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Grand Committee

Volume 689: debated on Wednesday 21 February 2007

Grand Committee

Wednesday, 21 February 2007.

The Committee met at fifteen minutes to five o’clock.

[The Deputy Chairman of Committees (BARONESS PITKEATHLEY) in the Chair.]

Budget (Northern Ireland) Order 2007

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. This 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.

rose to move, That the Grand Committee do report to the House that it has considered the Budget (Northern Ireland) Order 2007.

The noble Baroness said: We are considering the draft Budget order today as a result of the continuing suspension of the Northern Ireland Assembly. We are hopeful that locally elected representatives will soon be taking decisions on public expenditure in Northern Ireland with the restoration of devolution. However, while direct rule continues, we are determined to govern in an open and fair way to improve the delivery of public services for the people of Northern Ireland.

The draft order has two purposes. The first is to authorise revised amounts of resources and cash for 2006-07. The total revised amount of resources for 2006-07 is £16.83 billion and the total revised amount of cash from the Northern Ireland Consolidated Fund is £11.194 billion. The second purpose of the draft order is to authorise a vote on account to allow funds to continue to flow to public services for the early months of the next financial year, until the main estimates for 2007-08 can be prepared and considered. To do this, the draft order seeks Parliament’s authorisation for the use of resources amounting to £6.217 billion, and for the issue of cash from the Northern Ireland Consolidated Fund amounting to £5.05 billion.

In general, the resource and cash amounts required on account for the next financial year have been calculated as 45 per cent of the total voted provision for this year. The vote on account is not intended to seek final approval of the allocations for 2007-08. Instead, it seeks sufficient resources and cash to allow services to continue until the detailed work on the main estimates for next year has been completed in the early summer. I will not attempt to summarise the high level of financial detail contained in the Budget order and supporting documents. I will try to answer any specific points of detail raised during the discussion.

The Government’s key objective in the use of expenditure continues to be the delivery of quality public services. Reallocating resources from lower to higher priority areas, focusing on the reform of our public services and raising more money locally to pay for better local services, will achieve this. As in other regions of the UK, work is under way in Northern Ireland to determine the spending priorities for the Comprehensive Spending Review. The Secretary of State has identified three key cross-cutting priority strategies as part of the Comprehensive Spending Review: a 10-year strategy for children and young people; an anti-poverty and social inclusion strategy which replaces New Targeting Social Need, the previous strategy; and the sustainable development strategy emphasising the importance of investing in our environment and in renewable energy sources, as an important step in supporting the creation of a society which is genuinely sustainable.

There has been an increase in real-terms investment expenditure of 43 per cent, or more than £300 million, on the amount spent just four years ago. The planned level of investment will continue to grow, with the investment strategy for Northern Ireland setting out a sustained capital investment programme for 2005-15.

On 1 April this year, we will see the implementation of the water reform programme which will deliver significant benefits both to the public and the Northern Ireland economy. Through the new Northern Ireland water company, the Government will be putting in place the framework within which sustained investment will take place to improve the quality of our drinking water, better protect the environment and radically enhance the delivery of water and sewerage services to customers.

Considerable investment is required to improve the water and sewerage infrastructure. The Northern Ireland Asset Management Plan 2 indicated that investment in the region of £3 billion, at 2001 prices, may be needed during the 20-year period from 2003. The introduction of domestic charges and the widening of non-domestic charges will establish a secure, reliable source of funding which will deliver the scale of investment that is required to improve the water and sewerage infrastructure and the service to the customer.

The water reform programme will also benefit other public services in Northern Ireland as resources previously required to fund water and sewerage services will be available to allocate to other areas. Ultimately, when charges are fully introduced, we expect this figure to be around £300 million per year—a substantial sum which will provide much needed extra funding for our hospitals, schools and transport systems.

We want to see society and the economy transformed by using public spending wisely to invest in the services that make a real difference to peoples lives—in health and education; in the lives of 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 be accompanied by radical reform of how public services are planned and delivered so that front-line services are more efficient and responsive to the needs of the citizens who use them. It is in this context, therefore, that the process of implementing in full the announcements made following the review of public administration has already begun.

This Budget aims to meet the needs and expectations of this and future generations in Northern Ireland through a combination of investment and reform. I commend the draft order to the Committee.

Moved, That the Grand Committee do report to the House that it has considered the Budget (Northern Ireland) Order 2007.—(Baroness Amos.)

I thank the Lord President for presenting the Budget as she has. I take the opportunity to welcome her back to the seat that she enjoyed for some time in the past and congratulate her on the speed with which she flew in from Iraq.

Traditionally, we use this debate as a general discussion on the Northern Ireland economy. It is the only real economic debate that we have, bearing in mind that at this end of the Palace we usually do not deal with budgetary matters. However, there are a number of issues that I am sure noble Lords will want to raise. I should like to raise some general points.

First, let us hope that this is the last time that we are asked to debate the Northern Ireland Budget. I have said that several times before, but I sincerely hope that we have arrived at the end of the road. Nevertheless, let us take a brief look at the general state of the Northern Ireland economy. People are saying that the economy is in a strong state, and it is. But I should like to be reassured that the Government, while they are in control, are aware of and taking action on a number of areas that could give cause for concern.

We currently have low unemployment—the last quarter of last year was the lowest I have seen—but it is starting to edge up again. House prices have risen at a faster rate than anywhere else in the United Kingdom in the past three months. It is already causing a significant problem for first-time buyers, a problem which has also been felt elsewhere in the United Kingdom. People are saying that a generation gap is about to appear, with a whole generation of first-time buyers unable to get on to the housing ladder. It is very important that those who are currently responsible for running the country look at the issue, make a plan, and deal with it. I declare an interest as a member of the National House-Building Council and chairman of the Northern Ireland committee.

In previous years we have talked in this debate about public servants’ huge dependence on the economy and the public sector input to the economy. Those numbers are still way above anything that could be considered safe, solid and sensible. Although the Government have talked about that a lot, as far as I can see they have done very little to change the balance. It really does need to be addressed. People have talked about changing tax regimes and so on. The Chancellor will have his say and will make up his mind. However, I have lived with the corporation tax difference between Dublin and Belfast since the 1970s, when I started running businesses there and was looking for inward investment, and I can see the practical difficulties involved in that. We need to address that problem to ensure that the Northern Ireland economy is more self-sufficient and less dependent on government funding of one sort or another.

We are also in an era, which is the same on this side of the water, where bank rates are rising—they have risen quite quickly recently—inflation is undoubtedly rising and significant indirect taxation has taken place. That is coming through now and—in my simple opinion; I am not an economist—is forcing the inflation rate upwards. With the addition of the on-costs of the water rates and rates, another indirect tax, I can see that the whole economy will be under enormous pressure. I should like to hear the Government’s ideas on how to manage that. Our economy has benefited considerably from the rich economy of the south and a lot of cash is still flowing northwards. In the 30 to 40 years in which I have been involved in business in Northern Ireland, the economy has always fluctuated one way or another. At the moment, Northern Ireland is benefiting from the strength of the economy in the Republic. But I would like to feel that actions are being taken to move our economy upwards and for it to be strengthened.

In opening, the noble Baroness mentioned the review of local administration. I have complained before from this Dispatch Box about the lack of movement and the huge waste in the administration of Northern Ireland. It is a classic example of serious over-government, over-regulation and over-bureaucracy. It needs to change. I know that the plans are there and that we are talking about reducing the number of local authorities from 26 to seven and streamlining the hospital trusts and the education and library boards. But when will it happen? How quickly will it happen? When and what benefits will feed into the Northern Ireland Budget system?

Further, the key cash eaters of our Budget, as they should be, are education, health and to some extent the environment. We know that the number of pupils in full-time education is dropping significantly year on year. I believe that 80,000 places are unfilled in the education system. I thank officials for helping me with that figure yesterday, and see one of them nodding now. That calls for quick rationalisation. We do not need the same number of teachers for 80,000 fewer pupils. Where is the rationalisation? When will it come? Health is also an eater of cash. My view of the health service in Northern Ireland—as an only occasional user, thank goodness—is that it is still nothing like as good as it was 25 years ago. It, too, is over-administered and over-governed.

I turn to another bête noire of mine: the amount of money that is very often wasted on spin—on selling spin. I have in front of me the House of Commons Hansard from 19 December 2006, which contains a Written Answer to a Question asked by my honourable friend David Lidington. It shows the expenditure on press, public relations, publicity, communications work and advertising. The advertising figure for Enterprise, Trade and Investment for 2005-06 was £172,254; and the estimate for 2006-07 was £1,071,710. For Environment, the figure for 2005-06 was £1,554,283; and the estimate for the current year was £2,845,744. That is almost a doubling. For Health, Social Services and Public Safety, the numbers are not so big,—from £272,284 to £626,500—but the percentage increase is enormous. The Regional Development figure in 2005-06 was £46,910; and the estimate for this year is around £1,070,000.

I would be grateful if we could have an explanation for those figures. It is one of the areas that I have been complaining about. The waste of money on consultations, dressed up glossy documents and the money spent on consultants is all part of the heavy, over-bureaucratic administration that we have been complaining about for some time. With those few words to start with, I leave it to my colleagues to continue.

I thank the Minister for her statement and congratulate her on the way in which she is able to jump so quickly into discussing Northern Ireland from her previous involvement in the Chamber. I have been looking back at what I have said on this on previous occasions. We always start by saying how unsatisfactory this is, and of course it is. I said previously that we could spend on these matters every day for six weeks and still not scratch the surface of some of it. However, could this really be the last time that we have to meet like this? I am working on the basis that it might be; you never know.

As far as the Budget book is concerned, the die is cast. There are five weeks to go before the year-end, and I do not think we can say too much. I am delighted that the noble Lord, Lord Glentoran, has taken a page or two out of my book and has ferreted about. I took the view that I would not do that this time, unless it referred back to something that I had spoken about earlier, so there will be no new ferreting by me, although I am sure that would have been possible. Of course, the die is cast, and 2007-08 is based on 45 per cent of 2006-07, and we need—we hope for—a Northern Ireland Budget in Northern Ireland in June to look at the further 55 per cent and at the disposition of those resources.

I will return to some of the issues that I have referred to previously. Three years ago, I raised the issue of the budget of the First Minister and Deputy First Minister, which at that time was £50 million. That includes money for taking initiatives. When the Assembly was up and running, initiatives were taken by both the First Minister and the Deputy First Minister.

Also under that heading are some of the things that I thought were copper-bottomed by the Belfast agreement. One is the civic forum, which was basically shut down apart from a bit of ticking-over money. What will the system be for getting that up and running again? It was part and parcel of the Belfast agreement, and it should be up and running again. There should be such involvement. Indeed, it is now even more important, bearing in mind the prospective disposition of the Assembly. I understand that the noble Lord, Lord Rooker, did not want to involve himself yesterday in electioneering; nor do I, but we are forced to see it there. How do we get that up and running when the Budget is based on 2006-07? It should be up and running, provided that the Assembly is back for the subsequent year.

I recall referring to the budget for Northern Ireland Railways. On one occasion, when the Minister was answering, I referred to tourism and asked whether there were any resources in the vast tourism budget for promoting the line from Belfast to Londonderry, particularly the western parts, which are incredibly scenic. I do not know what happened. Did anything happen? Something must have happened. The noble Lord, Lord Laird, of Artigarvan, is not here today because of illness, so we may not be treated to words about the sins of Irish waterways. As noble Lords know, he is assiduous about asking questions. One of his questions highlighted that fact that, in the past five years, there has been a 50 per cent increase in passenger journeys on that railway line. What is the position now that Northern Ireland Railways has new rolling stock and has shown that it can achieve a 50 per cent increase in the number of passengers and that the customers will come? Where is the money? Has anything been done in this period to enhance the rolling stock? Enhancement was only partial when the new rolling stock was brought in. Where are we with replacing the other rolling stock? Indeed, it is often said, particularly in the Republic, that the frequency of the railway service between Belfast and Dublin should be doubled. That can happen only if the rolling stock is there, so is there any news on whether any work has been done on that?

I have referred to Ulster Savings two or three times. Ulster Savings will no longer be seen in this Budget book, but there was a savings scheme in Northern Ireland, which has now closed. Efforts have been made to trace all the people who had deposits in it, but those efforts have stopped. Even after ferreting about and looking for people, £8 million of assets are still unclaimed. There are no longer any staff in the organisation; it has been closed. I made the point that Northern Ireland money that is dormant in Northern Ireland should be used for that community. I also said that a splendid destination for it would be the Community Foundation for Northern Ireland. I made several points about this to the noble Lord, Lord Rooker. On 4 July 2005, he said, in effect, that I would have to wait for Mr Brown. I am not certain about that. I know that work is being done on unclaimed assets throughout the UK, but is this devolved money or is it Treasury money? It was in this Budget book previously, which leads me to think that it is devolved money.

For example, the moneys for the police are not in this book; we understand that. However, Ulster Savings was in this book. That needs looking at urgently. I do not want to lose it. Without speculating too much about the election, I think that we know where things stand. It is one thing the noble Lord, Lord Trimble, and the UUP being in business with the SDLP; it is rather different as regards the DUP and Sinn Fein. This is clearly uncharted ground. I am fearful of a “We’re going to look after our own” mentality arising. It strikes me that if the small resources of the Community Foundation for Northern Ireland were enhanced, they could be allocated to cross-community activities and minority groups.

I referred earlier to education and here I shall consult the Budget book. These Benches consider that it is right to look at integrated education. I cannot fathom what is meant by the wording on page 54, which states:

“All Voluntary and Grant Maintained Integrated Schools: to reduce provision in subhead A11/3 by £19,812,000. This is mainly due to a reduction of £34,438,000 reflecting a reprofiling of infrastructure expenditure to future years”.

“Reprofiling” is a popular word. “Reconfiguration” is also used. I do not really know what they mean, but I do not think that they mean enhancement. They either mean a delay or a cut. In setting out the Budget are the Government doing all that they can as regards integrated education? It does not sound like enhancement to me. My noble friend Lord Smith asks where the Bain report is going in the whole area of education and what savings it proposes through amalgamating schools.

I believe that one of my questions has been partially answered in that the domestic rates and water charges will result in a neutral effect for 2007/08. I believe that the long-term effect will be some £300 million. Will that figure arise in 2008-09 or will it be introduced gradually? Where do we see these savings? When will this major change have a positive effect on the Budget?

