Before the Minister moves that the first order be considered, I remind Members of the Committee that in the case of each order, the Motion before the Committee will be that the Committee consider the order in question. I should perhaps make it clear that the Motion to approve the order will be moved in the Chamber in the usual way. I also make it clear that, if there is a Division in the Chamber, the Committee will stand adjourned for 10 minutes.

rose to move, That the Grand Committee do report to the House that it has considered the Trade Marks (Relative Grounds) Order 2007.

The noble Lord said: The order will change the procedures for registering trade marks in the UK to make them fairer. The proposed change is both deregulatory and harmonises the procedures for registering national trade marks with those that business encounters when registering Community trade marks.

The order has been subject to extensive consultation with rights holders, prospective rights holders, legal professionals and their representative bodies. The Intellectual Property Office first engaged its users through a pre-consultation exercise to find out what they regarded as the strengths and weaknesses of the current system of registration. It then formally consulted about what the future examination policy should be. Finally, it consulted again about the form of the order before the Committee. Around 70 per cent of those who responded about the examination policy felt that a move to some form of “search and notify” opposition regime was necessary. That level of support represents not only the professional legal opinion of the trade mark world; the same level of support came direct from the small and medium-sized enterprises that responded.

In the trade mark registration regime currently operated by the Intellectual Property Office, the balance is skewed significantly towards the protection of earlier trade marks. That means that earlier trade marks are protected automatically, regardless of whether their owner has any concern about a prospective new trade mark registration and regardless of whether the earlier mark itself continues to qualify for protection by virtue of its genuine use. At the same time, new applications face an increasingly difficult time in achieving national registration due to the number of blocking registrations they face and the time and cost involved in overcoming them. A majority of those blocking registrations are Community trade marks, which, because of different registration procedures at the Community trade mark office, have not been vetted to see whether they conflict with earlier national marks or with earlier Community marks.

That is resulting in some whose business is solely conducted in the UK, and for whom the most appropriate protection therefore lies in obtaining a national trade mark, seeking instead to register their trade marks as Community trade marks simply to avoid the effects of the national registration procedure. That costs more and runs the risk of unnecessarily embroiling the trade mark owner in litigation elsewhere in Europe. If nothing is done, the problem will only worsen.

In the Government’s view, the solution is to adopt a system whereby it is left to the owners of any earlier marks or rights to object to new national trade marks. After all, it is the owner of the mark who is best placed to judge whether a new trade mark is likely to affect his intellectual property. Furthermore, it is the owner of the mark who is best placed to show that it meets any use conditions imposed by the law. There is a powerful argument that the owner of the mark has most responsibility for acting to protect his own property.

The order will introduce such a system. The Committee will note, however, that the order provides that the registrar may continue to conduct a search of the relevant registers for the purposes of notifying persons about the existence of relevant earlier trade marks. The search results will be sent to applicants for new trade marks so that they can assess for themselves the risk of successful opposition and decide whether to proceed. If the application proceeds, the owners of earlier marks who appear to have an interest will also be notified.

The office has worked with interested parties, including the Institute of Trade Mark Attorneys and the Chartered Institute of Patent Attorneys to ensure that the order before the Committee is workable and equitable to all parties. I therefore commend the order to the Committee and I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Trade Marks (Relative Grounds) Order 2007. 17th Report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting.)

As we have heard, Section 5 of the Trade Marks Act states that a trade mark shall not be registered if it is identical or similar to an earlier trade mark. The order provides that the registrar will no longer refuse to register a trade mark on relative grounds unless the proprietor of the earlier trade mark or other earlier right objects on any such ground in opposition proceedings.

I would like to make two points and ask a question at the end. The change represents a significant new burden for mark holders. They will be the ones on whom the onus lies to check and ensure that entries on the register will not conflict with their existing property. Small businesses could face an unfair and disproportionate burden compared with their larger competitors, especially if they have to monitor not only this country's register, but that of every nation. Can the Minister give me some clarification on that?

Having listened to the presentation by the Minister, this seems to be a very sensible amendment to existing law. I have only one question. At the end of his remarks, he touched on the consultation that had taken place with various organisations. It would be useful if he could elaborate on whether there was any wider consultation on the proposals.

We do not believe that any additional burden on existing national trade mark owners will be as great as the burden that we are now removing from businesses who want to register new national trade marks. There are a number of reasons for that. First, registration of a new trade mark does not extinguish the legal rights of the owner of a conflicting earlier trade mark to cancel registration and prevent the use of the later trade mark. Consequently, a national business does not have to oppose every apparently conflicting later trade mark. As I said, the order provides that the registrar may continue to conduct a search of relevant registers for the purpose of notifying persons about the existence of relevant earlier trade marks.

Secondly, most oppositions, which must be filed at the UK IPO, are resolved through negotiation between the parties or by one side or the other backing down before significant costs are incurred, so we are pretty sure that there will not be the burden about which the noble Baroness is concerned.

On the question of consultation, I mentioned in my speech that the consultation was extensive. It was placed on the UK IPO website and was accessed by about 2,000 individual users. About 40 hard copies were also issued to groups and organisations with an interest in this area. Press releases were issued to highlight the consultation to a wide audience. To engage small and medium-sized businesses, a summary of the consultation was sent to more than 500 individual businesses which had approached the UK IPO for information about protecting trade marks. The consultation was also highlighted on the websites of the Intellectual Property Office and the Small Business Service. I mentioned earlier the considerable number of organisations that we consulted before the order was finally drafted.

On Question, Motion agreed to.

rose to move, That the Grand Committee do report to the House that it has considered the National Minimum Wage Act 1998 (Amendment) Regulations 2007.

The noble Lord said: I present to the Committee two sets of regulations on the national minimum wage. The national minimum wage is an established part of policy, and ensures a minimum wage floor below which pay may not fall. It has made a real difference to the lives of hundreds of thousands of low-paid workers. These regulations include the yearly uprating for the minimum wage. As in previous years, the rates are those recommended by the independent Low Pay Commission, which undertook a range of research projects, analysed data from the Office for National Statistics and consulted with employers, workers and others before arriving at its recommendations. This year’s uprating stands to benefit around 1 million workers.

