Research—known as CERN—is situated on the French-Swiss border near Geneva, and was founded by 12 member states that had ratified the convention for the establishment of a European Organization for Nuclear Research (Cm 928) on 29 September 1954. United Kingdom ratification was deposited on30 December 1953. CERN is the world’s leading particle physics centre, and provides an infrastructure for member states to engage in science projects that would not otherwise be viable.

CERN is funded by 20 member states, with the United Kingdom contributing £80 million, which amounts to 20 per cent of the total budget. The Particle Physics and Astronomy Research Council lead on policy at official level.

The order will allow the United Kingdom to comply with its international obligations in giving full effect to the protocol on the privileges and immunities of the European Organization for Nuclear Research.

I am satisfied that the order is compatible with the rights contained in the European Convention on Human Rights.

This order is important. I trust that it is non-controversial. I hope that it will receive the full support of Members of the Committee. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the European Organization for Nuclear Research (Privileges and Immunities) Order 2006.—(Lord Triesman.)

I note the active interest in this regulation by the Conservative Opposition, so I rise to represent, I suppose, both parties, and to raise a number of general questions.

I am a little puzzled. I know CERN relatively well: my daughter’s partner worked there for his PhD. As I understand it, it is only 52 years since CERN first began its activities. I am not entirely clear why it was necessary to add these additional powers after exactly 50 years.

When the matter was considered in the Eighth Standing Committee on Delegated Legislation in other place, my colleague Jeremy Browne said—as I would have wished to say myself—that,

“we have to be extremely cautious about the continued extension of diplomatic privileges…Obviously, there will be a degree of unease in any open, democratic society about their being too widely available”.

The Minister will recall that I have raised this issue on previous occasions. I recall that on 28 November 2005, when we previously discussed these points, the Minister informed us that there had been a number of meetings of the EU Protocol Working Group, including a meeting of the EU Heads of Protocol, which had set in train under the UK presidency the first stages of a review on the future granting of immunities and privileges in the EU. I assume that that also covers broader European organisations such as CERN. What progress has been made with this? When might we expect a conclusion? What steps are the Government taking to ensure that the proliferation of European agencies does not simply add to the proliferation of tax-exempt and other forms of exempt bodies littered around an increasingly open social, economic and political space?

While I am being picky, why is there no clause here on geographical extent? On previous occasions we have had the usual idiotic clause on whether or not the provision applies to the Isle of Man, Jersey or Guernsey. On this occasion that does not even appear. Will the Minister please explain why that is?

I start with the general review of diplomatic privileges and immunities. I think that the noble Lord, Lord Wallace, knows that my own view is that a review, while it will unquestionably take time and will probably have to go into a lot of detail, is none the less worth while. I have maintained that view on a number of occasions and the noble Lord will be familiar with my reasons for doing so. There needs to be a very good explanation of why so many people enjoy special privileges of one kind or another, or we risk people perceiving different classes of individuals in the European Community, as widely defined. That will lead many to feel greater suspicion than they should normally have.

I am afraid that progress on that matter has been somewhat slow, but that is not to say that it is not taking place. It is slow partly because a significant number of organisations now need to be reviewed, and are being reviewed by a large number of nation states. Indeed, the number of nation states in the European Union will increase again in the very near future. This is probably the first occasion on which many of those states have applied themselves to these questions. Therefore, I am afraid that, if we want to be as inclusive as we desire, the process will take time. That is a pity but I do not want to overstress the matter because the intention is to complete a review, and that will happen. Even if I cannot give a terminating date, there is a desire to see this work completed. I intend to let everyone know the relevant date as soon as I can.

As regards geographical extent, the order is being reviewed by the JCSI and a geographical clause has been deemed not to be necessary. I do not have access to the thinking behind that, but I will write to the noble Lord with the reason that the committee has given for that. I have no doubt that it will be substantive, because the committee will have thought about the matter in appropriate detail.

The more substantive point concerns why the order is now required. The United Kingdom signed the protocol on the privileges and immunities of the European Organisation for Nuclear Research on 18 March 2004. That protocol legally obliged the United Kingdom to confer legal capacity, privileges and immunities on CERN. Like the noble Lord, I also know the organisation well because of its level of celebrity and importance in academic life generally.