Looking ahead positively, I refer to policing. Policing is not mentioned in this document because it is not devolved. However, if it were to be devolved, on what basis would it be devolved financially? Will Northern Ireland be treated like Scotland in that the Barnett formula will apply, bearing in mind the incredibly enhanced moneys for Northern Ireland? Will Northern Ireland pick up what it is due on the basis of the Barnett formula in the same way as Scotland, or will it do so on another basis? These are very substantial resources—£16 billion. I trust that the Assembly will use that money wisely and look at the totality of the diversity that makes up Northern Ireland. That is its task.

Finally, I thank the officials, with whom I had a short meeting yesterday, for the help that they gave on the points that I raised.

This is a rather curious thing to be called a Budget. Normally, when you think of budgeting, you think about what your income will be, where you are going to get it from, the total of that income, and then you think about expenditure. At least one hopes that you think about it in that order. If you think about it in a different order, it can be embarrassing. But this document, called a Budget, is merely parcelling out expenditure; so it is not a Budget in the real sense. That may be because the financing of Northern Ireland operates in a different way. There are, however, a couple of sources of income that would be under the control of the devolved Administration, if there were one: the regional rate, water charges and others. But in this document we have no clear statement on how the sum is made up, where it comes from and what choices have to be made in determining the total spend. It is merely dividing up the cake. The size of the cake is a given in this exercise. So the use of the term Budget is perhaps a little misleading.

There is a point in making these observations. An election is going on. I do not want to fight it here any more than anyone else does, but I do note that some of those fighting the election are making a lot of noise about the need for additional resources to be given to the devolved Administration. Some months ago the Chancellor was persuaded to make a statement, although I am not sure it involved additional resources. But these parties are now calling for even more money. The Minister is undoubtedly aware of that. I would appreciate her observation on this. It is not as if—I hesitate to say this—public expenditure in Northern Ireland is currently ungenerous. But the begging bowl is being rattled and it would be interesting to see the reaction to that.

As the Budget order involves expenditure across departments, it has been traditional for those of us from Northern Ireland who take part in these debates to use them as an opportunity to raise specific issues. I shall do so but I shall be restrained; rather than gathering up all my hobby-horses, I shall pick up only two. The first—if I need to justify raising it—comes under the heading of the Department of the Environment with regard to conservation planning services, and so on, in the hope that something can be done to increase the effectiveness and efficiency of the Planning Service. I think that this comes down to additional expenditure. The Planning Service has had to deal with a tremendous increase in the number of planning applications, which is partly a reflection of the increased prosperity and is therefore welcome. But the service is having great difficulty coping with the work.

Part of the reason for the agency’s difficulty is the difficulty in retaining expert staff, because the rewards of private practice are so much greater than the rewards in the public service. Steps have been taken over the past few years to make additional resources available to the service, but I hope that more can be done. The delays occurring in the Planning Service have a significant negative effect on development and consequently on the local economy. Perhaps I may give an example from my former constituency in the Banbridge area. A development there—Bridgewater Park, a combined industrial and commercial site—is finally coming on stream although the proposal was raised well over a decade ago. The planning delays in bringing it to fruition have been inordinate.

We are running into difficulties from the Planning Service in a related proposal affecting the small town of Gilford. This very imaginative proposal could be considerably positive not only for Gilford itself but for the region. It involves converting a former mill into a hotel and developing a new golf course nearby which will link the two together. It will greatly enhance the region’s tourism potential. This very positive development, involving multimillion pound investment, is now imperilled by the Planning Service. The problem is coming not simply from planning but from environmental and conservation considerations, which are fine in themselves but which should be taken and balanced against the positive economic benefits that there would be for the region. The matter is still very much in progress, but it should be mentioned, because it would be more than a shame if this development was frustrated because of the way in which it is being handled through the Planning Service.

I appreciate very much the comments that were made about the noble Lord, Lord Laird. It was said that because of the noble Lord’s absence, we would not have any mention of Waterways Ireland; I am now going to fill the gap on this matter. I will mention Waterways Ireland, but not in terms that my good friend would use. During the negotiation of the Belfast agreement, I was very much determined that waterways would be among the list of potential cross-border co-operation. I very much wanted that on the list for one reason and one reason only; namely I hoped that this would be a way in which we could advance the restoration of the Ulster Canal, which is a cross-border canal. It was not a cross-border canal when it was constructed; the border came into existence subsequently. If it were to be restored, it would be a cross-border canal. It is a project that ought to be advanced. From a tourism and leisure point of view, we are limited in the possibilities for tourism in Northern Ireland. We are always going to be engaged in various forms of niche tourism, but the use of waterways for leisure purposes is such a niche; and with the lakes, the loughs and the rivers that exist, there is huge potential. Indeed, there was a feasibility study into the restoration of the Ulster Canal, and that feasibility study must now be well over 10 years old, or pretty close to it.

They have been restoring canals in the Republic of Ireland, and they have been enhancing the use of waterways for leisure purposes. It is a highly desirable objective. Not only does it increase tourism, but it is significant from the point of view of rural regeneration. The Irish Government are well aware of the value of this exercise, but unfortunately in the Northern Ireland departments there is scepticism about the value, and there has been and continues to be resistance in the Northern Ireland departments to this operation. The matter is topical again because in the recent plan for capital expenditure announced by the Irish Government, they once again put in their share of the money for the restoration of the Ulster Canal. Quite some time ago, they effectively said to their Northern Ireland opposite numbers, “There is our money on the table; where is yours? If it is put down, we can get started on this”. I hope very much that something will happen on that.

I want to put that into a slightly broader context. If you are going to get the full benefit of the leisure and tourist potential from the restoration of waterways, your waterway needs to link up with major urban areas. That is the case in England and Wales, because the waterways were designed to carry goods and raw materials to areas that were then industrial areas but are now urban areas. The reason for the need to have the link-up to the urban areas is that from the point of view of the initial viability, it is people from those urban areas who might be persuaded to buy a boat and then to use it moving from the urban areas out into the countryside. Restoring the Ulster Canal, which would link Lough Neagh with Lough Erne through Monaghan, is good in itself, but if we really want to get the full benefit from it we need to restore the Lagan navigation as well, to have a network that stretches from Belfast through Lough Neagh to Lough Erne. It is no accident, from the point of view of restoration of the Irish canal network, that the Irish have started from Dublin with both the Royal Canal and the Grand Canal and are working out across from Dublin towards the Shannon waterway system.

So if we want it to be successful at the Northern Ireland end, we need to put in the Lagan navigation as well. It could be done for a fraction of the cost of the Ulster Canal restoration if the environmental heritage department could be persuaded not to list the derelict blocks, or to remove the listing. The listing is such that it will enormously increase the cost of restoration. From an environmental heritage point of view, the listing will achieve no significant benefit if the effect is to keep the locks derelict.

On my next observation, my view differs from that in the feasibility study into restoration of the Ulster Canal a decade or so ago. I think that it is desirable not to gold-plate the operation. When the Erne-Shannon link was put in, it was gold-plated. It has automatic locks—you swipe the card through and the locks work. It might sound like a good idea, but it is a bad idea. Do the locks the traditional way so that the boater had to get out, get his windlass, wind up the paddles and then open the locks. It is good physical exercise: I lost half a stone doing it last summer, and I am looking forward to losing a bit more this coming summer. In case noble Lords feel that I should declare an interest, I shall not, because my boat is on the English waterway system and will not come to the Irish waterway system. There is no point in having narrowboats on the Irish waterway system because they cannot cope with open water. But that is another matter. Working the locks is part of the attraction of using waterways and turns it into a valuable family activity by giving everyone something to do.

From my experience over the years I know how much families enjoy the locks. Making it easy to use them might be all right for those who are just going round in their gin palaces and are not up to doing a little bit of work; but if we are to attract those whom we would want to attract, we should not gold-plate the system. I thank the Committee for its indulgence of me as I gathered up those hobby-horses for their canter. I look forward to the observations of the noble Baroness.

I want to raise, as briefly as I can, one or two general issues. I do not know why my Liberal Democrat friends are so sceptical about that.

First, where are we going with the reform of local government, and what in practical terms will happen? We have a great plan for what I call a super-substratum of local government. We are going to reduce the number of councils from 26—and I think that there is much sense in that—to seven, but to seven super-sub-councils. If we are to have devolved local government, then, in a community with about 1.7 million people, it is nonsense to talk about having seven super-councils for which, according to the Budget, there will not be any extra money for new building or new premises. I think that they will be an exceedingly expensive luxury. In tandem with devolved government, we should have a form of local government that delivers local services at the local level. We must get rid of the idea of seven super-councils and look at reducing the 26 to 14 or 15, so that a relationship can be established between the devolved arrangement at Stormont and what is necessary locally. I hope that there is still enough latitude and imagination in whatever is going to happen to enable us to achieve that.

There has been a massive disposal of local assets in recent years. I am interested on two fronts. Military assets have been disposed of, and I am told that that comes back to the Ministry of Defence or to the Exchequer. If so, so be it. However, in the late 1990s, we were told that if we achieved peace in Northern Ireland, the assets from that achievement would be reinvested in Northern Ireland. If multimillions of pounds from the disposal of capital assets are coming back to the Exchequer and not being invested in Northern Ireland, I think I would like to know the justification.

The disposal of police capital assets is another issue. I have asked questions about where the money from the sale of parts of the police estate—police stations and the like—is being invested but have not received a clear answer. I should like to think that it is being invested exclusively in Northern Ireland and can be put towards the new police college, where there is a dispute regarding the figure of £90 million or thereabouts and a requirement of £135 million. Are we to have a cutback in this fine police college which we were promised would be a college of international standing because the Government are not going to find that £45 million? That is a huge amount but it could be looked at in terms of the income achieved by the sale of police estate. I know that I am straying outside the scope of the debate and apologise. I do not pretend that I am unaware of that. But the issue goes side by side with what we are discussing. We cannot divorce from this debate the effect of this issue on daily affairs in Northern Ireland.

I conclude on an issue that very much falls within the context of the Northern Ireland Budget. I have asked a number of Questions—some of which have inconveniently not yet be answered—about money invested in dealing with the major problem of autism. I declare an interest as vice-president of Autism Northern Ireland and I have a personal interest in this issue.

Although I am told it is a fine scheme, I cannot understand why the Middletown initiative is going ahead with ring-fenced funding when we cannot achieve ring-fenced funding for the assessment of children who badly need it for their future; that is, children who are suspected of having autism. I do not see any money dedicated specifically to that. I have had great difficulty trying to find out from the Northern Ireland Office where money for these specific assessments will come from and why 560 children are currently waiting—sometimes for almost three years—to be assessed. And yet we can have ring-fenced funding for a redundant nunnery in Middletown which is to be used as a centre of excellence, although nobody quite knows what it can do. It is isolated from teacher training colleges, universities and the main centres of population. It is a mad notion which was introduced by the Minister in the last Assembly, Martin McGuinness. I think it was done for dubious reasons and I leave it at that. But it is not a proper or good disposal of scarce moneys which should be better husbanded. Those specific points are important for the people of Northern Ireland when they look at how scarce money is being expended.

I had not intended to contribute to this debate but shall do so after hearing about the vast sums being spent in Northern Ireland, in particular on education, for historic reasons that we all understand. The number of people in Hampshire and Dorset together is equal to the number in Northern Ireland. It would be invidious to compare the combined cost of education in Hampshire and Dorset with the money going into Northern Ireland. It is probably too late now to do so because it has all gone through. But have the Government thought about local government as an important element in the provision of education? Have they thought about having just one unitary authority and 26 what I shall call community councils, rather than parish councils or whatever one wants to call them? The cost of that might be significantly less than the present reorganisation proposals. I simply ask the question. The Minister may not be able to answer it, but it struck me forcefully as we were talking about the amount going to education and the reorganisation of local government and the costs therein.

My Lords, I do not want to prolong matters, but I shall repeat the observation that I made yesterday in the Chamber. This is a major item of Northern Ireland business, but in Grand Committee we do not have the benefit of the views of members of the Democratic Unionist Party. They have absented themselves once again from an important piece of Northern Ireland business. I say this more in sorrow than in anger. We should encourage our colleagues to give us their views on this range of expenditure. It would have been most helpful to have had them.

My Lords, I begin by thanking noble Lords for welcoming me back to Grand Committee and to Northern Ireland business. I confess that when it became clear that I would have to do some Northern Ireland business, I said to my noble friend Lord Rooker, “As long as I don’t have to do the Northern Ireland Budget”. But here I am. Clearly, it was intended that I should be here.

I should say to noble Lords—particularly to the noble Lord, Lord Shutt, who raised a number of the issues he mentioned when I replied to this Committee many years ago—that it was quite a delight to hear the same issues coming up again. Like the noble Lord, Lord Glentoran, I hope that this is the last time we debate the Northern Ireland Budget. We all hope that the process of devolution will proceed. I also join noble Lords in noting the absence of the noble Lord, Lord Laird. He always brings what I can only describe as a colourful dimension to our proceedings. I certainly miss him.

If I may, I should like to run through the various points that have been raised, starting with the general points on the economy raised by the noble Lord, Lord Glentoran. He is correct to say that Northern Ireland’s unemployment is at a record low and well below the UK average. Employment is also increasing rapidly, particularly in the services sector. In terms of skills development, that remains an area of concern to some. I note the noble Lord’s comments on the local housing market. As he will know from discussions today about the housing market particularly in London, it is not a unique problem. However, a significant housing affordability review is under way. The affordability review is considering the barriers affecting those seeking affordable housing in the owner-occupied and the social and private rented sectors. An interim report has just been produced for consultation. Following the consultation period, final recommendations will be presented to the Government in the spring.

The noble Lord, Lord Trimble, raised wider Budget issues regarding the various requests for additional funding in Northern Ireland. It would be a much braver person than I who responded in detail on that matter. This is a time when the budgets of all government departments and wider public sector bodies are facing pressure as a result of wider economic conditions. I am absolutely certain that that will be one of the things that the Chancellor bears in mind. The current package presented by the Chancellor offers a stable and robust base on which an incoming Executive can develop priorities and associated spending plans. That remains our view.