We will also be debating regulations relating to further and higher education and the minimum wage, and the accommodation offset and registered social landlords. The first set of regulations amend Section 3 of the National Minimum Wage Act. This section allows for regulations to be made to prevent certain classes of people qualifying for the minimum wage. The purpose of our amendment is to amend an existing class, those attending a course of higher education, to those undertaking a course of higher education which requires a period of work experience. The current exemption for attending higher education is unnecessarily restrictive. The broader term which I am proposing in these regulations reflects the reality of today’s world, in which students are increasingly able to access learning through more flexible routes, including distance learning and e-learning.

In addition, we are introducing a new class of persons who will, in the second set of regulations, be exempt from the minimum wage. This new class are students undertaking a course of further education requiring attendance for a period of work experience. This is necessary to ensure that students can learn through practical application alongside their studies in the workplace.

The second set of regulations are probably the ones of most interest to the Committee, since they include the annual upratings to the minimum wage. They also make changes to the accommodation offset, which is the maximum amount which may be offset by an employer for the provision of accommodation against the wages due to a worker for national minimum wage purposes. The regulations make changes to how the accommodation offset applies to workers who are employed by a local authority and live in accommodation provided by that authority, and workers who work for a registered social landlord and live in accommodation provided by that landlord. The regulations also exempt people who are participating in certain European Union training schemes and those on certain further education work placements, where the placements are undertaken as part of their course.

I move on to the detail of the second set of regulations. Regulation 1 provides for them to come into force on 1 October 2007. The rates were announced in March, giving sufficient time for business to prepare and plan for the rate increases. Regulation 2 deals with the increase to the adult minimum wage rate, from £5.35 to £5.52, as recommended by the Low Pay Commission. This is a rise of 3.2 per cent. Regulation 4 increases the development rate for workers aged 18 to 21 from £4.45 to £4.60, a rise of 3.3 per cent. The 16 and 17 year-old rate will increase from £3.30 to £3.40 per hour, a rise of 3 per cent. Additionally, the regulations will uprate the accommodation offset, as recommended by the Low Pay Commission, from £4.15 per day to £4.30 per day.

Regulation 3 exempts from the national minimum wage post-16 learners required to attend a period of work experience as part of a further education course in respect of the work they do for an employer as part of the course. The practical application of classroom-based and theoretical aspects of learning in the workplace is an integral part of education. Many further education courses include an element of work experience and/or work-based assessment provided by employers, which is valuable to the learner since it develops his or her understanding of a particular issue and gives a better perception of the world and workplace. This practical application of skills is integral to a learner’s education and there should not be a requirement to pay the national minimum wage to students in the workplace. This exemption will ensure that employers continue to offer this valuable experience.

Regulation 3 also exempts participants in the European Union’s Leonardo da Vinci and Youth in Action programmes, which allow incoming vocational trainees and young volunteers from Europe to receive funding from the EU to take part in training or volunteering activity for up to a maximum of a year in another participating country. The training and volunteering activities are designed to ensure that they do not replace a post that would otherwise be occupied. These programmes are reciprocal, which means that UK students can visit other European countries on similar terms to students coming here.

Regulations 5, 6 and 7 clarify the position in respect of local authorities and registered social landlords and the accommodation offset. At present in some cases, a local authority or registered social landlord may provide work and social housing to an individual. Where the two are connected—for example, where the individual is a care warden—the accommodation offset should apply. We are not intending to change this. However, where there is no connection between employing a person as a worker and housing the same person as a tenant, this amendment will ensure that they are not accidentally caught by the policy on the accommodation offset. In these cases, the level of rent paid is set through government policy on social rents. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the National Minimum Wage Act 1998 (Amendment) Regulations 2007. 19th Report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting.)

I think that we are considering the National Minimum Wage Act 1998 (Amendment) Regulations 2007 and the National Minimum Wage Regulations 1999 (Amendment) Regulations 2007 together. Section 3 of the Act sets out the classes of persons in relation to whom regulations may be made that exclude them from qualifying for the minimum wage or prescribing an hourly rate other than the main rate of minimum wage. That is okay.

The 10 regulations in the National Minimum Wage Regulations 1999 (Amendment) Regulations 2007 amend the National Minimum Wage Regulations, and the principal rate of the national minimum wage is increased. The Minister kindly outlined all the other things that fell from that. The regulations insert three new classes of persons who do not qualify for the national minimum wage. As I heard it, those include workers who attend a period of work experience as part of a course of further education, and workers participating in two specific European vocational training schemes. The regulations also amend the Act, so that Regulation 31(1)(i) of the principal regulations will not apply to deductions made by or payments to a local housing authority or registered social landlord in respect of the provision of living accommodation, save where a connection exists between the provision of the living accommodation and the employment with the local housing authority or registered social landlord. Regulations 6 and 7 provide that, where the deduction or payment in respect of the provision of living accommodation is exempted from Regulation 31(1)(i) by Regulation 31(3), it will not be taken into account under Regulation 31(1)(g) or (h).

That is all very well and good. The worry with all these things is that a minimum wage works only if it is properly enforced, otherwise law-abiding employers lose out every time while unscrupulous employers receive an unfair advantage. This will affect 1 million more people. How many successful prosecutions have there been thus far? How much strengthening is being done, in terms of appropriate staff and funding, to carry out this extra work for this extra amount of people? We may find ourselves disadvantaging the law-abiding employer and making the provision look unfair. It would be very helpful if the Minister could give me some information on that today. If not, perhaps it could be put on the record somewhere.

I obviously welcome the regulations, which relate to the National Minimum Wage Act 1998. I think that I am probably the only Member of the Committee who was involved in the debate on that Bill, so I well remember the arguments that ensued. It was a controversial Bill.

Two points emerge from the regulations. The first point, which was significantly made by the then Conservative Party spokesman, was that the implementation of the national minimum wage would at best decimate and at worst destroy British industry. I am delighted to hear from the thrust of the noble Baroness’s question that clearly her party no longer takes that position. I would like to share her question and I look forward to the answer. Clearly, if we are to have a national minimum wage it needs to be, first, supported and, secondly, enforced fairly.

The second point where I am not sure that in 1998 the Government and our Benches were entirely ad idem was that we moved a number of amendments to ensure that the national minimum wage could be determined only by the Low Pay Commission, and that there should be no governmental discretion in it as we thought it important that this should be taken out of party politics. I am very pleased with the noble Lord’s comment that £5.52 for £5.35 is in line with the recommendation of the Low Pay Commission. Will the Minister remind us whether on every occasion in the past nine years the national minimum wage increase has been in accordance with the recommendation of the Low Pay Commission?