The intention is to confer privileges and immunities on specific categories of individuals connected with the organisation, an undertaking we made in 2004 despite the fact that CERN goes back very much further. This tidies up the process. Apart from conferring the usual privileges and immunities on the employees of CERN, the protocol will also allow CERN to buy high-cost scientific equipment from different countries without incurring the usual import and export duties, so it also tidies up that matter. I hope that that is the explanation sought by the noble Lord. As I have said, I will make sure that the thinking of the JCSI on the other particular detail is conveyed to him. I commend the order to the House.

On Question, Motion agreed to.

National Minimum Wage Regulations 1999 (Amendment) Regulations 2006

rose to move, That the Grand Committee do report to the House that it has considered the National Minimum Wage Regulations 1999 (Amendment) Regulations 2006.

The noble Lord said: I beg to move the Motion standing in my name on the Order Paper. I am pleased to present these regulations to the Committee today, which are primarily to implement the increased national minimum wage rates that come into effect on 1 October. The minimum wage has come a long way since its introduction in 1999 and remains one of the Government’s finest achievements. It has benefited many hundreds of thousands of people each year, particularly women, who make up two-thirds of those benefiting and is now widely supported by all sides of the House.

Before I speak to the detail of the regulations, it might be helpful to put them in context by saying a little bit about the independent Low Pay Commission’s remit last year. The Government asked the Low Pay Commission to consider whether the October 2006 uprating of the adult and development rates recommended in their 2005 report remained appropriate in the light of economic circumstances and other factors, andif not to make any recommendations for change. The remit also asked it to review the level of the rate for16 to17 year-olds, keeping in mind the position of the youth labour market and the incentives for the young to participate in education and training. Furthermore, the Government invited the Low Pay Commission to review the operation of the accommodation offset and, if appropriate, to make recommendations for any changes needed to the regulations. We were asked to review the treatment of benefits-in-kind, including where those benefits are offered as part of a salary sacrifice arrangement. The commission reported in March 2006 and the Government announced that they had accepted most of the recommendations.

I will now talk to each regulation in turn. Regulation 1 provides for the regulations to come into force on 1 October 2006, giving employers sufficient time to prepare and plan for the rate increases which were, of course, announced by the Government in March. Regulation 2 deals with increases to the minimum wage rates and the accommodation offset. The regulations increase the adult rate from £5.05 to £5.35, as recommended by the Low Pay Commission and accepted by the Government. That equates to an increase of nearly 6 per cent. The regulations also increase the development rate for workers aged 18-21 from £4.25 to £4.45 an hour, an increase of 4.7 per cent.

The commission also made a recommendation in respect of the 16 and 17 year-olds rate for 2006, recommending a 10 per cent increase from £3 to £3.30, to take into account the absence of any uprating in October 2005. In arriving at this decision, the commission looked at whether the introduction of a rate for 16 to 17 year-olds has encouraged young people out of full-time education or training. It concluded that it has not, nor has it damaged their prospects in the labour market. The Government recognise that in increasing the minimum wage they must be mindful of the economic conditions. They must ensure that the minimum wage is set at a level which avoids the risk of adverse effects on employment, inflation and the PSBR.

In short, the economic data indicate that these rates are sustainable. Employment continues to grow both in the overall economy and in the low paying sectors. Corporate profitability continued its cyclical improvement. The UK labour market remains healthy with high employment rates. Unemployment remains low. That is not just our view. It was the view of the Low Pay Commission, too. In its considerations, it looked at the low paying sectors, since any adverse employment effects of the minimum wage would be most evident in low paid sectors over and above the labour market as a whole. Employment in most of these sectors has continued to increase since the introduction of the minimum wage. Having said that, the Low Pay Commission stated that, in arriving at its decision, it recognised that there has been some divergence in economic outcomes.