On the point made by the noble Lord, Lord Glentoran, on the scale of public sector employment in Northern Ireland, the noble Lord is of course right that the key issue is to increase private sector employment. It is important to point out that the level of public sector employment in Northern Ireland is high when it is expressed as a percentage of the total number of those employed. If, however, you look at it as a percentage of the total population, it is actually exactly the same as elsewhere in the United Kingdom, because you need certain levels of nurses, teachers and others.

The noble Lords, Lord Glentoran and Lord Maginnis, who is briefly not in his place, mentioned the review of public administration, which covers local government, education and the major health and social services bodies, including the remaining Executive agencies and public bodies. Under the current timetable, by 1 April this year, five new health and social services trusts will replace 18 existing trusts. By 1 April next year, a new health and social services authority will replace four existing health and social services boards. A new patient and client care council will replace the existing four health and social services councils, and a new education and skills authority will replace the five education and library boards. A new library authority will also be operational. By 1 April 2009, seven new councils will replace the existing 26 councils. The noble Lord, Lord Maginnis, suggested that the number should be 15 or 16. I talked earlier about a braver person than I am, and I must use the same words again: a braver person than I am would reopen the debate on local government configuration, which has already been decided.

The decisions arising from the review of public administration in relation to local government are designed to strengthen the role of local government in Northern Ireland and place it at the heart of local democracy. The Local Government Task Force, which is chaired by my honourable friend David Cairns, continues to provide the vehicle for the direct engagement of local government representatives in strengthening local democracy in Northern Ireland. Moreover, members will have direct input throughout the implementation phase. So although the debate on the number of councils is not open to discussion, there will be an opportunity to have input in how the seven councils are implemented.

The noble Lords, Lord Glentoran and Lord Shutt, and the noble Baroness, Lady Harris, mentioned schools. In answer to the noble Baroness, I do not know whether one unitary authority was considered, but I am happy to write to her if I find out any more about it.

On rationalisation, on 23 January the Department of Education published a consultation document, called A Policy for Sustainable Schools. The policy is based on the Bain review recommendation, including its minimum thresholds for urban and rural primary schools, post-primary schools and sixth forms. Its objective is to ensure that all children have access to high-quality education in fit-for-purpose facilities. The closing date for responses to the consultation document is 16 April 2007. The Bain review recommended that schools under the minimum enrolment threshold should be reviewed to ensure that they are providing children with the education they need and will continue to need in the future. The fundamental issue is quality of education. Of course, reviews must be handled carefully and sensitively, and the review will need time to be completed and will require engagement with the relevant education authorities. The Bain review did not identify a level of savings at this stage.

The noble Lord, Lord Shutt, talked about integrated schools. The figures quoted reflect the fact that there has been a re-profiling of integrated schools provision. The money has not been taken away from the integrated sector; it has been re-profiled—a rather difficult word—to specific projects. I shall give some examples of what that re-profiling involves. This year, for example, the Government have allocated £25 million for new capital development in integrated schools. On top of that, additional money will be put into supporting the ongoing running costs of integrated schools, and proposals for new integrated schools are under consideration. For example, the Minister for Education recently decided upon two development proposals for the establishment of new integrated schools.

Almost every time the noble Lord, Lord Glentoran, speaks on these budgetary and resource issues, he raises the issue of consultants. Following the publication of the Northern Ireland Audit Office report on the use of consultants in June 2004, the DFP issued revised guidance on the use of external consultants in February 2005, outlining a number of lessons contained in the report that could be applied across all departments to ensure that value for money was obtained when employing consultants. External consultants are currently being used on a number of key government reforms: the review of public administration and the water reform I have already mentioned, and NICS-wide reforms such as accounting systems, human resources and accommodation. They are also used on a range of major projects, including the new sports stadium at the Maze and on private finance initiatives.

The noble Lord, Lord Shutt, raised the question of the civic forum. The Office of the First and Deputy First Minister has made financial provision in the vote on account for 2007-08 for the civic forum being restored should devolution return. On railways, an issue which the noble Lord has raised in the past, the north-west railway link has sufficient resources to maintain existing services but, given the recent British-Irish Intergovernmental Council oversight report which acknowledged its strategic importance, a review is under way. The north-west clearly has great potential for tourism and that must be exploited. Translink plan to upgrade the track on the railway line between Ballymena and Londonderry. The work is intended to commence late this year, with an expected duration of two years.

On Ulster Savings and the use of money in closed accounts, another issue raised by the noble Lord, Lord Shutt, the outstanding Ulster Savings scheme liability is held within the Consolidated Fund on behalf of investors. It now stands at some £6.6 million. Payments are made on receipt of a valid certificate. The accounts are therefore considered closed as opposed to dormant. The £6.6 million remains liable for repayment. The Treasury plans to bring forward legislation on dormant bank and building society accounts on a UK-wide basis. It will not apply in the case of Ulster Savings, however, because those accounts are viewed as closed rather than dormant. The potential of the legislation on dormant accounts is to fund the community and voluntary sector, including in Northern Ireland. The noble Lord looks as though he wants to come back.

There is an interesting point here. It is one thing for the Government to take a view on dormant bank and building society accounts, but that may go further and cover unclaimed insurance policies and unclaimed shares. An incredible amount is unclaimed, particularly in newly demutualised companies. There is no equity in a situation where those moneys must be used for charitable purposes. Goodness knows what the dormant sums must be in the National Savings Bank. There is a fine line between closed and dormant, and there are no staff left at Ulster Savings. How do people now knock on the door and say “Oh, by the way, I have a passbook here.”? I do not even know how that will work. I assume that it does work, because I thought that the figure was £8 million, whereas the Minister now says that it is £6.6 million. Perhaps some of the money has now gone, though huge efforts were made before the closure. The actuaries can look at how much there will be, because they know how the flow is going. But there will still be a considerable sum. It is right to use that money in Northern Ireland. Is that going to be a decision in the future for the devolved Assembly, or will it be a decision made here by the Chancellor?

I will write to the noble Lord, Lord Shutt, on the process for claiming. On the wider issue of the proposed legislation, my understanding is that the intention is that that legislation should be UK-wide, so it will apply to Northern Ireland. It will not be a devolved matter. I have also had a note which I do not entirely understand, but I will read it anyway. The proceeds of Ulster Savings, like National Savings, are already invested in support for public services.

It would be better if I wrote to the noble Lord on the process. The legislation on dormant bank accounts is intended to be UK-wide. If I can throw any further light on the issue of dormant versus closed accounts, I will do that as well.

The noble Lord, Lord Shutt, talked about water revenues. The revenues generated from water reform will benefit Northern Ireland departments and budgets immediately. As the years progress, the revenues collected will increase, reflecting the phased introduction. That will mean that more resources will become available to allocate to front-line public services.

As the noble Lord, Lord Shutt, made clear, policing is not devolved. As we move closer to a date for the future transfer of criminal justice responsibilities to the devolved Administration, the Government will need to discuss arrangements for the transfer of additional resources from the Northern Ireland Budget to the devolved Administration to cover the costs of those new responsibilities. With respect to the question on the Barnett formula, we will discuss future funding arrangements for criminal justice spending in Northern Ireland with the devolved Administration ahead of any transfer of responsibility. Those arrangements will operate within the framework of the Treasury’s statement of funding policy for the devolved Administrations. I hope that the noble Lord, Lord Shutt, is not going to ask me what that statement involves.

The noble Lord, Lord Trimble, asked about the need to increase the effectiveness of the planning system. In the time that I covered Northern Ireland issues, there was a widespread concern about the planning process and the time taken to process planning applications in Northern Ireland. I absolutely recognise that concern. The reasons for the delays are twofold: first, a sustained high level in the number of planning applications received in the past three years; and, secondly, increasing public interest in planning issues. We have to find a way of managing that more effectively. For the past three years, the Planning Service has been engaged in a comprehensive reform and modernisation programme which is looking at all aspects of the system. Additional resources have been allocated to the public information interface to help to improve processing, but this will take a little time to kick in so that people begin to feel that there is a difference.

I am delighted that the noble Lord, Lord Trimble, talked about canals and waterways. It would not have been a discussion of the Northern Ireland Budget if we did not have some discussion of canals and waterways. Northern Ireland government officials are working closely with Republic of Ireland officials in endeavouring to take forward the project of the proposed reopening of the Ulster Canal, ensuring compliance with accountability and value for money requirements. A number of studies and appraisals have been carried out examining the costs and potential benefits of reopening the Ulster Canal. The Irish Government have declared their support for a sectional approach being adopted, focused initially on restoring navigation on the 12-kilometre south-western reach at an estimated cost of £24 million. This proposal is being actively explored with the Republic of Ireland.

The noble Lord, Lord Maginnis, asked about the disposal of assets. His memory on these issues goes back much further than mine. I recognise the case that he makes for using released resources to fund a new police college. That decision does not rest with me, but I shall, of course, pass on his comment. Previously we have said that proceeds from the disposal of assets that are the responsibility of the devolved Administration will be available for reinvestment in public services in Northern Ireland. However, military assets, which the noble Lord mentioned, are in the separate ownership of the Ministry of Defence and do not automatically fall within that arrangement.

Autism is an issue dear to the heart of the noble Lord, Lord Maginnis. More than 2,000 children in schools in Northern Ireland are identified as having an autism spectrum disorder. All education and library boards provide specialised support to schools with pupils with autism and provision is matched to individual needs. Since the report of the task group on autism was published in 2002, the Department of Education has committed £7.4 million to meet the needs of children with autism. The Department of Education, in conjunction with the Education and Training Inspectorate, is preparing a strategy for autism based on an action plan produced by the five autism groups, a range of work by the inspectorate and research into preschool children with an ASD, the results of which will be published shortly. The Department of Education and the Department of Education and Science in Dublin are jointly developing a centre of excellence for autism in Middletown, County Armagh. It is planned to start introducing services from mid-2007, beginning with training and advisory services. I hope that that meets some of the concerns of the noble Lord, Lord Maginnis.

I am grateful to the noble Baroness. I apologise for having left the Chamber for a short period. I had to get my Coke fix. That is not to do with drugs but with diabetes.

As the Minister knows, I am concerned about the piecemeal way in which the problem of autism is being dealt with. It appears to me that there is no single identifiable individual heading up an initiative on autism. The noble Baroness will be aware that, although the boards have a responsibility in this area, there is no consistency between one board and the next in how the problem is dealt with. While we would all like to see a centre of excellence, this is a pre-emptive move without any real reason behind it. Middletown is isolated from centres of population, teacher training colleges and universities. The location is an utter nonsense. I do not know whether we can draw back from this. I should like an assurance that this matter will be looked at again before we get too far down the line of spending money that could be more usefully employed.

I suggest two things. First, the noble Lord expressed concern about consistency. Part of the purpose of having a centre of excellence with advisory services would be precisely to help to advise the individual authorities in schools on best practice. Secondly, the noble Lord also talked about not going too far down this road. This will clearly become an issue for the Assembly. Once the centre of excellence is up and running by the middle of this year, and has put in place a work programme, the Assembly may want to consider some kind of review of that programme and its impact and effectiveness in the longer term.

I hope that I have answered all the questions that have been asked, and I commend the order to the Committee.

On Question, Motion agreed to.

Waste (Amendment) (Northern Ireland) Order 2007

rose to move, That the Grand Committee do report to the House that it has considered the Waste (Amendment) (Northern Ireland) Order 2007.

The noble Baroness said: The draft Waste (Amendment) (Northern Ireland) Order introduces provisions broadly in line with those already in force in England and Wales by the enactment of the Clean Neighbourhoods and Environment Act 2005. The order aims to provide stronger enforcement powers and stiffer penalties to deter unlawful waste activity. I hope that it will be helpful to the Committee if I comment briefly on the background to the order. I shall then say a few words about the detailed proposals.

There is clear evidence that organised criminal gangs are involved in the illegal cross-border transport and illegal management of waste. Such activity generates large profits for those involved. It also causes substantial environmental damage, leads to high clean-up costs and the loss of significant revenues for the Exchequer, and has an impact on the competitive status of legitimate waste businesses. It is small wonder then that the Organised Crime Task Force annual report of 2006 identified such activity as a continuing threat for Northern Ireland. How will this order help combat the problems posed by illegal waste activity? Perhaps it will be helpful if I highlight four main provisions.

The first provision is a general power for authorised officers of the Department of the Environment in Northern Ireland to stop a vehicle on a public road. In other parts of the UK, this power is available only to uniformed constables. However, the unique problems faced by Northern Ireland justify such a provision. Vehicles are the key tool of illegal waste operators, and it is essential that the regulatory authorities in Northern Ireland have clear and effective powers to target those vehicles. Once a vehicle has been stopped, the enforcement authorities need to establish whether it is involved in illegal waste activity. Secondly, therefore, the order also contains powers for the search and seizure of vehicles where such activity is suspected. These powers will be available to police officers and officials.

Thirdly, the order increases the penalties for offences involving the illegal treatment, keeping or dumping of waste. These provisions send out the clear message that illegal waste activity is viewed as a serious environmental crime, and will be punished accordingly.

Finally, the order gives new powers to the courts which are designed to ensure that penalties are proportionate to the crime that has been committed; in other words, that the punishment adequately reflects the crime. Courts will have powers to order the confiscation of vehicles, plant and machinery, and to require offenders to pay investigation, enforcement and clean-up costs.

In addition, when determining the level of penalty that should be imposed, courts can have regard to any financial benefit that an offender has accrued. These provisions give practical effect to the “polluter pays” principle.

I have tried to summarise the key elements of the order. There are of course other, more detailed, provisions, and I shall willingly answer any questions on them. In itself, the order will not provide a sufficient deterrent to illegal waste activity. Further subordinate legislation will be required in due course. However, this is a foundation on which an effective enforcement framework can be built.

I have already referred to the scale of illegal waste activity in Northern Ireland, a problem that must be addressed. The enforcement authorities face a significant challenge, but this order gives them some of the powers that they need to respond effectively. The increased penalties will act as a more effective deterrent. The order will bring Northern Ireland into line with England and Wales, while including other provisions which reflect the particular needs and circumstances of Northern Ireland. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Waste (Amendment) (Northern Ireland) Order 2007.—(Baroness Farrington of Ribbleton.)

I thank the noble Baroness for the way in which she presented the order. I declare two interests. First, I am a landowner and farmer living in Northern Ireland. Secondly, I have had a waste disposal business as part of my responsibilities when working as chief executive of the Redland businesses in Ireland.