I can reassure the noble Lord that all recommendations have been in accordance with the independent commission’s views. I am grateful to him for highlighting the success of the minimum wage policy, which this Government introduced.

The noble Baroness, Lady Wilcox, asked about sanctions—to what extent the system is working well, and what is done if we discover that the minimum wage is not being adhered to. The Act entitles almost all workers in the UK to the national minimum wage. The Government have always made every effort to protect this entitlement and to restore arrears to workers who have been underpaid, helping tens of thousands to recover £25 million in unpaid wages since 1999. There are 16 compliance teams around the country which monitor, investigate, and, if necessary, take action.

In January this year we announced that we would be issuing the penalty available to us in current legislation, a minimum fine of £224.70, in virtually all cases where an enforcement notice has not been complied with. The most serious wilful cases of non-compliance are and will be prosecuted, and there are many investigations under way right now. In the past year the Government helped restore over £3 million in arrears to over 14,000 workers. However, the best protection we can offer workers and compliant businesses is to strive to ensure that arrears do not arise in the first place.

I hope I have managed to reassure the noble Baroness that the Government, through our compliance units, do everything we can to ensure that the minimum wage is paid.

On Question, Motion agreed to.

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

Moved, That the Grand Committee do report to the House that it has considered the National Minimum Wage Regulations 1999 (Amendment) Regulations 2007.—(Lord Evans of Temple Guiting.)

On Question, Motion agreed to.

rose to move, That the Grand Committee do report to the House that it has considered the Limited Liability Partnerships (Amendment) Regulations 2007.

The noble Lord said: The regulations we are debating today will strengthen the investigation regime operated by Companies Investigation Branch in respect of limited liability partnerships. My colleague the Minister of State for Industry and the Regions consulted earlier this year on a proposal to give Companies Investigation Branch increased powers to investigate limited liability partnerships, in line with those they have for companies. All those who commented on the proposal supported it, including the Law Society, the Institute of Chartered Accountants in England and Wales and the Association of Partnership Practitioners.

A limited liability partnership is a relatively new corporate vehicle introduced by this Government through the Limited Liability Partnerships Act 2000 and the Limited Liability Partnerships Regulations 2001. An LLP gives the benefits of limited liability as for a company, but allows its members the flexibility of organising their internal structure as a traditional partnership. Since its creation about six years ago, the LLP structure has appealed to businesses of all sizes across a number of sectors. There are about 22,000 LLPs on the register at Companies House.

Some aspects of the legal framework for LLPs were designed specially for the new vehicle, and they are contained largely in the LLP Act itself. But in other respects, where it is sensible to do so, an LLP is treated much like a company. That has been achieved in the 2001 regulations by applying sections of the Companies Act 1985 and other relevant legislation, such as the Insolvency Act 1986, to LLPs, either as they stand or with appropriate modifications to tailor the provisions for LLPs.

One of the areas where the requirements for LLPs and companies are substantially the same is the investigation regime. When the LLP was introduced, the bulk of Part 14 of the 1985 Act on the investigation of companies was applied to LLPs by the 2001 regulations, leaving aside those provisions concerned with share dealings. Those are not relevant for LLPs, as they do not have shares. Part 14 gives the Secretary of State powers to appoint inspectors or investigators to investigate companies and requisition documents where, for example, there are grounds for suspicion of misconduct. It is our policy with regard to Part 14 of the 1985 Act to ensure consistency in the treatment of LLPs and companies.

Since the 2001 regulations were made, the Companies (Audit, Investigations and Community Enterprise) Act 2004 was passed to ensure confidence in the UK corporate framework following Enron and other corporate scandals in the US. As part of that package, the 2004 Act strengthened the investigations regime by amending the investigation provisions set out in Part 14 of the Companies Act 1985 to give more extensive powers to investigators of companies. For example, it gave investigators the power to remain on premises if this would assist their investigation, and introduced more effective sanctions where people fail to comply. It did not change the basis for inspections or substantively change the grounds for an investigation.

Where amendments in the 2004 Act affect provisions of the 1985 Act that are already applied to LLPs by the 2001 regulations, the 2004 Act amendments automatically apply to LLPs. They apply by virtue of Section 20(2) of the Interpretation Act 1978, as those 1985 Act provisions are referred to in the 2001 regulations. However, where new provisions were inserted into the 1985 Act by the 2004 Act, it is necessary expressly to apply those provisions to LLPs by amending the 2001 regulations to refer to the provisions inserted by the 2004 Act.

Unfortunately, the new investigation provisions introduced by the 2004 Act were not applied to LLPs at the time. That oversight came to light during the process of considering how the new Companies Act 2006 should be applied to LLPs. It is the purpose of the Limited Liability Partnerships (Amendment) Regulations 2007 to apply the new investigation provisions to LLPs.

As it turned out, Companies Investigation Branch has had no need to use the new powers against LLPs. Indeed, investigations of LLPs are rare. However, should investigators need to investigate an LLP, the full powers that they have to investigate companies will be available to them. That is the sole purpose of these regulations. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Limited Liability Partnerships (Amendment) Regulations 2007. 19th Report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting.)

The regulations appear to make a technical amendment only and as such I have no substantive points to make.

Those of you who have been in your Lordships' House for some time will realise that you cannot take the lawyer out of the lawyer. As someone who has not practised law for the past 12 years, I cannot help but draw to the Minister's attention that limited liability partnerships existed long before the legislation brought in by this Government.

It is of course correct that the use of limited liability partnerships has occurred substantially since the passing of the Limited Liability Partnerships Act 2000, which as the Minister said was designed to make it easier for organisations to become limited liability partnerships, having the advantage of limited liability while organising themselves without the pressure of having to comply with Table A and all the other internal corporate regulations. He is right to say that, given the large number of limited liability partnerships that have been formed since 2000 and given the significant size of a number of those organisations, it is appropriate that steps should be taken to enable powers that exist vis-à-vis companies wherever appropriate also to apply to limited liability partnerships.

With apology for the legal lecture, I support the regulations.

I am grateful to the noble Lord for clarifying my speech.

On Question, Motion agreed to.

rose to move, That the Grand Committee do report to the House that it has considered the Local Authorities (Conduct of Referendums) (England) Regulations 2007.