While it supported the rate rises for 2006, it concluded that the phase in which the Low Pay Commission is committed to increases in the minimum wage above earnings is over, and furthermore makes no presumption that further increases above average earnings are required. We support this. As I have already said, the minimum wage is about protecting the vulnerable, while ensuring that the economy is not damaged. Additionally, the regulations will uprate the accommodation offset from £3.90 per day to £4.15 per day. That is the amount which can be taken into account when determining whether the minimum wage has been paid in situations where the employer provides a worker with accommodation, which is in line with the Low Pay Commission’s recommendation.

Regulation 3 contains some minor technical provisions. In addition, the Low Pay Commission recommended in its 2006 report that the accommodation offset provisions should continue to apply to all workers housed by their employer in all circumstances, and that the Government should update existing guidance and raise awareness. It also recommended that the Government should implement legislative measures to prevent employers using the device of a separate accommodation company to circumvent the restrictions imposed by the offset and, as a result, evade paying the national minimum wage.

We agree that the accommodation offset should apply in all situations in which employees are housed by their employers. However, legislative measures are not required since our legislation already covers a wide range of circumstances in which the employer provides accommodation to workers. We will issue draft guidance on when the accommodation offset is likely to apply and will embark on a consultation process with all interested parties, including the Low Pay Commission, to ensure that the guidance is sufficiently clear to meet needs.

Finally, last year we announced a new approach called “targeted enforcement”. The purpose is to target publicity and enforcement at key low-paying sectors in turn. As we stressed at the time we announced this approach—but I will stress again now—our purpose is not to tackle the great majority of good employers, but to tackle the minority of bad employers. This year's sector will be childcare nurseries. Her Majesty’s Revenue and Customs enforcement teams have found that one in three nurseries they have looked at have been paying less than the minimum wage. It is vital that we raise the perception of childcare as an attractive career option. As well as taking the action I am announcing today, the Government are also investing and legislating to ensure that childcare providers, including those in the private and voluntary sectors, can improve quality and give parents increased choice and confidence. We will therefore work with representative bodies, employers and employees in the nursery sector to identify the main issues, and produce appropriate guidance, which will be followed by an enforcement drive. That approach was successfully adopted last year in the hairdressing sector. I commend these regulations.

Moved, That the Grand Committee do report to the House that it has considered the National Minimum Wage Regulations 1999 (Amendment) Regulations 2006.—(Lord Sainsbury of Turville.)

I thank the Minister for explaining the effect of the regulations. The British workforce is among the most dedicated in the world, and we of course support the intent that our people have enough income to support themselves and their families, and to protect them from unfair discrimination by unscrupulous employers. We note however that the uplift in the minimum wage for adult workers in these regulations represents an increase of just over 5.9 per cent, which is considerably above the Government's inflation target.

Employers' organisations have expressed their increasing concerns, among other things, at the impact on the competitiveness of our companies. There was historically an intention to achieve a minimum wage above £5, which was achieved last year. The regulatory impact assessment states that it has not accounted for additional costs to employers as a result of what it calls the “uprating”. Presumably, that means that it has not contemplated the effect of successful pay claims by those above the minimum wage seeking to maintain their differentials. Given that these are likely to have a significant effect on many small businesses, especially those in the Midlands and the north, I would be grateful if the Minister would inform the Committee of his estimate of that effect.

I repeat my concerns voiced in the equivalent debate last year that some small businesses—I declare an interest as a shareholder of one, and need hardly say that they employ a sizeable proportion of the country’s workforce—employ a high proportion of lower paid workers, often operating at marginal rates of profitability. That gives rise to concerns, perhaps especially in the manufacturing and retail sectors, that if costs rise when profits are already wafer thin, redundancies are the only realistic option, thus often hitting the lowest paid hardest.

It is interesting to note that the Low Pay Commission’s report this year states that its review of economic conditions revealed some factors which could argue for a slight reduction in the October 2006 increase. It admitted, for instance, that subdued consumption spending had negative implications for the retail sector. It said that average earnings over the last year had increased somewhat less than they anticipated: that is, by 4.1 per cent and not 4.5 per cent. It acknowledged that forecasts for 2006 showed a similar shortfall, and admitted that the slowdown in average earnings growth appeared greater in the private sector, especially some parts of it. I look forward to hearing the Minister’s comments on these points.