I was pleased to hear the last utterances of the Minister that further subordinate legislation is required. My first reading of this order was “You ain’t gone far enough”. It is and has been a huge problem, as the noble Baroness has said. I first went into business in the early 1970s in Northern Ireland, and it has been a big problem since then. It is a cowboy problem that has developed into an organised crime problem and then into an international problem. Not only is the environment at risk; waste disposal is a serious, technical and dangerous business if not done properly.

I look first at Articles 10 and 12. It could be said that this is part of my interest, but I am concerned by Article 10. It is no good passing the buck to landowners. That would not achieve much, because acres and acres of land in Northern Ireland are wildernesses, as the Minister will know. Certainly in winter, when herds are not out, farmers do not walk all over their land every day or every week. Other means and deterrents must be strong enough to prevent the casual tipper in the countryside.

I accept that there are landowners with disused quarries and such who have done private deals to fill them up with waste of one sort or another without planning permission. I am unhappy to some extent with the framing of Article 10. The onus of proof on everybody’s part could be near to impossible on many occasions. The buck would be passed around: the lawyers will make their money; the landowner and the farmer will suffer and have to pay, with worries and hassle; and the criminal will be wandering around with a smile on his face. The order does not do much to stop that.

It is good to have Article 12, about householders and the different receptacles used for recyclable and non-recyclable waste, in here. However, a lot more thought must given to the infrastructure of that legislation. In London, where I live in the week, we have recyclable and non-recyclable bins that must go out at night, and you do not know what time the bin men are coming in the morning. Sometimes they do not come until two o’clock in the afternoon, by which time dogs—or, in my case, unfortunately, pigeons—get at it.

I have had letters of summons for £2,000 fines from the authority because somebody has handed in a letter with my name on it and said that they found it outside my house. The Committee will be glad to hear that I managed to sort the matter out, but that is real life. The neighbour situation, to which my honourable friend David Lidington referred when this order was debated in the other place, is also a serious worry. If somebody has a grudge against a neighbour, they can cause a huge amount of hassle and trouble very easily. Those issues are not addressed in the legislation. More thinking, more regulation, and more infrastructure needs to go into how to interpret this law. If it is interpreted with considerable common sense and understanding, and as more knowledge is built up or more regulations are introduced when needed, that will be okay.

One of the most important aspects, which is tackled to some extent, is the licensing of those who carry out waste disposal operations. I hope and assume that the licence goes to the driver of the HGV who is doing the disposal. It does not say so here, but I assume that if an organisation is licensed, the driver of the HGV carrying the waste is expected by law to carry his disposal licence. If he is stopped, it is no good just telling Joe Bloggs from the department, “I have a licence. We are fixed”. He must be able to produce a government licence when he is stopped. I sincerely hope that that is part of this legislation. If it is not, it is not worth a great deal.

Another aspect that I want to recommend is that before those licences are issued, a form of training should be compulsory to those drivers—and operators, if necessary—to have an understanding of the law and what they are allowed to do with the waste they are disposing of. They are on public roads. Sometimes they are driving tankers containing dangerous materials, so they ought to have a special licence saying that they have been trained, they are entitled to dispose of the waste, and that it is their job. Otherwise, how will it be controlled? There is more to come on that issue.

I turn to the last of my key points. Finance is very important. My briefing tells me that the prices for disposal in the Republic of Ireland are considerably higher than those in the north. That tells its own story. The Republic is a very competitive place. They are good business people and they are competitive. But if the price for disposing of their waste is significantly higher than that in the north, there must be a story as to why they bring their waste across. There is no currency gain; it is purely that it is cheaper to find a disposer in the north than in the south. I suggest that the reason why prices in the north are so much less is because of the cowboy trade. No one in the industry professionally and legally can offer the prices required to carry out that business in a regulated and legal way. Waste could include arsenic, chemicals, and so on. The more technical and difficult the waste, the more likely the tenderer is to get a good price because the cowboys do not want to get into that. I have been there. People laugh at you and say, “Oh, don’t be silly. Jim will take it away for you. Don’t worry”. There are cowboys behind the scenes, which I believe is understood by the department and the Government.

This order does not go nearly far enough, but it is a start. It says that regulations will be produced that back it up as subordinate legislation. I hope that they will not be too long in coming. In principle, I support the order. It is a move in the right direction.

I, too, thank the Minister for delivering the order to us. The majority of the provisions replicate those in the Clean Neighbourhoods and Environment Act 2005.

As we heard graphically from the noble Lord, Lord Glentoran, who has a great deal of experience in this area, organised gangs are making very large profits on the movement of illegal waste. The environment must get damaged if waste disposal is not properly regulated, and the costs to clean up those unregulated areas are very significant. The draft order provides much stronger powers for enforcement officers and additional powers for the courts to impose wider-ranging and more significant pecuniary penalties to combat and deter illegal waste activity.

I was pleased to see that consultation on the proposals has been undertaken, the main responders being district councils. Their main concerns were that the proposals were focused far too narrowly—the noble Lord, Lord Glentoran, made this point—on the powers of the department to deal with waste management and disposal activities. They did not provide a greater role for district councils to become involved in this important area. I am pleased that the Government have recognised that and propose to engage further with district councils on the possibility of enhancing their powers.

In Articles 3 to 9 on the disposal and depositing of waste, I hope that guidance will be given on how the powers of those dealing with such incidents will be undertaken. There will be a need to understand proportionality in dealing with possible offenders, especially as the powers now being given to the people who will police these incidents will be greatly enhanced. Will the Minister explain the term “authorised officer”? We have a definition in Article 9(11), which states:

“In this Article [5E] and Article 5F … ‘authorised officer’ means an officer of the Department who is authorised in writing by the Department for the purposes of this Article”.

The authorised officer will work alongside, or with, the police. I am concerned about the level and quality of such officers. They will need training. They will have quasi police powers if they are not with a police officer, so that is important. Will the Minister say what discussions there have been with the Republic of Ireland on these measures? It is extremely important that dialogue between the north and the south is clear so that both sides understand the difficulties that each has with the importation and exportation of illegal waste. We on these Benches also welcome the proposals in the main, and hope that the situation on illegal waste tipping is brought to a rapid end.

I thank both noble Lords who have taken part in this short debate. We are working closely with the Republic of Ireland on this matter, and have recently had joint operations on it. One reason why we would want authority to be given to an appropriate level of officer to deal with this is that, as we all know, the police are on occasions suddenly called away on an emergency. We do not want a particular issue to fall by default because the police are called away.

At an operational level, the departmental officers regularly discuss and share information with their RoI counterparts and assist in investigations. RoI officers have attended Northern Ireland operations in which waste from the Republic has been identified. Department of the Environment officers have been witnesses in RoI prosecution cases. The authorities in both jurisdictions have prepared an action plan to deal with existing waste illegally dumped in Northern Ireland, and to prevent possible future waste movements. The draft plan was presented to the European Commission at a meeting in October 2006, and the Commission welcomed it as a positive step in tackling the problem.

The noble Lord, Lord Glentoran, and the noble Baroness, Lady Harris, recognise that it is a cross-border issue on which we are co-operating fully on both sides. It is also, of course, a European Union issue on which member countries are required to work to the agreed directives. We only have one land border in our country, but the issue must be tackled by countries across the whole European Union. As the noble Lord, Lord Glentoran, recognised, the issue is often that disposal sites are cheaper on one side of the border than on the other. The noble Lord was also concerned about the fact that district councils want, and could have, more authority and powers to deal with this. We are currently in close discussion with them, and envisage that they will be able to have their concerns met as the process moves ahead. It is perfectly true that it is not only an environmental problem, but could be a dangerous health problem. It is important that we deal with that.

The noble Lord, Lord Glentoran, raised the issue of the recent judgment in the Challice case, in which Exeter City Council brought charges against a resident for contamination of their recycling container. The council could not prove that the resident had personally done this. That prosecution was brought under existing waste legislation rather than under the new fixed penalty system introduced under the Clean Neighbourhoods and Environment Act 2005. The new regulatory regime will, we hope, assist in enforcement. I see the noble Baroness, Lady Hanham, in her place, and I remember our discussions during the passage of the Clean Neighbourhoods and Environment Act. We agree that it is difficult to guarantee that waste bins placed on a public road will not be tampered with but, if we are going to tackling recycling, we must encourage people to take responsibility. We will continue to monitor the legislation.

The noble Lord, Lord Glentoran, raised the issue of fairness to landowners. The order will help councils to deal with derelict sites where there is no occupier of the land, or with an absentee landlord allowing his land to be used as an unlawful dump. The aim is to allow action to be taken against irresponsible landowners without penalising the victims. We recognise that people are often the victims of fly-tipping.

As is currently the case with an occupier, an owner will have rights of appeal against such a notice, and a court will not expect an owner to pay removal or remedial costs if satisfied that the owner neither deposited, nor knowingly caused or permitted the deposit of, the waste. The courts will be given greater deterrence powers, and will be required to take into account any financial benefit that an offender has accrued when considering the level of penalties. They will have the power to order the forfeiture of the vehicle and order offenders convicted of the unlawful deposit of waste to pay the full clean-up costs.

I understand the concern of the noble Lord, Lord Glentoran, but it is important that we increase the deterrence of this unlawful activity, which causes damage and threatens health. The noble Lord also raised the issue of disposal licences. There will be detailed guidance on the legislation. It will be the responsibility of licensed companies to pass information on to their drivers, and Article 15 provides for the revocation of licences in the case of non-compliance.

Drivers are subject to legislation on the registration of carriers, and will have to have the relevant documentation to identify them as a registered carrier. They are also subject to the duty of care legislation, and must therefore have a waste transport form, indicating the nature of the waste, its origin and destination, such as a particular licensed waste disposal site. The fixed penalty notice that is introduced if the above is not adhered to is extremely important.

I have tried to cover the issues raised, and I hope that I have covered all the points. We do not want to penalise landowners who are victims. My understanding is that the authorised official would be somebody at a competent level. If I am wrong, or if I can add anything, I shall write to the noble Baroness, Lady Harris. I thank both noble Lords. I beg to move.

On Question, Motion agreed to.

Local Authorities (Contracting out of Anti-social Behaviour Order Functions) (England) Order 2007

rose to move, That the Grand Committee do report to the House that it has considered the Local Authorities (Contracting Out of Anti-social Behaviour Order Functions) (England) Order 2007.

The noble Baroness said: The order was laid before the House on 9 January 2007. In summary, it enables local authorities, where they so wish, to enter into arrangements with organisations that manage their housing stock so that those organisations may exercise some or all of the local authority’s functions for seeking anti-social behaviour orders. The Serious Organised Crime and Police Act 2005 gives the Secretary of State the power to make an order specifying a body or type of body to which local authorities may contract out all or part of their anti-social behaviour order functions. We issued a consultation paper, Enabling Local Authorities to Contract their Anti-social Behaviour Order Functions to Organisations Managing their Housing Stock, in November 2005, and it forms the basis for the statutory instrument that we are discussing today. There were areas where we have advanced the policy in the light of the constructive comments from stakeholders, and, overall, the consultation provided a clear mandate for pursuing our proposal as put out to consultation.

Currently, agencies provided with the power to seek anti-social behaviour orders through the courts are restricted to those listed as relevant authorities in the Crime and Disorder Act. They include the police, local authorities, registered social landlords, transport police and county councils. At present, local authorities may not contract out their power to apply for an anti-social behaviour order to other bodies. We believe that enabling them to do so in the context of social housing stands to provide a number of advantages where the local authority has delegated the delivery of front-line services to other bodies. As the Committee will be aware, many local authorities in England have delegated operational functions to other organisations that manage some or all of their housing stock on their behalf, notably arm’s-length management organisations and tenant management organisations, as well as private finance consortia.

At the moment, every time an organisation, such as an arm’s-length management organisation, wishes to seek an anti-social behaviour order to protect the community, it must approach its parent local authority to make the application on its behalf. This can lead to delays and unnecessary red tape. A rapid response is often critical in building and maintaining public confidence in an agency’s ability and preparedness to act to stop anti-social behaviour. It is critical that residents have faith in those managing their housing and are reassured that they are suitably equipped to do the job. Officers working for arm’s-length management organisations or tenant management organisations will more often than not be leading on handling complaints and pursuing cases. They will be responsible for gathering evidence and taking decisions on how best to act. We see no reason why they should not be empowered, where the local authority sees fit, to carry the process through to resolution by pursuing an anti-social behaviour order application through the courts.

It is important to note that many housing management organisations already pursue applications through the courts for other forms of action to tackle anti-social behaviour, including possession cases and injunctions. That demands much the same level of judgment, capacity and expertise as anti-social behaviour order applications. Anti-social behaviour orders are powerful measures, and our primary concern is to ensure that they are used appropriately and only where they provide the best solution for protecting the community from anti-social behaviour.

We recognise that local flexibility must be coupled with proper accountability. We are conscious of the critical importance of making sure that those entrusted with these powers can be expected to be capable of exercising them responsibly. That is why we have made an explicit link between this initiative and Section 27 of the Housing Act 1985, which is the statutory process for delegating housing management functions. The effect of Section 27 is to regulate the process by which the local authority appoints another housing body to manage council homes. That process is primarily designed to protect tenants’ interests and ensures that housing management responsibilities may be delegated only to those with appropriate skills and resources. We believe that the requirement under Section 27 to have in place a robust management agreement between the local authority and the housing management organisation will ensure robust government and accountability and will provide a framework for ongoing performance management.

It is important to be clear that local authorities will remain fully accountable for how any contracted responsibilities are exercised. We will be issuing statutory guidance on the contracting out of ASBO functions to which local authorities and any organisations to which they may contract out must have regard. In preparing that guidance, we will take full account of issues raised through the consultation process and of points raised in this debate. This order will for the first time give tenant management organisations the power to apply for anti-social behaviour orders, where appropriate in the local context. The Prime Minister and the Secretary of State for Communities and Local Government focused on this issue in their announcement on 9 January, and I am pleased to say that the response we have received to date has been very positive.