The noble Lord said: These regulations concern the procedure at referendums held by local authorities under the Local Government Act 2000. These referendums relate to the question of whether a county or district council, or London borough, should adopt executive arrangements—that is, the referendum is to determine how the authority is run. Executive arrangements include a mayor and cabinet executive, a mayor and council manager executive, or a leader and cabinet executive.

The principal purpose of these regulations is to implement changes introduced by the Electoral Administration Act 2006. The provisions need to be in place for a planned referendum due to take place later this year. The regulations are needed to ensure that there is consistency of electoral practice between the elections of local councillors and elected mayors and the conduct of such local authority referendums.

These regulations re-enact the Local Authorities (Conduct of Referendums) (England) Regulations 2001 and apply only to referendums held in local authorities in England.

The Committee will be pleased to note that my officials have worked closely with both the Electoral Commission and electoral administrators in developing these regulations. The Electoral Commission was also consulted formally on a draft of these regulations and its comments were taken into account in the draft before you.

The regulations also set out the rules for the conduct of referendums in full. This will make the rules more easily accessible and user-friendly for electoral administrators and other practitioners. This approach was commended by the Merits Committee.

The regulations have three key aims: first, to implement changes introduced by the Electoral Administration Act 2006; secondly, to set out the rules for the conduct of referendums in full; and, thirdly, to remove the option of a referendum being conducted by means of an all-postal ballot following the introduction of personal identifiers for postal voting.

Members of the Committee will know that the Electoral Administration Act 2006 made wide-ranging changes to the way that the electoral system is administered. The changes in these regulations implement those new electoral arrangements, which include ballot paper changes aimed at strengthening the security of the electoral process, and to allow more automated procedures to be used in the printing of ballot papers. In particular, the regulations provide for new security markings and unique identifying marks to be used on ballot papers; for the counterfoils to be removed from ballot papers, which will be replaced by a corresponding numbers list; and for a full set of prescribed forms for use in referendums, which include new forms introduced as a result of the Electoral Administration Act.

The new official poll card provides a wider range of information for voters, and the regulations introduce new poll cards for postal voters and proxy postal voters. There will be a new postal voting statement which removes the witness declaration but includes a new requirement for postal and proxy postal voters to provide their signature and date of birth.

The regulations prescribe the form of words for the question to be asked in the referendum. In particular, we consulted the Electoral Commission, as required by the Local Government Act 2000, for its views on the intelligibility of the questions which may be asked at these referendums. Full details of the Electoral Commission’s comments and the Government’s response are set out in the report, prepared by the Government in pursuance of Section 45(8B)(b) of the Local Government Act 2000, and which the Government have laid before each House of Parliament.

In its response, the Electoral Commission made some suggested changes to the wording of the questions. However, the Government were not able to agree to those changes, largely because the Local Government and Public Involvement in Health Bill currently before Parliament will make significant changes to the structure of local authority executive arrangements. Although we agree that the referendum questions should be reviewed, it would be more appropriate to do so in the wider context of the implementation of the local government Bill. Therefore, no changes to the referendum’s questions have been made in these regulations. However, for the longer term, we look forward to working with the Electoral Commission and other stakeholders, and reviewing the wording of the referendum questions.

We also sought the views of the Electoral Commission on the limitation of referendum expenses as required by the Local Government Act 2000. As a result, we have increased the referendum expenses limits so that the base figure will be £2,362, an increase of £362, and the additional figure will be 5.9p for every entry on the register of electors, an increase of 0.9p. These changes take into account rises in the level of inflation since the limits were last set on 2 April 2001.

In conclusion, the regulations incorporate into the conduct of referendums important changes to our electoral system made by the Electoral Administration Act 2006. They will come into force 14 days after they are made. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Local Authorities (Conduct of Referendums) (England) Regulations 2007. 19th Report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting.)

I am grateful to the noble Lord, Lord Evans, for introducing the regulations, and I am particularly grateful for the assurance that there will be a referendum later this year. For one brief moment, until I remembered that this relates purely to local government referendums, I thought that this might be the Government meeting their manifesto commitment to give us a referendum on the new EU constitution, but sadly I understand that it is merely to hold a referendum in Darlington some time later this year.

I have a number of questions that arise from the regulations. I should like to start by referring to the Explanatory Memorandum, for which I am grateful to the noble Lord for providing because it is very helpful. My first question relates to the comments in the Explanatory Memorandum at paragraph 7.3 on postal ballots:

“It is worth noting that the option of a referendum being conducted by means of an all-postal ballot has been removed”.

I would like to hear more generally about the Government’s views on all-postal ballots for the future and whether they think that postal ballots as a whole have been a success. The Minister referred to the disasters in the Birmingham City Council elections, a case which the judge who tried it referred to as being one that would have “disgraced a banana republic”. There was a great deal of electoral fraud as a result of the postal ballot. To remove the possibility of having an all-postal ballot for such referendums is probably a step forward. I was therefore a bit alarmed when the noble Lord said in his opening remarks that the Government would come back to all-postal ballots when there are slightly more secure means of checking people’s identities. I should like to hear a little more on that, and to be absolutely sure that we will not see all-postal ballots or any further encouragement of all-postal ballots until we are convinced that the system is secure.

In passing, I shall make one other comment on postal ballots, which no doubt the noble Lord will be able to answer on behalf of his department. At the moment, most local authorities are strongly encouraging us to move over to all-postal ballots. I certainly have a postal ballot for my vote in London because it normally tends to be more convenient. But I notice that, whenever one gets a chance to renew one’s entry on the electoral form, to go back from a postal ballot to voting in the proper manner is rather difficult. Will the Government consider making it easier to revert to the more traditional means of voting rather than leaving us on postal ballots, about which some of us have increasing doubts?

Just before I leave postal ballots, I should say that the Minister referred in his Explanatory Memorandum to,

“urgent policy discussions with stakeholders”.

He used the word “stakeholders” again in his opening remarks. I would be interested to know who the stakeholders are. I would rather have hoped that an educated chap like the Minister, a former publisher, would try not to use words like “stakeholder”, which are fairly meaningless. I am sure that he could come up with something better. If he could tell us who the stakeholders are with whom they consult, we would be grateful.

I turn to the question of expenses. I am grateful to the Minister for explaining just how they were going to increase in line with inflation. Will he comment on how that compares with the expenses in general elections and in local elections? I imagine that they are broadly similar in some manner to the amount people have to spend in local elections, but no doubt he can assist me on that.