As the Minister said, the Low Pay Commission’s 2006 report went on to say that it considered that the phase in which it is committed to increases in the minimum wage above average earnings is over. The Minister said that the Government support this. Will he go further, and undertake that the Government will not push forward increases next year at above the increase in average earnings?

There is a delicate balance between keeping inflation at an acceptable level and ensuring that workers are protected from unacceptably low levels of pay. I look forward to the Minister’s comments on these and other noble Lords’ points.

I am standing in for my noble friend Lord Razzall who is unfortunately unable to be here. I shall make some brief comments. We are, as a party, committed to narrowing the gap between the rich and the poor, rather than allowing it to spread. We recognise that the origin of Labour’s commitment to reintroduce the minimum wage was the failure of the wage councils under the previous Conservative Government to keep rates of pay in different sectors up with inflation.

We therefore welcome in principle this effort to introduce and maintain a floor. However, we wonder whether a national minimum wage is necessarily the way forward in the long term. Living between London and Yorkshire, and doing as much of my large item shopping in Yorkshire as I can because prices are a great deal lower there than in London—and rent and property cost a great deal less in Yorkshire than London—I am conscious that a minimum wage enabling you to live moderately well in Yorkshire hardly allows you to live at all in London. In its review of the future of the national minimum wage, are the Government now contemplating moving towards a greater geographical, and perhaps sectoral, variability?

It is clearly right that we carefully consider these changes to the minimum wage rate, since they obviously impact on workers and employers a great deal. I shall cover the points raised by noble Lords and give them reassurances.

The 6 per cent increase to £5.35 was the right approach. Six per cent is clearly more than the current average earnings of around 4 per cent, but the Commission found no strong evidence to support the contention that the minimum wage is damaging employment levels in low-paid sectors. As I said, there is a clear recognition that the period of substantial increases over the rate of inflation is probably coming to an end.

The noble Lord asked about the impact of the minimum wage on differentials. What the Low Pay Commission found in its 2005 report was that there is a concertina effect. In the years when the rate increase has been relatively large, businesses have narrowed the differentials and then restored them in the years when the increases have been smaller. It is therefore difficult to say precisely what the impact is, but one has to assume that if you move the minimum rate upwards, with some time lag it will affect differentials. That has to be taken into account when considering increases in costs.

On the point that employers’ organisations are saying that job losses will follow, the situation is that the UK labour market remains extremely healthy with high rates of employment and low unemployment. Of course, over the years since the first debates were held, people have argued that the national minimum wage would result in huge unemployment figures. We have not seen that, but it is absolutely key to continue to keep a close watch on the situation to make certain that we do not suffer impacts. We see this very much as a question of balancing all the time the need to retain a minimum wage while ensuring that it does not drive up unemployment.

So far as the retail sector is concerned, there has been a period of slack retail sales. However, in May, they were 1 per cent higher than in the preceding three months and up 2.1 per cent on a year earlier. Most forecasters are now predicting that we will see a pick-up in retail sales, so I do not think that there is any particular problem in that sector or, indeed, in other low-paying sectors. On the future, we are not in the business of making commitments. Our approach so far has been that we need to make judgments as we go along in the light of the circumstances at the time. We should not be saying that the minimum wage will be linked to the RPI or make other commitments.

The final question put to me concerned the suggestion to set regional rates rather than a national rate. This has always been an issue. One of the problems with it is that within regions themselves there is as much wage rate variation as there is between regions. I believe that going down that road would introduce an enormous amount of complexity that would become very difficult to manage. It is a case where we have to trade off exact fairness and economic efficiency against complexity. I think that we have reached the right position, which is to continue with a national rate. I accept that, as with any kind of national wage agreement, it means that those living in London experience considerable difficulties while a person on an island off the coast of Scotland might be keen on the relative wealth of the national minimum wage. However, it is necessary to trade complexity against equity.

I think that I have answered all the questions raised and I commend the regulations to the Committee.

On Question, Motion agreed to.

The Committee adjourned at eighteen minutes past six o’clock.