Some concerns have been raised about whether by providing anti-social behaviour order powers we might provoke unchecked vigilante action where neighbours take out vendettas on each other through anti-social behaviour order applications. These concerns are unfounded and, it could be argued, betray a lack of awareness of the way that tenant management organisations are established and operated. Many tenant management organisations already have responsibility for the day-to-day running of the homes in their areas, and they are delivering excellent services. They are called upon to take on these responsibilities only when they have undergone a rigorous process of training and accreditation and they must secure the support of the community for taking on management functions. Many employ dedicated staff who manage large estates. We are not talking about giving powers to residents’ associations with informal constitutions but rather about delegating to highly professional organisations with established track records that are subject to robust accreditation and on-going monitoring.

Providing additional powers to TMOs, where appropriate, would give local residents a greater say in how their estates are run and would support them in ensuring that disruptive anti-social behaviour is dealt with swiftly and effectively. This order is relatively simple—I dare say that—and has been drafted to provide the local authority with the maximum flexibility to ensure that any arrangements it may wish to enter into are tailored to best fit the local context. The local authority retains full discretion about whether it wishes to make use of this provision. It may enter into contracting arrangements with one or more housing management organisations with which it holds management agreements. An authority will retain the power to discharge its anti-social behaviour order functions in its own right, regardless of whether it has entered into a contracting-out arrangement. The order allows local authorities full flexibility to restrict the circumstances in which the specified organisations are able to discharge the contracted-out functions if they so wish. The order also allows a local authority to attach other conditions, as it considers appropriate. These conditions must be adhered to by the housing management organisation.

We have included in the order a duty on the part of the organisation to which the local authority contracts to consult the parent local authority every time the housing management organisation wishes to apply for an anti-social behaviour order. A number of responses to the consultation asked that we made that explicit in the interests of supporting multi-agency working and the exchange of pertinent information. It is important that we recognise that that has been taken on board from the consultation process.

This order also expressly confirms that housing management organisations to which anti-social behaviour order functions are contracted out will be provided with full rights of audience to take cases through magistrates’ courts, which is essential in enabling them to lead on applications from the onset to the conclusion of a case. It is important to note that the majority of anti-social behaviour order applications are currently conducted in the magistrates’ courts, although they are also available in the civil courts alongside other applications.

My department, the Home Office and the Department for Constitutional Affairs are working together on new proposals to provide housing officers working for arm’s-length management organisations and tenant management organisations with rights of audience in the civil courts. If enacted, this will, in due course, allow them to pursue anti-social behaviour order applications in the civil courts as well. At the moment, the right of audience in the civil courts is subject to judicial discretion.

In many situations arm’s-length management organisations and tenant management organisation officers will already be well practised in taking cases. However, we will make clear through the issue of guidance that local authorities will need to work closely with housing management bodies in ensuring that those responsible for taking cases in court are fully trained and competent to do so. In more complex cases, it is likely that the housing management organisation will continue to work closely with a local authority’s legal team or commission specialist legal support.

This order gives local authorities the flexibility to make local decisions about how anti-social behaviour is tackled, enabling them to be responsive to changes in the way in which their communities are served. It will assist in delivering more efficient and effective working practices and would further equip those on the front line to be better able to tackle anti-social behaviour. I commend the order to the House.

Moved, That the Grand Committee do report to the House that it has considered the Local Authorities (Contracting Out of Anti-social Behaviour Order Functions) (England) Order 2007.—(Baroness Morgan of Drefelin).

I thank the Minister very much for her introduction of this order, and I welcome her to the Front Bench and look forward to working with her. At the outset, I want to make clear that in general we support these proposals, which seem extremely sensible, particularly because registered social landlords are already deemed appropriate bodies to have the power to seek anti-social behaviour orders to help them manage their properties. It seems therefore only right that the arm’s-length management organisations and tenant management organisations, which now control a significant proportion of local housing authority stock, should be placed in a similar position. We are absolutely at one on that.

We all recognise that the problems faced by owners and tenants of these—usually—estates from a few troublemakers can be sufficient not only to make their lives absolutely miserable but also to jeopardise the good management of the property and the maintenance of public areas and common parts of their homes. They are often intimidated by gangs of young people who defile and degrade the properties, bringing fear and insecurity to tenants and owners, and make their daily lives a battle rather than a pleasure. We fully understand the rationale behind this.

The Minister referred to the government consultation and the views of local authorities and tenant management organisations. However, I am bound to say that the consultation received a dismal number of replies. Is the Minister satisfied that this minimal response is adequate for her to be able to say that there is great support for this? Do she and the other Ministers feel able to conclude that the support of those who will implement the proposals is sufficiently robust? Does she believe that the poor response was due to general satisfaction with the proposals—people often do not bother to respond when they are happy—rather than inertia? Only 29 local authorities out of all the local authorities that have housing responsibilities bothered to reply. I have not checked how many ALMOs and TMOs there are in the country, but there are certainly more than 14. But only 14 ALMOs and TMOs bothered to respond. I know that consultation is not always enthusiastically taken up, but that response does not justify the glorious view that the Minister took of the proportion of those in favour of the proposals. The responses of 24 out of 29 local authorities justified an 80 per cent response rate being quoted. We need to bear that in mind.

I appreciate that these regulations are permissive and that a local authority does not have to implement, delegate or contract them to its tenant management organisations, but it would be a pity if so few of them did so that the effort was meaningless. That takes me back to the response to the consultation. Perhaps the Minister can tell us how effective the responsibility already borne by resident social landlords has been in terms of the number of anti-social behaviour orders they have instigated. That will give us a feel for the extent to which anti-social behaviour orders are being used by those who are already able to do so.

I apologise to the Minister because I have one or two further questions. I think it is important that we get this matter clear. The Minister said that local authorities will be expected to help their tenant management organisations in pursuing ASBOs. How much does she expect them to have to do if this is a delegated responsibility? Is it correct that the legal presentation of these cases to courts will be carried out by housing managers; or is it anticipated that although they will be the prime movers, the court work will be done by legal advocates? I think that the Minister said that where cases are complicated, legal help will be brought in, but I want to be clear on whether it is the housing managers for whom a right of audience is being sought. Is it expected that managers of larger management organisations will be more comfortable in handling anti-social behaviour orders than managers in smaller organisations who are better known to those who live in the area? Where a small housing unit has a tenant management organisation, it is possible that a manager might feel intimidated by residents if he were to try to produce an ASBO. So does the Minister think that the number of properties that a tenant management organisation manages should predicate whether it has delegated authority from the local authority?

I want to clarify whether it will be possible to give anti-social behaviour orders to people under 18. The Minister mentioned that ASBOs would be covered by the magistrates’ courts, and I presume that the youth court would be the responsible court for those cases. Can she confirm that, in common with other anti-social behaviour orders, they can be given to under-18s? Can the Minister also indicate whether the Government are likely to respond to the concerns of the Children’s Society, which feels that there should be a set of minimum national requirements to ensure child protection and welfare legislation is fully adhered to?

Finally, a question has been raised by the Statutory Instruments Committee about whether the Government have given adequate consideration to the reservations about these proposals raised by a number of legal policy and citizens’ rights organisations. They were concerned that the danger of using anti-social behaviour orders inappropriately would be magnified if the number of those entitled to issue them was increased. Could she comment on that, and on the other issue raised by the Statutory Instruments Committee, which was the use of CCTV in investigations for anti-social behaviour orders? I do not imagine that housing managers have access to CCTV footage for evidential purposes, but would the local authority be able to pass it on to them?

We have no objection to the principle of the order but it would be immensely helpful if the Minister could reply to my questions on the record.

I, too, thank the Minister for leading on this order. Before I start, I shall scotch the wicked rumour that the Liberal Democrats do not support ASBOs. We support ASBOs, but we think that there are better alternatives, such as acceptable behaviour contracts, which would be a better way forward. Nevertheless, I have always expressed concerns about training, accountability and monitoring in relation to ASBOs. Those concerns have been raised by these Benches, especially in relation to Part 3 of the Police and Justice Bill, which dealt with a similar idea—the contracting out of parenting orders and parenting contracts.

My questions are on the training and accountability of those who undertake what will be an important role. While I accept that those who will go to court will have training and responsibility—the noble Baroness, Lady Hanham, suggested that their training would be adequate—I am concerned about the hands-on issuing of ASBOs. I would like to be reassured about the training of people who do it. Where will that accountability fall? How will it be monitored? The Minister said that it would be continuously monitored, but how will that take place? What are the practicalities? With the assurance that we support this order, I simply ask the Minister to help me on those issues.

I thank my noble friend the Minister for her lucid and pithy exposition. I found the remarks from the other side of the Committee helpful and illuminating. My noble friend touched on accountability and proportionality in the powers adumbrated in the order. Can she give me some detail on the safeguards? Have they been properly considered? How meaningful were the consultations? How widespread were they? It would be helpful for the Committee to have some detail.

We still hear of youth nuisance and worse on large estates and council estates—I do not know whether we can refer to estates as social housing. However, my noble friend knows what I am saying. When this order was put together, what consideration was given to, and how do the Government assess, the success rate or otherwise of ASBOs as a policy? What is the Government’s thinking on ASBOs as they touch on the order under discussion?

Reference was made to magistrates’ courts. Do we have any feedback at all on the responses of the magistrates’ courts, which are mentioned in the Explanatory Notes? I presume that magistrates are well briefed on ASBOs and that surely they must consider applications for them. To what extent are magistrates informed by CCTV where ASBOs and their applications are concerned? Again, I am most grateful to my noble friend for her opening remarks.

I thank Members of the Committee for their kind and welcoming comments. It is a pleasure for me to speak from the Front Bench. Obviously, I have to respond to quite a few points. I am very pleased that the consultation exercise was mentioned. When considering a consultation exercise, one does not want to look only at the numbers involved; it is also important to look at who has responded. Although the relatively low number of responses might reflect the overtly technical nature of the consultation, it was important that some umbrella organisations, such as the National Federation of ALMOs and the National Federation of Tenant Management Organisations, responded. The response from the umbrella organisations is very helpful in articulating consensus about the desire for this delegation. So although the number of responses was not high, the quality of the responses was very important.

We are delegating rights of audience and contracting out ASBO functions because, without the rights of representation, we would not be fully equipping housing management organisations to undertake all stages of an ASBO application, from inception through to the court hearing. At the moment, after collecting all the evidence necessary to make the ASBO application, HMOs have to revert back to their parent local authority for the case to be presented to the courts. Even where some HMO staff may have previously held the right of audience when employed by the local authority, by giving HMOs a right of audience in ASBO applications, we will further equip them to be able to deliver a more effective ASBO service.

On the question of whether size is important in handling the delegation effectively, we would expect a contracting-out authority to satisfy itself that an HMO was suitably equipped to take on the responsibilities. However, giving rights of audience does not of course mean that they will always be utilised. There may be cases where it is felt appropriate to use the local authority’s legal team for the more complex cases, as the noble Baroness suggested, or even to commission support from private solicitors. It is fair to say, however, that it may not be appropriate for smaller TMOs, which in any event are unlikely to be leading on delivery, to take on the broader responsibilities for anti-social behaviour. This is definitely the responsibility of the local authority.

How effective have ASBOs been, for example, with regard to registered social landlords? The recent NAO report showed that the Government’s approach to tackling anti-social behaviour is effective and that ASBOs represent part of a wider toolkit of anti-social behaviour interventions. They are a key contributory factor to deterring anti-social behaviour. In the NAO survey, the majority of people—65 per cent, I think—who received an anti-social behaviour intervention did not re-engage in anti-social behaviour, which brings vital respite to communities. It found that 65 per cent of people desisted from anti-social behaviour after the first intervention, which is obviously very important; that 85 per cent of people desisted after the second intervention; and that 93 per cent desisted after the third intervention. I am delighted to see from the NAO report that perceptions of anti-social behaviour have fallen significantly nationally and at an even greater rate in particular areas of action, such as the Trailblazer area and Action area. Monitoring local area success in tackling anti-social behaviour is improving and includes the introduction of local area agreements with a mandatory outcome to build respect and reduce anti-social behaviour. Local areas are making increasing use of the new interventions to tackle anti-social behaviour.

Members of the Committee raised the important issue of surveillance. Covert surveillance evidence will not always be needed to make an anti-social behaviour order application. However, in situations in which this type of intelligence-gathering is required, there are two options available for taking this forward. Section 28 of the Regulation of Investigatory Powers Act 2000 authorises the housing management organisation to use covert surveillance on its behalf on a case-by-case basis where it is considered to protect the community from anti-social behaviour.

The HMO cannot use covert surveillance: it would have to be the local authority. The local authority could authorise the HMO, but the HMO cannot do it itself.

Perhaps I may correct myself. I am grateful to the noble Viscount for pointing that out. Section 28 of the RIPA enables the local authority to undertake covert surveillance and to authorise a housing management organisation to use covert surveillance on its behalf on a case-by-case basis where it is considered to protect the community from anti-social behaviour. Alternatively, the HMO could revert back to its parent local authority, which could then gather evidence on its behalf. This evidence could be exchanged in line with the provision in Section 115 of the Crime and Disorder Act 1998, which authorises the sharing of such information for ASBO application purposes.

The noble Baroness, Lady Harris, asked about training. It is highly unlikely that any local authority would choose to contract out ASBO functions to a housing management organisation, where that organisation is not already responsible for delivering services to tackle anti-social behaviour, unless it were part of a wider transfer of responsibilities. We must remember that the ASBO is only one tool in the armoury. As I have already said, a housing management organisation can currently take action through the courts by using injunctions and tenancy measures, as well as being equipped to extend its responsibilities by pursuing ASBO applications once this order is agreed.

Critically, many of these organisations are already doing much of this evidence-gathering and case preparation. Many ALMO staff and some TMO staff, including those responsible for delivering anti-social behaviour services, will have transferred from the local authority at the point at which housing management services were contracted out. I am sure that noble Lords agree that it would be incorrect to assume that they are any less qualified to carry out their duties following a transfer. Importantly, however, we will make it explicit in guidance that local authorities should satisfy themselves as to the capacity of staff prior to contracting out. The specifics of any necessary training are best left to the stewardship of the local authority as a critical part of contracting-out functions. It is in the best interests of both the local authority and the HMO to ensure that staff are appropriately trained to perform these functions effectively.

We shall make it clear, as is already the case, that authorities institute robust and regular reporting and monitoring procedures to identify any problems as quickly as they emerge. That would normally be done through the existing channels of communication established between authorities and organisations managing their housing. HMOs will be under a duty to consult the local authority before making an application to the court, allowing the local authority to monitor case by case and pass any pertinent information on to the TMO. Through our regulatory impact assessment, we have undertaken to review the operation of the order in the two years after commencement.