On the question of publicity and other information in connection with referendums, I understand that the proper officer of the local authority has only in to publish the fact that there is going to be a referendum in one newspaper circulating in the local authority’s area; it does not even say the principal newspaper, or the newspaper with the greatest coverage. What measures are there to ensure that he goes to the right paper and makes sure that there is proper coverage, rather than having to publish in just one newspaper that circulates to some extent in that area? We would not want to be in a position where the officers of an authority could discriminate against certain papers purely because they did not like those papers’ political bent and not offer them the advertising when dealing with such matters. No doubt the Minister will be able to assist me on that.

Moving on, I dealt with referendum expenses in terms of the increase in the amount that people will be able to spend. Can the Minister say anything about how the Government deal with exactly who is covered by the expenses? What about non-affiliated supporters of a particular group, the “no” faction or the “yes” faction, in any referendum? How will the Government ensure that those groups are covered?

I have been through quite a lot of the rest of the statutory instrument, and I am grateful for it. It makes a lot of things much clearer. I particularly commend Schedule 3, which sets out the Local Government Act referendum rules. Those are clear, and are easily understood by anyone who is concerned by them. Again, I would be grateful for an assurance that they broadly follow similar guidance to that offered for elections to local government, city councils, county councils or whatever, or indeed for general elections.

The I trust that the Minister will be able to give me some answers to those brief questions, but if not, I am sure that he will be able to write to me.

I looked at the title of the statutory instrument—Local Authorities (Conduct of Referendums) (England) Regulations 2007—and thought, “What an opportunity for a man from Wales”. Some people are born to greatness, some people achieve greatness and others, like me this afternoon, have greatness thrust upon them. I shall tell them in Wales that England matters are interesting even to people from the Principality. I will not keep the Committee at great length.

The regulations largely replicate the previous regulations from 2001. They include some changes made under the Electoral Administration Act 2006. The Government consulted the Electoral Commission and others in that field on the drafting of the regulations, and they are broadly content. There does not seem from our Benches to be any great worry or concern about these regulations. Therefore, I am happy to say that we shall support them in this Grand Committee.

I am most grateful to the noble Lord for his contribution to the discussion. Before I answer as many questions as I can asked by the noble Lord, Lord Henley, asked, perhaps I may say that I think this is the first time I have uttered the word “stakeholder” in either the Moses Room or the Chamber. I usually cross it out and put in something like “interested parties”, which sounds awful but not as appalling as “stakeholders”. I am afraid that it is a fashionable word which pops up all over the place.

I was very sorry to disappoint the noble Lord about the proposed referendum. I absolutely understand why he had a greater ambition for it. I confirm that the authority mentioned is Darlington Borough Council, which will have a referendum in September of this year.

The first substantive question asked by the noble Lord, Lord Henley, was: why can a referendum no longer be run as an all-postal ballot? The changes set out the rules for the conduct of referendums in full and remove the option of a referendum being conducted by means of an all-postal ballot. The law now requires the checking of postal voting statements before they go forward to the count. To conduct an all-postal referendum would mean collecting the signatures and dates of birth from every eligible elector in the authority in order to verify personal identifiers on postal voting statements. That is not possible in the time available to call a referendum and risks disfranchising electors. Personal identifiers are designed to strengthen the security of the postal voting system and to respond to concerns expressed that postal voting should be made more secure.

The noble Lord asked whether it is possible to revert from all-postal to traditional voting. Each elector simply needs to contact his local authority to cancel his postal ballot. The noble Lord also asked about publication in newspapers. The requirement in the regulation is the minimum legal requirement and is identical to the provision in previous regulations. Local authority officials will exercise their discretion to decide how to advertise the referendum. It would be improper to deal with such matters for irrelevant reasons, and to do so would be unlawful. He asked who were the stakeholders—the interested parties—mentioned in my speech with whom they consult. The Local Elections Advisory Group was set up in the summer of 2005 to look at issues for implementing changes from the Electoral Administrations Act 2006, and electoral administrations with experience of running referendums.

The noble Lord, Lord Henley, also asked whether expenses were covered for non-political groups. A campaign organiser does not need to represent a political party, just an outcome in the referendum.

Finally, he asked whether referendum rules follow similar guidance in similar matters to those implemented in local authority elections. The referendum rules are on those that apply to the election of councillors, making those changes necessary to reflect the differences between elections and referendums—for example, the absence of candidates in the latter.

It may be that I have not answered some of the noble Lord’s questions, but we will look at Hansard very carefully and he will receive a letter within the next few days. I commend the regulations.

On Question, Motion agreed to.

rose to move, That the Grand Committee do report to the House that it has considered the Vaccine Damage Payments Act 1979 Statutory Sum Order 2007.

The noble Lord said: I am satisfied that the order is compatible with the European Convention on Human Rights.

This draft order makes a modest but significant change that will affect a very small number of children and their families. Immunisation with vaccines is one of the most important methods for protecting individuals and the community from serious diseases. Where, rarely, the programme results in severe disability to an immunised person, the Vaccine Damage Payments scheme provides a measure of financial help.

When the scheme was introduced in 1979, it provided a tax-free lump sum payment of £10,000 in respect of those who were severely disabled as a result of a vaccination against certain specified diseases. It was designed to ease the present and future burdens of those suffering from severe vaccine damage, and of their families. A payment is also available if someone is thought to be severely disabled because their mother was vaccinated against any of the specified diseases while she was pregnant or if someone is thought to be severely disabled because they have been in close personal contact with a person who has been vaccinated against polio.

Unlike social security benefits, there is no statutory obligation to increase vaccine damage payments in line with inflation. However, successive Governments have given an undertaking to Parliament to review the rates of the payment regularly in order to maintain their value broadly in line with inflation. The amount has been progressively raised on four occasions over the past 28 years. From the initial amount of £10,000 in 1979, the sum increased to £20,000 in 1985, £30,000 in 1991, £40,000 in 1998 and on the last occasion in 2000 to £100,000. We have therefore decided that it is now time for a further increase.

The relevant statutory sum for the purposes of the Vaccine Damage Payments Act 1979 is the statutory sum at the time when a claim for payment is made. The order therefore raises the statutory sum of a vaccine damage payment to £120,000 from 12 July 2007 for all successful claims made on or after 12 July. That means that the buying power of the payment is more than restored to its value in 2000. People who claimed before will receive the statutory sum in force at the time the claim was first made.