I have already commented on the effectiveness of ASBOs, but they have been thoroughly examined on numerous occasions over the past few years, including by the Home Affairs Select Committee in April 2005. Specific areas of improvement have been identified and acted upon. Broadly speaking, practitioners, the communities they serve, and those communities’ representatives are happy with the policy, and it has been successful over the years as an essential tool for tackling anti-social behaviour. We are not complacent, however. We must also keep the policy under continuous internal review, and it was this process that identified, for example, the need to improve data collection.

I am grateful for the contributions to this debate. I am mindful that I might not have picked up all the points that I perhaps need to. In that case, I undertake to pursue them and to write to noble Lords. I am particularly grateful for the kind welcome that I have received. This is the first time we have sought to use the order-making powers of the Serious Organised Crime and Police Act 2005. There is clear justification for using the Act now to minimise operational constraints on tackling anti-social behaviour effectively. We intend to monitor the impact of contracting out, including through continued working with stakeholders.

On Question, Motion agreed to.

Industrial Training Levy (Engineering Construction Industry Training Board) Order 2007

rose to move, That the Grand Committee do report to the House that it has considered the Industrial Training Levy (Engineering Construction Industry Training Board) Order 2007. 8th Report from the Statutory Instruments Committee.

The noble Lord said: With the leave of the Committee, I shall speak to the Industrial Training Levy (Construction Industry Training Board) Order 2007 at the same time. The orders, which are broadly familiar to the Committee from previous years, seek authority for the Construction Industry Training Board and the Engineering Construction Industry Training Board to impose a levy on employers in the industries that they cover. First, I will set out the wider context. In 2002, we established the Skills for Business Network of 25 sector skills councils to ensure that employers have a strong voice to influence the provision of education and training in their respective sectors. The network is beginning to deliver real benefits, initially through the development of sector skills agreements and now by the establishment of national skills academies and the development of specialised diplomas for 14 to 19 year-olds. Recognising this, the recent report by the noble Lord, Lord Leitch, recommends the establishment of a new Commission for Employment and Skills, which will re-license and empower sector skills councils, giving them an enhanced role in driving up employer demand and investment, alongside a new universal adult careers service.

We have already promised that where both sides of the industry in a sector agree, we will help to set up a statutory framework for training that applies in that industry. The two industrial training boards, set up under the Industrial Training Act 1982, are models for the successful application of such frameworks. Their role is to ensure that the quantity and quality of training are adequate to meet the needs of the industries that they cover. They provide a wide range of services, including setting occupational standards, developing vocational qualifications, delivering apprenticeships and paying direct grants to employers who carry out training to approved standards.

The Construction Industry Training Board, in partnership with the CITB Northern Ireland and the Construction Industry Council, operates as ConstructionSkills, the sector skills council for the construction industry. It developed one of the first sector skills agreements, which now underpins every facet of the CITB’s operations. During the past year, it has maintained its position at the forefront of training developments by developing and launching one of the first three national skills academies. The engineering construction industry does not meet the minimum-size criteria for becoming a sector skills council. I am pleased to say, however, that it has received funding from the Sector Skills Development Agency to scope out its future role in the Skills for Business Network, and discussions on the nature of the ECITB’s future relationship with the Skills for Business Network are continuing. The board’s status as a valuable sector body was further recognised in 2005, when it won an award from Sector Skills Alliance Scotland as,

“the most effective Sector Skills Council or Sector Skills Body in Scotland”.

That is an excellent example of what can be achieved by a levy-funded body.

The Industrial Training Act contains provision for a levy on employers to finance a training board’s activities and to share the cost of training more evenly between companies across an industry. It is for the employer members of a board to make proposals for the rate of the levy for the industry that it covers and for the Secretary of State to make an order giving effect to the proposals. That is the purpose of the orders before us this evening. They give effect to proposals submitted to us for a levy to be collected by the CITB in 2007 and the ECITB in 2008. Both orders involve the imposition of a levy in excess of 1 per cent of payroll on some classes of employer. The Industrial Training Act requires such orders to be approved by the affirmative procedure of both Houses. In each case, the levies are based on employers’ payrolls and their use of sub-contract labour. For both boards, the proposals involve levy rates in excess of 0.2 per cent, with no exemption other than for small firms.

In such cases, a levy order can be made only if the proposals are necessary to encourage adequate training in the industry and if one of three conditions is satisfied. The first condition is that the proposals have the support of organisations representing more than half the employers, who together are likely to pay the majority of the levy. The proposals from the CITB meet that condition. The ECITB proposals are supported by the industry’s employer organisations. However, those organisations currently represent slightly fewer than half the employers, although together those employers are likely to pay the vast majority of the levy. The first condition has therefore not been met fully in the case of the ECITB. In this case, an order can be made only if one of the other two conditions is satisfied.

The second condition is that the order is made less than two years after the making of a former levy order giving effect to proposals in respect of which the first condition was satisfied. There is also a third condition, which is that a Minister considers that the levy is necessary to encourage training in the industry. However, it has not been necessary to invoke this third condition, as an order was made in 2006 that had the support of the employer associations, and at that time, they represented more than half the employers. Those employers also paid the majority of the levy. That means that for the current proposals, the second condition is satisfied in respect of the ECITB.

The Act requires the industrial training boards to exclude small firms from the levy but does not set a minimum size threshold. Each of the proposals sets a level that the industry considers to be appropriate. However, employers who fall below the threshold are not precluded from benefiting from grants and other support from the boards, and many of them do so. In the order before the Committee, the CITB proposes that both its levy rates should stay the same as those approved by the House last year. The rates will be 0.5 per cent of payroll for direct employees, and 1.5 per cent of net expenditure on sub-contract labour. Employers whose combined payroll and net expenditure on sub-contract labour is less than £73,000 will not have to pay the levy. That is an increase from last year’s threshold of £69,000, to reflect wage inflation. The level equates to an employer who employs three people full time throughout the year, and 43 per cent of employers come into that category. A further 22 per cent of employers will not be assessed for, or will not pay, the levy for other reasons; for example, if they are in their first year of registration with the CITB or if they have ceased trading. That means that around 65 per cent of employers will not actually be required to pay the levy.

The higher levy rate on sub-contract labour is because, according to the industry, the vast majority of training is carried out by employers with a directly employed labour force. Employers who opt to use sub-contract labour tend to have a transitory arrangement with their sub-contractors and are not normally involved in their training. It is encouraging to see that large contractors, who use significant amounts of sub-contract labour, are recognising their responsibility to contribute more than just cash to tackle the skill shortages in the industry. Through the CITB’s ConstructionSkills programme-led Pathways initiative, large contractors have initiated action to encourage firms in their supply chains to recruit and train apprentices.

The ECITB also proposes to make no changes to last year’s rates. For sites, the rate will be 1.5 per cent of total payroll and net expenditure on sub-contract labour. Contractors whose combined payroll and net expenditure on sub-contract labour is £275,000 or less will not have to pay the levy. The level is unchanged from last year, and it equates to an employer who employs 15 to 20 persons full time throughout the year. It is expected that 40 per cent of sites will be exempted. For head offices, the rate will be 0.18 per cent of the total of payroll and net expenditure on sub-contract labour. Head offices whose combined payroll and net expenditure on sub-contract labour is £1 million or less will not have to pay the levy. This level is also unchanged from last year, and it equates to an employer who employs around 40 persons full time throughout the year. It is expected that 76 per cent of head offices will be exempted.

The proposals are expected to raise between £160 million and £165 million for the CITB and between £12 million and £13 million for the ECITB, which covers a much smaller industry. It is worth pointing out that the CITB currently returns £1.88 in direct and indirect training support for every £1 levy received. For the ECITB, the figure is £2.19.

I hope that I have adequately explained the orders. The Committee will know from our annual debates that the CITB and the ECITB exist because of the support that they receive from employers and employer interest groups in their sectors. There is a firm belief that without them there would be a serious deterioration in the quantity and quality of training in these vital industries, leading to a deficiency in skill levels. That was confirmed by reviews of both boards carried out by my department in 2003, which found that the principle of the levy is still strongly supported in both industries. The boards’ own annual employer surveys also demonstrate continued strong support for the principle of a levy system. The orders that we are considering will enable the two boards to carry out their vital training responsibilities in 2007. It is in that spirit that I warmly commend the orders to the Committee.

Moved, That the Grand Committee do report to the House that it has considered the Industrial Training Levy (Engineering Construction Industry Training Board) Order 2007. 8th Report from the Statutory Instruments Committee.—(Lord Adonis.)

I thank the Minister for his explanation of the changes that are currently being made to the process of approving the two levies. Although the debates approving the continuation of the levies have been useful in the past for highlighting concerns about the provision of training for these skills, we appreciate that the annual confirmation of the levy lays a burden on the affected industries, and we are glad that it will be reduced when the Further Education and Training Bill passes through both Houses.

As the Leitch report made clear, we are facing a skills crisis among our workforce that is only going to get worse. Unskilled manufacturing jobs are being lost, and a growing number of skilled jobs are becoming available. The provision of skills training is therefore critical, and is going to become even more so. We cannot rely on skilled immigration, especially as other EU counties start to open their job markets to recent entrants, and nor would we want to. The levies are an important tool in training provision. I am glad that they continue to enjoy the support of the relevant industry federations, but I hope that the decline that was noted last year in the number of firms joining the federations has been reversed. The involvement and support of local employers is necessary to make sure that courses are relevant and rigorous. We are pleased at the decision of the film industry to initiate a levy on its members to finance training for its workforce, and we hope that success there will cause other industries to consider taking the same step. Voluntary levies are a reassuring sign that employers are getting involved in training their workforces.

The annual report of the Adult Learning Inspectorate made clear how important that involvement is when it highlighted the failings of the programme-led apprenticeships that remain in the engineering sector. It noted that students coming out of the course without on-the-job experience were unable to handle the tight deadlines and rigorous standards that apply in the workplace. That is why we must increase employer involvement at every level, from strategy and course development at the top to assessment and work experience at the local level. The annual report also highlighted the worrying number of students dropping out of apprenticeships before fully qualifying. Only about half of construction apprentices are successful, and the figures for engineering are not much better. However, those figures are a rapid improvement on past years, so I hope that when we next debate the levies we will be able congratulate the providers on better statistics.

Another worrying statistic in the report is the lack of students who progress to level 3 skills; fewer than a third go on to further skills development. The inspectorate raised the possibility that if this state of affairs were to continue, the accepted standard of competency would fall to a level 2 qualification. Many things contribute to the failure to raise the skills level of so many construction workers, including the difficulty of finding funding for those over 19 years old. One of them is certainly the lack of industry incentives to attain higher level qualifications. I hope that the report will motivate a change here and that employers will learn to appreciate the benefits that come from a higher skilled workforce and will continue to support their employees through further training. A lack of level 3 skilled workers will not only cause problems for firms currently looking to hire, but will also cause long-running difficulties in recruiting supervisors, teachers and assessors, with consequences for both training provision and the long-term health of the industry.

Notwithstanding all that I have said, we welcome the orders. Despite the problems evident in reports and surveys on the provision of skills training, the sectors are improving, and are doing so rapidly in many cases. We wish them well.

I, too, thank the Minister for introducing the two orders. We have them every year, and every year we on these Benches reiterate that we support them. In this case, I have no wish to depart from that tradition.

The industry is distinguished by consisting of a small number of very large organisations and a large number of very small ones, and a great deal of contracting out. Those arrangements ensure that very few organisations can get away with being freeloaders in terms of training and paying for it.

I have two concerns, both of which have been alluded to by the noble Baroness, Lady Morris of Bolton. The first is the validity of the consultation in the case of the engineering construction order. Although the consultation took place and the proposals were supported by the main employer organisations, they now represent less than half the employers. I noted that last year the percentage dropped from 58 to 50 per cent, and this year it has gone down to 48 per cent. Clearly, it is a continuing trend. I wonder what the Government do to get the views of the other organisations, which do not belong to the federations and which are not consulted on these matters. In view of the fact that 83 per cent of the total levy is likely to be paid by those who did respond to the consultation, we cannot say that the consultation was totally invalid, but it is worrying.

The second issue is the number of apprenticeships that are not completed. I know that it is the industry’s view that a full, proper apprenticeship is up to an NVQ level 3. Yet a large number of apprentices either stop at level 2 or do not even get that far. That is particularly worrying. I think that it has something to do with the fact that the Learning and Skills Council funds up to the age of 19. Many of them have only got as far as level 2 at that stage, and do not go on to level 3 because the funding is not available and employers are not willing to spend the money on it.

In the light of the Government’s proposals following the Leitch report, and the Further Education and Training Bill that is currently before your Lordships’ House, can the Minister draw our attention to anything that is likely to improve that situation because it is vital that young people improve their skills in those two important industries?

Last year, when these orders were before us my noble friend Lady Sharp, who is not in her place today, made two suggestions. One was that part of the problem is the difficulty of getting work placements from small and medium-sized businesses. She suggested that the Government might consider giving some incentives to small and medium-sized businesses to offer these important placements where young people could get experience. I do not believe that the noble Lord, Lord Davies of Oldham, responded to that point on that occasion. I do not know whether the noble Lord, Lord Adonis, can reassure us that something is being done to encourage the smaller firms to provide those important training places.

The Government are large commissioners of building and construction projects. My noble friend Lady Sharp suggested that perhaps the Government would give some consideration to making it a stipulation of the contracts that apprentices should be properly qualified if they are to work on contracts. I think of the Building Schools for the Future programme as one example of where that might be done.

The response of the noble Lord, Lord Davies of Oldham, at that time was that those things are very competititve and it would put the price up. We all want high quality work, and at the same time we want to develop the skills of our young people. The Government are in a position to do something about that. I wonder whether the Minister has a different view from his colleague, or whether the situation has moved on, because the Government are now focusing much more on the important area of developing the skills of the young people of this country, and they might consider using their leverage in whatever way they can to ensure that is done. Those are my two areas of concern. I hope that the Minister can reassure me on them.