Out of an average of 177 claims made each year about five claims are successful. Therefore, an increase in the statutory sum from £100,000 to £120,000 would result in associated costs of approximately £100,000 a year. That improvement for the few children and their families who may in future suffer as a result of vaccination shows that this Government remain committed to recognising those who are severely disabled as a result of a vaccination programme for the protection of the whole community. We have consulted the devolved Administrations and the Isle of Man, and they have consented to the making of the order.

A consultation exercise was not undertaken for this order as no substantive changes are to be made to the Vaccine Damage Payments Regulations 1979. The order simply increases the statutory sum which is payable under the Act. The purpose and scope of this order will enable the statutory sum of a Vaccine Damage Payment to be increased to £120,000 from 12 July 2007 for all claims received on or after this date. I hope that that receives a warm welcome this afternoon, and I commend the order to the Committee and beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Vaccine Damage Payments Act 1979 Statutory Sum Order 2007. 18th Report from the Statutory Instruments Committee.—(Lord McKenzie of Luton.)

These Benches welcome the order. I am glad that the Government have decided to increase the amount paid in damages to the families of children disabled as a result of the vaccines they have been given.

The benefit to society of widespread vaccination for childhood diseases is incalculable. Our medical capabilities have reached the point that we have the potential to wipe out a number of the debilitating diseases that have caused pain and suffering to so many people. For example, worldwide child deaths from measles have fallen by 60 per cent since 1999; a wonderful achievement that goes way beyond the UN target.

Vaccinations do not benefit only the recipient. If a sufficiently high proportion of the population receives the vaccine, the disease can be eliminated entirely and children and adults who are unable for medical reasons to receive the vaccine are also protected. Keeping vaccinations up to the necessary level—about 95 per cent, I believe—is a long-term challenge, especially as incidences of the disease fall and parents perceive it to be less of a threat.

This damage payment is a good and necessary method of helping those families looking after children who have sadly become disabled as a consequence of vaccination. It goes some way to helping them bear the increased costs of raising a disabled child and easing the burdens that such care can impose on a family.

I am glad to see from the debate on this order in another place that only about five children are seriously disabled by vaccinations each year, as the Minister confirmed. I was less reassured though by the large number of claims made every year that are unsuccessful. Can the Minister reassure me that the complexity of the application process is not in any way to blame for the very low success rate? I should be interested to hear whether support is offered to people applying for the damage payment, and if there has been a recent review of how the process can be made simpler, quicker and cheaper.

While I am on the subject of efficiency and simplicity, I hope that the Minister will consider making changes to the amount of damages through an annual uprating in line with inflation. Regular small increases would be much fairer than the current system where increases are arbitrary and unpredictable, often creating large differences in the amount of payment from one year to the next. The current system, where concerned organisations have to rely on getting the ear of the Minister, is surely not the best way to ensure that payments keep their value over time.

Finally, I should like to mention the possibility of involving the pharmaceutical industry in setting up a voluntary fund to support victims. In another place, the Under-Secretary of State explained that the Government decided not to pursue this because of the negative response. Rather to my surprise, she gave the impression that it was a case either of continuing to provide support for the families of the disabled children or giving up that important work to concentrate on persuading the pharmaceuticals. Are the Government not capable of doing both?

I look forward to hearing the Minister respond to the points I have raised.

I am happy to add my support for the order, thus giving it all-party support. I concur with much that was said by the noble Lord, Lord Taylor. The Vaccine Damage Payments scheme introduced in 1979 has been a success and the order recognises the need to valorise the awards. I absolutely acknowledge that in the recent past the Government have made not just the fourth increase in 20 years, but have reduced the percentage disability that triggers eligibility from 80 to 60 per cent. That has been very welcome too.

I am pleased that consultation has been undertaken with the devolved Administrations but, in parenthesis, I might say that on future occasions consultation with some of the interested bodies, pressure groups and others might be valuable too. Although this order is merely restricted to the nevertheless very important question of quantum, some of the circumstances and background environment of how disability is looked at have changed significantly since 1979. That is a good thing. I shall develop this point in a moment, but we should always reflect on how we can improve the support we give to families in these circumstances.

I agree that valorisation seems to be a natural suggestion to make in terms of how we uprate the awards. I perfectly understand that this is not a natural benefit under the normal term of the Acts. It is not even a compensation payment; it is simply a recognition of the fact that disability costs are greater for children who take the advice of the state and get vaccinated. It is a good job that they do so, because by and large, as a public health issue, it is a valuable programme, which I am sure we all support.

Although this is therefore not a benefit payment, it is an award in recognition of medical damage. I still think that it would be possible—the department must have the ingenuity available—to get it shoehorned into our normal annual statutory uprating provisions. If we did that, I would feel safer. It is easy to forget some of these things. Four increases over 20 years is very welcome, but it is easy for the cost of provision for looking after young people, particularly those with disabilities, to run ahead of retail price indexes. We need to keep a close eye on that, and the only way of guaranteeing that the job is being done properly is to look at it annually.

The claims process could also be looked at. I said earlier that some kind of consultation with the pressure group community in advance of these orders might have been advisable. It is a flat rate award, but a sliding scale has been suggested. The Disability Rights Commission is doing valuable work on all this. It points out to us—and I am sure that we all want to recognise this in the course of approving the order—that not only does it estimate that it costs three times the normal amount to raise a child with vaccine damage compared with the average, but the statistics clearly demonstrate that households that have to make provision for disabled children are on average 17 per cent poorer in terms of average income. Those children are disadvantaged in a number of ways.

The scheme is extremely valuable, but we should always be looking at ways of improving it, and you can do that only if you are taking regular soundings from the pressure groups and the academic community interested in this; the Disability Rights Commission as well as the devolved Administrations. I am looking for assurances that the Minister is not just going to leave it to the next time we have an uprating order to have consultation on these matters. I hope that the department will keep them constantly under review. I hope that it will look creatively to see whether there is some way of attaching the award to the annual benefit uprating system.

I agree with my noble friend, who was interested in some of the success rates, such as five claims being approved a year out of 177 or so. The department must have data on trends. Is the success rate increasing or decreasing? Are these vaccination damage cases likely to increase? Is the science getting better? Are the vaccines becoming less prone to causing damaging side effects, in the way we have seen with the cases that have received these awards? Does the science give us long-term hope? Perhaps in the middle to long-term, vaccine damage payments will be much less required because the damage is much less, which is obviously what we all want.