I hope that the noble Lord, Lord Adonis, got the letter that I sent him yesterday. I want to raise a specific point, and he may not have an answer, but I hope that I am not too late. I am very sad, because I tried to give him notice yesterday, and if the letter has not arrived it is a great pity. It is not a constituency point because we do not have constituencies in this House. Anyone who lives in north Norfolk, as I do, cannot fail to know about the Bircham Newton national college. That is what I wrote to the Minister about. The press said that it was going to be closed down today; I hope that the press is wrong. It is an old RAF airfield that has been converted into the National Construction College; it is not the only one, but it is the main one. As the noble Baroness, Lady Morris, said, surely at this point in time we need all the skilled people in the construction industry that we can get, not only in the basic trades, but crane drivers and people who can deal with heights and that sort of thing. The college does all that.

The difficulty about it is this; it still houses the students in the World War Two-era staff accommodation for the RAF, which is extremely unsatisfactory from the students’ point of view. People might not be there for very long, but possibly one of the reasons that it is not used to the extent that it should be is that employers do not want to send their trainees to a place where the facilities are not up to the standard that one would expect. It needs a bit of money. The noble Lord told us that the levy, which I know is an annual event, will raise a certain amount of money this year. Is there any hope that the board might spend a bit of that money on bringing up to date the residential accommodation for the people who go to that college? If it did, it would be very much more attractive. All the other facilities are there; the skills are there, the equipment is there and all the machinery is there. It would be the greatest possible tragedy if all those facilities and skills were lost. After all, it provides alternative tertiary education for those who want to learn manual skills as opposed to academic skills.

I am told by the cabinet member for Norfolk County Council that the college employs 200 people. In that part of north Norfolk, that is no small thing, because there are not very many other sources of employment. There is a bit of fishing, there is agriculture, if anyone ever employs anyone in agriculture any more, and there is tourism. There is that large college, and there are presumably highly skilled people who are there to train the students. It would be a tragedy if that were lost. The reason why there is a doubt about the future of this place is because of the standard of accommodation.

I suppose the Minister cannot tell me whether a decision has been taken today to close the college down. I hope not. If it has not, could minds be applied to the point I made about the standard of accommodation, because it would be a real tragedy if a place of such significance was to disappear for the sake of not very many millions of pounds for refurbishment of the accommodation? The noble Lord cannot be expected to answer the question today, because if he did not get my letter he will not know what I am talking about. Nevertheless, perhaps he will look into it; I am sure that he will. It is important that a place of this calibre should not be lost to the CITB.

I thank my noble friend the Minister for his comprehensive remarks when he spoke to the orders. We also heard concerned speeches from the other side of the Committee regarding training and employment. Do these orders signal that Her Majesty’s Government believe that they will be of great help to Britain’s manufacturing industries? Are the orders designed to support, enhance and encourage what now remains of Britain’s manufacturing? I would like to think that the orders will bring forth more and better quality apprenticeships and that there will be more effective skills training, which will enable our manufacturing industries, such as remain, to cope with very severe global competition. Our percentage of GDP with regard to manufacturing is slipping each year.

I note that in the Explanatory Notes, reference is made to the Industrial Training Act 1982. As it happens, in another place I had responsibility in the then-Opposition for employment and training. Opposite me was the Minister, the late Peter Morrison, Member of Parliament for Chester, and speaking for the Liberal Democrats was the rather famous Cyril Smith. In our debates on that Act and on the orders for the amalgamation of various training boards, great concern was expressed for the future of skills training, apprenticeships and manufacturing. Here we are, a quarter of a century later, telling each other of our concern for skills training and apprenticeships and of the need for Britain to have those skills to cope. I dare say I shall be able to hear the Minister tell me that it is a priority of our Government that Britain should retain and develop a manufacturing base.

The Minister may recollect my references in a Second Reading debate not too long ago to the great British aerospace industry, which is arguably the last sizable industry of skills remaining in our country. I assume that the orders are designed to promote that great industry, which earns billions of pounds by exports every year, now some £6 billion. It is not for me to detail the difficulties of Airbus and BAE. I look forward to hearing the Minister’s response on that matter.

Lastly, we have heard the plea from north Norfolk for Bircham Newton college. It was not a constituency speech; there was not one. The noble Lord will recollect that that college is but a mile, as the crow—or the buzzard of north Norfolk, for that matter—flies from Bircham Windmill, which is a notable tourist spot in the rather empty and beautiful north Norfolk. I wish him well in his objectives, and I look forward to hearing a strong voice of commitment to British manufacturing.

I greatly regret that I did not receive the letter from the noble Viscount, Lord Colville. I will, of course, respond to it fully. However, he underestimates the brilliance of my officials, who have been able to pass me a good deal of information about Bircham Newton that I hope will address most of the points that he made. I will amplify my answers in the letter that I will send to him.

It is important to explain the background to the issues faced by Bircham Newton college. As the noble Viscount rightly said, the facilities at Bircham Newton are in need of substantial renovation in order to comply with current legal and other requirements. It simply will not meet the requirements unless it is modernised. The sum of money at stake is quite large: it is estimated to be about £15 million. The CITB had planned to fund this, partly by selling off unneeded parts of the site for housing development, and it applied for planning permission to the local authority for this purpose. The planning authority refused that planning permission, and the CITB appealed to the Department for Communities and Local Government. The DCLG planning inspector rejected the appeal, despite letters of support emphasising the national importance of the college both for my departments and for those of the DTI. We did our utmost to support what appeared to be a thoroughly credible proposal for raising the funding, but the planning system took its proper course and the proposal was not accepted.

This has left the CITB with the major challenge of Bircham Newton college’s future. The college has not closed. The noble Viscount may have been informed that the CITB was meeting today. That is correct: the CITB met today to consider options. No decision to close the college has been taken, and I am informed that the CITB has been invited to set up a working group to consider options, with a report due in October. I cannot say with absolute certainty whether the CITB adopted that proposal, but I am told that that was very likely. I will see that the noble Viscount’s comments are drawn to the attention of the CITB and the working party as they conduct that review with a view to a report in October. I am told that the options do indeed range from complete closure—I should be quite frank about that; that is a serious option on the table—to other options that might enable the college to continue. The sums of money at stake are, however, substantial, and the CITB will have to weigh up all these issues.

The noble Baroness, Lady Walmsley, rightly drew attention to the fact that the CITB now represents under 50 per cent of employers. She said that consultation had shown that there was still significant support, but she also drew attention to the fact that the number of very large employers was very small. As she rightly said, however, although the employers who are members of the board now constitute only 48 per cent of leviable employers—that is, they are beneath the 50 per cent threshold, hence the need to go to the second condition to invoke the power to set the levy—together they are likely to pay 86 per cent of the total levy, which further justifies our decision to proceed with the levy request, even though the figure is under the 50 per cent threshold. I noted that the noble Baroness supported our taking that step because of the importance of training in this industry.

The noble Baronesses, Lady Walmsley and Lady Morris, talked about apprenticeship completion rates. They are quite right to draw attention to the fact that, historically, completion rates have not been satisfactory; they have been at the 50 per cent level, as the noble Baroness said, and are not what should be achieved. I am glad to say, however, that there has been a significant improvement in completion rates. Under the CITB-ConstructionsSkills managing agency, completion rates are now running at 65 per cent, which is a huge improvement on the 2003 figure, which was as low as 29 per cent. We have set a target to increase the number of completions to 75 per cent by 2008, and the CITB is working with further education colleges to enable the key skills tests to be taken earlier in the apprenticeship, which we hope will also lead to higher-end completion rates. We believe that the programme-led “Pathways” initiative will also contribute significantly to an improvement in the completion rates by providing college-based apprentices with the opportunity to acquire site experience, which is a requirement to complete their apprenticeships. Participants in the programme-led “Pathways” initiative tend to be older, and older participants tend to be more likely to complete their apprenticeship framework. We therefore hope that the 75 per cent target that we have set, which will be a welcome further improvement on the 65 per cent completion rate, will ensure that we have a better story to tell.

The noble Baroness, Lady Morris, drew attention to the provisions of the Further Education and Training Bill, which will, we hope, streamline the procedures, including the necessity for our annual debate in Grand Committee. Under the existing Industrial Training Act, industrial training boards,

“may from time to time submit to the Secretary of State proposals for the raising and collection of a levy”.

The Act does not specify any set frequency, but it has become normal for each ITB to submit such proposals annually. The Further Education and Training Bill will enable ITBs to submit proposals for levies only every three years, with provision, should economic or other external circumstances change significantly, for a board to come back to a Minister to change its order. There is general consensus that this is a more satisfactory regime than the one that we have at the moment.

I entirely concur with what my noble friend Lord Jones said about the importance of the manufacturing industry, and perhaps I may pay tribute to the work that he has done in this area, not least his own services to the aerospace industry. The manufacturing industry, as he knows, is not directly covered by the orders, but we hope that the good example that is being set in these sectors will be taken account of in other sectors, including the vital sectors that he highlighted. I completely concur with the view that we still need more level-3 work and high levels of training and achievement. Nonetheless, they are significant agents of training in these sectors. The £148 million that the levy raised in 2006 paid for, among other things, 40,000 apprentices; grants to 20,000 employers to train their workforce; 9,500 visits to small businesses to help them to identify and address their training needs; and a marketing programme to encourage young people to consider a career in the industry, which contributed to more than 20,000 online applications for apprenticeships. The £11 million levy income, which the levy generates for the ECITB, led last year to there being 1,250 apprentices in training, 2,900 units of craft training for existing workers and for new-entrant adults, leading to 108 level-2 and 500 level-3 and level-4 units, supervisory and project management training for 1,300 people, and a new programme of 1,100 discretionary grants for employer-specified training. I could go on. A substantial body of training is made possible by the sums raised by the levies, and we therefore strongly support their continuation.

The noble Baroness, Lady Morris, talked about the extension of levies to other industries. As she rightly said, our recent White Paper stated that,

“where both sides of industry in a sector agree, we will help to set up a statutory framework for training”,

which could lead to our approach towards these industries being extended to others. I am glad to say that, as the noble Baroness mentioned, the film industry has expressed a positive interest. Consultation with employer organisations and other partners in the film industry showed unanimous support—to secure unanimous support in such an industry is, I suspect, quite a high hurdle—to work with the Government to set up an ITB that will have the powers to raise a training levy. My officials are preparing an order that will establish a film ITB for England and Wales, which will be brought to Parliament for approval later this year. We see this as a significant step in the direction that Leitch set out.

I am afraid that, like my noble friend Lord Davies, I am unable to give the noble Baroness, Lady Walmsley, an immediate response on her point about small and medium-sized enterprises, which are vital areas for the two training boards. I am sure I have a good catalogue of measures that they support that I can tell her about, but I shall have to do so in writing.

On Question, Motion agreed to.

Industrial Training Levy (Construction Industry Training Board) Order 2007

rose to move, That the Grand Committee do report to the House that it has considered the Industrial Training Levy (Construction Industry Training Board) Order 2007. 8th Report from the Statutory Instruments Committee.

Moved, That the Grand Committee do report to the House that it has considered the Industrial Training Levy (Construction Industry Training Board) Order 2007. 8th Report from the Statutory Instruments Committee.—(Lord Adonis.)

On Question, Motion agreed to.

Mental Capacity Act 2005 (Loss of Capacity during Research Project) (England) Regulations 2007

rose to move, That the Grand Committee do report to the House that it has considered the Mental Capacity Act 2005 (Loss of Capacity during Research Project) (England) Regulations 2007. 6th Report from the Statutory Instruments Committee.

The noble Lord said: These regulations make transitional arrangements to ease the introduction of new safeguards relating to research involving people who lack capacity to consent. The Mental Capacity Act 2005 provides a statutory framework for people who lack capacity: those who cannot make their own decisions because of an impairment or disturbance of the mind or brain, for instance, dementia, brain injury or mental health problems. The Act includes a statutory framework for research involving people who lack capacity to consent to their participation. The provisions in Sections 30 to 34 of the Act balance the importance of properly conducted research into the treatment and care of people who lack capacity with the need to protect their interests and respect their current and previously expressed wishes and feelings. The Act applies to research that is defined as intrusive, which would normally require a person’s consent in order to be lawful—for example, their consent to the taking of blood during a medical check-up which is part of a research project. The Act applies to a wide range of research into treatment and care and is particularly relevant to health and social care research. The Act does not cover clinical trials of medicines, which are governed by separate regulations that implement EU directives.

The Act requires the researcher to obtain approval from an appropriate body: a properly recognised research ethics committee, as defined in separate regulations made on 19 December 2006. The committee must be satisfied that the research project meets certain requirements set out in the Act: that it is necessary, safe and cannot be done as effectively using people who have mental capacity. It must also be satisfied that arrangements are in place to consult a suitable person, as set out in the Act, about the participant’s previous wishes and feelings and to ensure the participant’s safety. If the person says no, or shows any sign of distress or dissent, the researcher must not include them. The person can also change his mind at any time.

The general policy intent of these regulations was signalled during the passage of the Act and was prompted by points made by noble Lords. The Government recognise the importance of a smooth transition to the new arrangements to give protection to people without capacity without stopping long-term research studies or causing unnecessary bureaucracy for researchers or research ethics committees. Noble Lords will be aware of a number of extremely important long-term health studies that track thousands of people over many years or decades. An example is the outstanding Whitehall study of 10,000 civil servants to study links between work, lifestyle and heart disease. It is of profound importance and has had a great impact on public health issues. It is essential that it continues. In it, people do not have capacity to consent to participate. They attend regular check-ups, perhaps annually, and provide health information and blood samples. Between the check-ups, researchers analyse the information and the blood samples in the laboratory. There may also be links to the patients’ medical records, perhaps identifying particular diagnoses, such as heart disease or angina. Over time, some of the participants may suffer injury or ill health and lose the capacity to consent to check-ups carried out as part of the research or to the collection of data from their medical records.

When the Act is fully in force in October this year, researchers will need to comply with the arrangements that I have described. If they cannot comply with them—approval by a research ethics committee, consultation with an appropriate person and the other protections—they will have to withdraw the person from further medical check-ups as part of the study.

However, we have used powers in Section 34 to make these regulations enabling researchers in certain circumstances to continue research on the information and blood samples taken before the person lost capacity. We have listened carefully to the debate in Parliament and to the views of research groups, such as the MRC and the Wellcome Trust, about the status of consent given by a person with capacity. When we developed the process for consultation, we took full account of those views. We are proposing a mechanism that allows researchers to continue research where the Act would otherwise have applied if a person has consented to participate in an existing study and then loses capacity. This transitional easement applies only to information and material that was collected prior to the person’s loss of capacity. It does not cover any new intervention or collection of any new material. If a researcher wants to take more samples or carry out another health check, he will have to meet the full requirements of the Act. It applies only where the research was started before 1 October 2007 and the person in question consented to take part in it before 31 March 2008.