With those cautionary questions adding to what has already been said, I am very happy to support the order and hope that it will be speedily introduced.

I start by thanking both noble Lords for their strong and warm support for the draft order. I shall try to deal with the questions raised. Both the noble Lords, Lord Taylor and Lord Kirkwood, asked about annual upratings. As I said, unlike social security benefits, there is no statutory obligation to increase the payment in line with inflation. Primary legislation would be required to allow an annual uprating. That is no reason to say that it could not be introduced, but the reality is that under both this Government and the previous Government—

Can the Minister confirm that there is likely to be another social security Bill winging its way that might be appropriate for a new clause sometime soon—if not next year, then the year after?

I hesitate to speculate on what might be in the gracious Speech for the next Session of Parliament. I emphasise that under both the current Government and the previous Government, it has been uprated on a regular basis. To put it in context, if the statutory sum of £10,000 in 1979 had been upgraded annually, it would now be worth £34,000. So the process that has taken place has done a good deal more for recipients than an annual uprating would have achieved.

Both noble Lords asked about the number of applications that fail. The majority of claims to the payment scheme are unsuccessful because the vaccination did not cause the disability. In considering cases, medical advisers have regard to whether informed medical opinion suggests that there may be a causal link between the claimed adverse event and vaccination. Each claim is given individual consideration and factors taken into account include the nature and severity of the adverse event, its temporal relationship to vaccination, the person's previous medical developmental history and any relevant family condition for which the subject of a claim had a predisposition. There has been no recent review of the claims process.

To give some statistics, in 2006-07, there were four awards; in the year before, five; the year before, four; and the year before that, five. The number of claims for that period were, in 2006-07, 60; 106 the previous year; 111 the year before that; 165 the year before that; and 417 the year before that—that was associated with the change in some of the rules. There is an analysis, which I should be very happy to share with noble Lords. I have a tabulation that sets out the reasons why each of the claims was disallowed. If we look at the total number of claims since 1977-78, of 4,489, 3,645 of them were not accepted because causation was not accepted. I am happy to share that tabulation and provide a copy of it.

The claim form is about 10 pages long and it is suggested that it is quite straightforward to complete. The noble Lord, Lord Kirkwood, asked: why not introduce a sliding scale of disability? A sliding scale of disability and payments would run counter to the scheme’s principle of providing a straightforward single payment for those whom the Secretary of State is satisfied are severely disabled as a result of vaccination. The noble Lord, Lord Kirkwood, also talked about the increased cost that families with severely disabled children face. That is absolutely right, but there is a range of other government programmes that provide for the needs of disabled people and disabled children: the disability living allowance, the carers’ allowance, incapacity benefit and the income-related benefits and premiums.

Both noble Lords mentioned the pharmaceutical industry and asked why it should not contribute. As requested by some lobby groups, we have broached the subject but we have not been able to find a mutually satisfactory basis for establishing such a fund. We should not allow the pursuit of that to hold up what we are doing with the order, but neither do I think that we should give up on it.

I hope that I have dealt with the points raised, but if noble Lords have any residual comments I shall be happy to try to answer them. The routine childhood immunisation programme has been a great success, as the noble Lord, Lord Taylor, said. Immunisation remains the safest way for parents to protect their children against these diseases. However, we must continue to recognise the very small number of children and their families who suffer from the effects of vaccine damage. It is seven years since the previous increase to the statutory sum. This proposal maintains the Government’s commitment to those who become severely disabled as a result of vaccination by restoring the value of the statutory sum to more than the equivalent of its 2000 value. I commend the order to the Committee.

On Question, Motion agreed to.

rose to move, That the Grand Committee do report to the House that it has considered the Child Support (Miscellaneous Amendments) Regulations 2007.

The noble Lord said: Getting the child maintenance system right is one of the most important matters that we face, as parliamentarians, as parents, and as a society. This House has always played a crucial role in national debates on the issue, and the considered views of the Members of this House has consistently both informed government thinking and improved the legislation that oversees this area. I think it is fair to say then that this House is well aware that the performance of the child maintenance system has fallen a long way short of the expectations of this House, and more importantly, of the people that the system is designed to help.

Noble Lords will know that the Government are taking action to reform the child maintenance system for the long term so that it is capable of achieving the important objectives we have set: to help tackle child poverty; promote parental responsibility; provide a cost-effective and professional service; and be simple and transparent.

Members of the Committee will soon have the opportunity to debate and scrutinise the Child Maintenance and Other Payments Bill. But there is still the short-term challenge, which we have already begun to address, particularly through the operational improvement plan, which is already showing improvements in several key areas.

The Child Support (Miscellaneous Amendments) Regulations 2007 will tackle problems that have been identified with the existing regulations. These need to be addressed now, before the proposals of the Child Maintenance and Other Payments Bill start to take effect.

The regulations will: change the way the Child Support Agency calculates the net earnings of a self-employed non-resident parent; end geographical restrictions on the courts’ jurisdiction over child support enforcement cases; and increase the time allowed for a non-resident parent who lives abroad to make an appeal, and the notice period that the agency must give such a non-resident parent before commencing certain enforcement proceedings.

The changes to self-employed income became necessary following a judgment of this House last year in the case of Smith. That case was an exceptional one. None the less, this House found that the meaning in legislation of “taxable profits”, which provides the basis for calculating such earnings, was ambiguous. The House ruled that the agency’s interpretation of “taxable profits” was incorrect. We have therefore taken this opportunity to clarify what we mean by providing a definition of taxable profits which corresponds to that used by HMRC; and to change the information used by the agency to calculate self-employed earnings. The result is that self-employed earnings as assessed by the agency will more closely match those of HMRC.

Currently, the agency uses the self-assessment tax return as the primary source from which to obtain a total taxable profits figure and calculate self-employed earnings. If a return is not available, the agency has looked to the tax calculation notice supplied by HMRC to the taxpayer instead. Following these amendments, the agency will use the tax calculation notice as the primary source of information, and this means that the agency will be basing assessments on earnings information which has been agreed by HMRC.

A key feature of the Smith case was the question of whether capital allowances should have been taken into account when calculating the non-resident parent’s income. The majority ruling of this House was that, in the current scheme, they should not. However, we believe that it is right to acknowledge the reality that over time assets tend to lose their value and that the loss should be offset against business income. This is something recognised by both HMRC and in good accounting practices. By using the tax calculation notice as the basis for assessment, capital allowances will automatically be taken into account, and this reflects our original policy intention that the profits of a self-employed person which are assessable for tax should be the basis for the maintenance calculation. The new method will be administratively straightforward and, because it provides a closer link to HMRC rules, will be more easily understood by parents. It also mirrors how we are proposing to recognise earnings from self-employment in the future child maintenance scheme.