I should explain that although the regulations are transitional, they will have a long-term effect. I reiterate that they apply only when before 31 March 2008 a person consented to take part in a research project that started before 1 October 2007. They allow for projects that have started when the Act comes into force but have not finished recruiting participants. As long as those conditions are met, the regulations will apply regardless of when the person loses capacity. So a person could join an existing study in October 2007 or January 2008 and lose capacity in the 2020s, and, if the study is continuing, the regulations would apply.

Regulation 3 states that in cases where the regulations apply a researcher can continue to use information obtained before loss of capacity if he satisfies the requirements set out in Schedules 1 and 2. “Information” means “data” as defined in the Data Protection Act, or material containing “human cells or human DNA”. Schedule 1 requires that the research ethics committee has approved a protocol and is satisfied that there are suitable arrangements for complying with it. We see a central role for the expertise on research ethics committees to make judgments about what is appropriate for different types of research. Schedule 2 sets out what the researcher needs to put in place when he becomes aware that a participant has lost the capacity to consent. The schedule repeats the relevant safeguards from Section 32 and 33 of the Act, which mean that a suitable consultee who cares for the person or is interested in his welfare must be identified and given information about the project. He will be asked to advise on whether the person would want the samples or data already taken to continue to be used in the research in line with the arrangements set out in the protocol. The consultee will be expected to consider the facts that the person without capacity would originally have consented to take part and that that should be a powerful indication of his wishes and feelings at that time.

However, they might also be aware of other factors relevant to the decision, such as other views made known by the person who now lacks capacity. The researcher must also respect the wishes and feelings expressed by the persons themselves. They must not do anything which contradicts any advance statement of wishes of which the researcher knows and must not continue if the person indicates in any way that he has an objection. The interests of the person must be assumed to outweigh the interests of science and of society.

On a practical note, the Government have made clear to the research community that there is not a new duty to monitor the capacity of all the research subjects continually. It must be assumed, in keeping with Section 2 of the Act, that a person has capacity unless shown otherwise. If, however, information becomes known to the researcher—perhaps through contact from next of kin, direct observation or from other medical diagnoses—they will need to apply the protocol.

I am aware that researchers and research ethics committees need further advice and guidance on how to apply the Mental Capacity Act. We shall be including a chapter on research in the Mental Capacity Act code of practice that will shortly be laid before Parliament. We are also working with the Central Office of Research Ethics Committees to provide guidance and training materials.

The transitional provisions are intended to help researchers on existing projects with the transition to the new requirements of the Act. I remember the debates in which I participated when the Mental Capacity Bill was debated in 2005. We must of course have safeguards, but it is absolutely essential to reflect on the challenges facing eminent researchers who bring a responsible and strong ethos to the conduct of research. We do not want to erect barriers which may be difficult for them to meet. The transitional regulations before the Committee reflect that balance in the best possible way, and I commend them to your Lordships. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Mental Capacity Act 2005 (Loss of Capacity during Research Project) (England) Regulations 2007. 6th Report from the Statutory Instruments Committee.—(Lord Hunt of Kings Heath.)

I thank the Minister for explaining the purport and effect of the regulations. I immediately add that they are not controversial; indeed, I give them my general support.

I have a few questions, however. Will the Minister confirm that the main concession to researchers embodied in these regulations is around the minimisation of bureaucracy in a case where a long-term study is being carried out which commences before October this year? As I understand it, if one of the subjects of such a study were to lose capacity halfway through and the full provisions of the Act were to apply, that study—or that part of it, at least—would have to be stopped. As it is, under the transitional regulations before us, any samples or findings collected from the project before P’s loss of capacity could still be used. I hope I am right about that.

There is another issue about which I am not clear, which concerns the protocols being developed. The Act says that the only sort of research that may be carried out on a person lacking capacity is that connected with an impairing condition affecting that person or its treatment: those provisions are in Section 31. There may be research projects that find themselves covered by these regulations which do not relate to the impairment or the disturbance in the functioning of the mind or brain. I understand that, if one of the subjects of a research project like that loses capacity and the researchers then wish to gather new samples or information from them, they would have to follow the provisions laid down in the Act. Will any allowance be made in the protocols to permit fresh interventions where these are not connected to a project relating to the impairment of the mind or brain? In other words, would all new interventions in a Whitehall-type study be automatically ruled ineligible for approval, or will the protocols allow for them if a suitable case can be made to the research ethics committee and the carer agrees?

Secondly, could the Minister comment on what status a consent by a participant in a research project would have if that consent explicitly anticipates loss of capacity? As I understand it, it would not over-ride the need to go back to the research ethics committee if they lost capacity and the researchers wished to carry out new interventions or to collect new data. Would the consent be likely to carry special weight with a research ethics committee in comparison, say, with a statement from a third party about the reported wishes and feelings of the person? In other words, would it now be prudent for all researchers engaged in long-term studies commencing prior to October 2007 to obtain consent in a form that anticipates the possible loss of capacity, or would it make no difference what form the consent took?

On a factual point, can the Minister tell me how many long-term studies and how many research participants these regulations are likely to cover? Is it possible to answer that question even approximately? On a point of interpretation, what sort of principles will underpin the guidance to be issued by the Secretary of State under Schedule 2(2) on who can be nominated as a representative of a person who has lost capacity?

Finally, on the vexed issue of fluctuating capacity, what would happen if one of the subjects in a research project covered by the regulations lost capacity but then regained it? There are some syndromes—delirium during infections, for example—where fluctuations can take place on a daily basis. The same can happen where someone is suffering from drug toxicity. One could also imagine someone with Alzheimer’s whose state of mental incapacity is reversed by medication. In circumstances like these, what are the obligations placed on a research team, and will proper guidance be given to cover those situations? Where a research ethics committee has declined to give consent for new interventions on a person who has lost capacity, and that person subsequently regains capacity and renews his consent, what happens then? These are, I believe, sensible, transitional provisions which strike a good balance between protecting the interests of people who lose capacity and those of researchers, and they have my support.

I, too, thank the Minister for his clear explanation of these interim regulations and we on these Benches are broadly happy with this sensible set of what are almost tidying-up transitional regulations. However, like the noble Earl, Lord Howe, I have a few questions and doubts, which I will go through as quickly as possible because I know that we are running late. First, given that we have had to look at this without the code of practice, it would be good to know when the code of practice for the Mental Capacity Act 2005 will be laid before Parliament, especially the research guidance. The Minister in another place said that it would be before 1 October 2007, but it would be good to have a little more clarity. It would also be good to see it a little sooner than that.

Secondly, there are real questions around the nominated person. Schedule 2(6) says that the nominated person,

“must ensure that nothing is done in relation to [the person or subject] in the course of the research which would be contrary to … an advance decision of his which has effect, or … any other form of statement made by him and not subsequently withdrawn”,

which I think addresses part of the question asked by the noble Earl, Lord Howe. Tim Loughton in another place rightly asked what culpability attaches to the nominated person if those considerations are breached unwittingly. It is very complicated because it is really unclear who can act as a nominated person.

Schedule 2(1), the relevant section, reads that the researcher,

“must take reasonable steps to identify a person who … otherwise than in a professional capacity or for remuneration, is engaged in caring for P or is interested in P’s welfare, and … is prepared to be consulted [by the researcher] under this Schedule”.

It is unclear, because how close a caring connection or how well the nominated person knows the person is not specified at all. Section 2 allows the researcher to nominate someone who is prepared to be consulted by the researcher under this schedule and has no connection with the project, but that could, as stated, be more or less anyone.

We all share the Government’s view that research already ongoing to which the patient has consented hitherto should not be unnecessarily stopped or interfered with. Many of us also agree that the interests of the patient must be assumed to outweigh those of science and society. But if we are talking about the loss of capacity, people change.

The work of Jennifer Radden, the distinguished American philosopher at the University of Massachusetts, teaches us to ask what kind of person someone who has lost capacity becomes. Most of us find it difficult to imagine that we might become very different if, for instance, we suffered from Alzheimer’s. We might be quite content—as we certainly would not be now—to say “Good Morning” to the cat 1,000 times a day. For that reason, it is important that the nominated person has real knowledge of the person concerned and, ideally, was nominated by them before capacity was lost so that they have real knowledge of how they felt.

The question of the professional consultees in paragraph 2 of Schedule 2 remains an issue, as respondents to the consultation suggested. It would be good to hear when the Government will issue their statutory guidance on professional consultees, given that the Explanatory Memorandum tells us only that it will be “at a later stage”.

Questions about who a nominated person or a relative might be were asked during discussions on the Mental Health Bill. Members on these Benches would have grave reservations if the patient who temporarily lacked capacity was not allowed to nominate, within reason, someone other than their nearest relative. In the case that we are discussing, where loss of capacity is permanent, although the consequences are obviously much less serious, the nominated person is appointed much more casually. I hope that the Minister will reflect on why the contrast between the Government’s two positions is so great.

My honourable friend in another place, John Pugh, asked about an audit of the research. I realise that this is a relatively short-term transitional set of regulations for research that starts before October 2007 and is consented to before March 2008, but some of these research projects, such as Sir Michael Marmot’s long-term Whitehall civil servants studies, or studies following groups of children from birth, are very long. People who lack capacity can change. Where is the audit of the views of their carers in these long-term studies?

Taking those questions and caveats into account, however, I am broadly content with these regulations.

I thank the noble Earl and the noble Baroness for their constructive comments and general welcome for the transitional regulations, which I believe constitute a balanced approach to difficult issues and ensure that the rights of participants are fully protected when they lose capacity and that this very important research continues.

The noble Earl, Lord Howe, correctly described the intent of the regulations. He was right to stress that the only samples that could be used are those that were given before capacity was lost. It is important to restate that point. He then asked what would happen if further samples were required. There is no question but that that will fall under the main provisions of the Act. That is a very strong safeguard in terms of how the measure will operate in the future. We are talking about samples that were given with consent before the person concerned lost their capacity. We are talking about the availability of samples that already exist up to the point that capacity is lost.

The noble Earl, Lord Howe, asked about the numbers involved. I have a very long list which I am happy to send to him. However, I refer to the three national birth cohorts who have reached adulthood, which started in 1946; the 1958 birth cohort study; the 1970 British cohort study; the Avon longitudinal study of parents and children—14,000 children in the Bristol area; the millennium cohort study—19,000 babies born between 1 September 2000 and 31 August 2001; the Aberdeen children; the Southampton women’s survey; and the Whitehall and Whitehall II surveys. There are about 20 studies, so we are talking about a lot of people. In a sense, that reflects two things: the importance of what we are talking about; and the need to balance safeguards with the avoidance of bureaucracy. If there were a requirement to go back to each person, that would be very difficult to do. That is why the Wellcome Trust, other bodies, and the noble Lord, Lord Turnberg, were so concerned about that matter.

I well understand that there are substantive issues to do with consulting, which is a very important matter. It was considered in detail during the passage of the Act. As the noble Baroness, Lady Neuberger, said, Section 32 requires that a researcher must take steps to identify someone who cares for the person or is interested in their welfare, except in a professional capacity, and who is willing to be consulted about the person’s participation in a research project. If this is not possible, the researcher must nominate a third party unconnected with the research who is willing to act as a consultee. That person—here is the safeguard—must be identified in accordance with guidance issued by the Secretary of State. Section 32(3) states that a person consulted must have,

“no connection with the project”.

That must be right.

On the substantive points, the Secretary of State’s guidance—as foreseen in Section 32(3)—will spell out what sort of connection we mean. I take the points that were made about that, but we must also avoid an incredibly bureaucratic approach. I am thinking about our forthcoming debate on the nearest relative in the Mental Health Bill, in which it is made very explicit who is considered the nearest relative. Noble Lords may wish to change that. However, I do not think that there is a case for having such an explicit requirement for the matters that we are considering now. We shall issue guidance. I shall, of course, take account of noble Lords’ communications with me and of the debate held here and in the other place about issues that ought to be included in that guidance. I cannot say exactly when the guidance will be issued, but if I find out, I shall communicate it to noble Lords.

On fluctuating capacity, it is clear to me that the transitional provisions will come into play if at any point it becomes clear to the researcher that a person has lost capacity. I imagine that it would be difficult to anticipate at that point—we have debated anticipating benefit and other matters—whether that person would continue to be without capacity or whether it would fluctuate. However, the provisions dig in the moment the researcher becomes aware that the person has lost capacity. As I said, there will be guidance to consultees about what happens when a person has no family and when it is not obvious whom the researcher should contact.

I am clear that the provisions of the Act must apply in full to new interventions and new invasive procedures. There are no provisions under the Act that make any exceptions to this rule, and nor should there be. Will consent before loss of capacity carry special weight? Both under the Act and under these regulations, a researcher must consult a person about the participant’s wishes and feelings; that is, what they would have been in the consultee’s opinion. Prior consent here must be a good indicator of this, although other factors or subsequent changes of mind may be relevant. For instance, animal research was mentioned in the other place. It was suggested that the person consulted might have an ethical objection to animal research and that they understood that the research with the person who had lost capacity had some connection with animal research. We cannot anticipate all these matters. However, I imagine that if the person had originally made it clear that they gave consent and were very happy with the research, but the person consulted knew that the person was violently opposed to animal research but may not have known that it would be undertaken at the time of giving consent, that would be a powerful indicator for the person consulted to say, “The person without consent does not give approval”. I do not want to suggest that that is a definitive view but it seems a common-sense approach. We must rely on common sense here.

The code of practice is due to be issued shortly, I am glad to say. As I said, guidance is due to be consulted on. I cannot give the exact date, but the aim would be to issue it before October. It will cover the nominated person and take account of the many points that noble Lords have made tonight.

I think that I have answered most of the points. These are very important transitional regulations, which safeguard the interests of those people who have consented to research and who may lose capacity. They meet the needs of legitimate and important research, and I commend them to the House.

On Question, Motion agreed to.

That completes the business before the Grand Committee today. The Committee stands adjourned.

The Committee adjourned at 8.25 pm