The existing child support schemes provide an alternative method for calculating self-employment earnings when information submitted to or supplied by HMRC is not available. Under this method, earnings are obtained by deducting from gross business receipts statutory deductions such as income tax and national insurance contributions, and allowable business expenses. Currently, depreciation is not an allowable expense. These regulations reverse this, providing recognition of depreciation which will broadly mirror that intended for capital allowances.

Regulation 3 inserts a definition of taxable profits into the Child Support (Information Evidence and Disclosure) Regulations 1992 by reference to the Income Tax (Trading and Other Income) Act 2005. It also amends those regulations so that the agency can demand any information that is required from the non-resident parent to determine their taxable profits.

Regulation 4 amends the Child Support (Maintenance Assessments and Special Cases) Regulations 1992 to bring the new methods of calculating self-employed earnings into effect for the old child support scheme. Regulation 5 makes the same adjustments to the new scheme by amending the Child Support (Maintenance Calculations and Special Cases) Regulations 2000.

The Child Support Agency has at its disposal a number of enforcement measures to ensure that non-resident parents meet their child maintenance liabilities. Obtaining a liability order is usually the agency’s first step to enforcing child support debt. At present, an application for a liability order must be heard in the court in the area in which the non-resident parent resides. This means that the agency cannot make an application for a liability order against a non-resident parent who lives abroad. Similarly, appeals against deductions from earnings orders or enforcement of liability orders by distress must be heard in the court in the area in which the non-resident parent resides. This effectively means that non-resident parents who live abroad are unable to exercise a right of appeal in these cases. This is patently wrong and so we have removed these restrictions.

To complement the extension of the courts’ jurisdiction, the regulations also double to 56 days the time allowed for overseas NRPs to appeal against a decision to impose a deduction from earnings order, and they extend to 28 days the minimum notice period that the Child Support Agency must give an overseas non-resident parent when it intends to obtain a liability order. Removing the restrictions on courts’ jurisdiction will allow the agency to pursue centralisation of actions in respect of liability orders in future. This will improve the efficiency of its enforcement of maintenance arrears. To effect the required changes to courts’ jurisdiction and the relevant notice periods, Regulation 2 makes a series of amendments to the Child Support (Collection and Enforcement) Regulations 1992.

I am satisfied that the statutory instrument before us is compatible with the European Convention on Human Rights. I commend these regulations to the Committee and I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Child Support (Miscellaneous Amendments) Regulations 2007. 19th Report from the Statutory Instruments Committee.—(Lord McKenzie of Luton.)

I was interested to hear the Minister’s introduction to these regulations, and was listening carefully in the hope that some of my questions about the amendments would be answered. I have found myself with many questions about this legislation. The Minister has explained that one of the amendments it contains is a response to the case of Smith. It was found that the agency’s calculations of taxable profits for the self-employed were ambiguous and had been applied incorrectly. It seems important, therefore, that in addressing this problem the Government take care to ensure that their legislation is not ambiguous, but is instead well thought through and fully assessed. That appears, however, not to be the case.

I am sure Members will be assured by the Minister that the regulation does not meet the conditions that require a regulatory impact assessment, but does he not think that faith in the ability of the Child Support Agency would be better restored if changes to the assessment of maintenance, let alone its collection, were given such an assessment none the less? As it is, we have been given no estimate of how many children will be affected by these changes or how many maintenance payments will be changed. Given the Government’s stated intention of addressing child poverty, I am surprised that there appears to have been no analysis of how many of the 3 million-odd children living in poverty will see their families’ income rise as a consequence of these measures.

Of course, regulatory impact assessments are useful not only for the information they deliver about the impact on the public, but also for the assessment of the costs and feasibility of the changes. The Child Support Agency already has an unfortunate reputation for the number of cases waiting to be assessed. Will the Minister explain how many more will have to be reassessed because of these regulations? How much longer will it take for the backlog to be cleared because of them?

Quite a lot of these regulations deal with non-resident parents, a minority of non-custodial parents. Although there will always be unusual difficulties in assessing and collecting maintenance from a person who does not live in the country, has there really been no analysis of whether the costs of the resources that the Government intend to throw at the problem are justified by the benefit that will result?

I also have some queries about the level of interdepartmental co-ordination that will be needed to implement some of these changes. Using Her Majesty’s Revenue and Customs data to assess the taxable income of self-employed parents will require a great deal of Treasury co-operation and input. It will need to be effective joined-up government to persuade the Treasury to use resources for identifying abuses that will not greatly improve the amount of income tax that it collects, but will instead be used to the benefit of another department. Can the Minister assure the Committee that the Treasury has been fully liaising on these regulations, and that they have the Treasury’s full support? Calculating capital allowances for the purposes of macroeconomic policy and international trade will surely have a knock-on effect on child maintenance. How do the Government intend to stop these unintended consequences?

Another aspect of these regulations that has not been fully explained is how a parent without custody will challenge any changes that are made to their child support liability. As I understand it, these regulations move the responsibility for providing evidence away from the parent with custody, who always used to have to show why a reassessment should be made, to the parent without custody, who will now have to challenge HMRC’s reassessment of his or her income. What evidence will be required of them to do so, and what support will be available for them while the challenge is being processed? According to evidence given to the Work and Pensions Select Committee in February 2006, 65 per cent of cases where a liability order is sought have an error in them. That must lead to an enormous number of challenges, many of them successful, the cost of which to the CSA and the involved parents must be considerable.

That shockingly high number of errors is no doubt partly because of the overtly complex assessment system the CSA uses. We on these Benches have been proposing for a long time that this system could be simplified by being based on a previous year’s income. I am very pleased to note that the Government have taken up our suggestion on the Child Maintenance and Other Payments Bill, although it is disappointing that they do not intend to implement that much-needed proposal until at least 2010. Yet this secondary legislation implements precisely that simpler method of assessment for the self-employed immediately. Why are the Government implementing the new system for 7 per cent of the caseload now, but delaying it for so long for the majority? Are the Government content that the vast majority of CSA clients will have to struggle on with the existing discredited system until 2010? My colleagues in another place have made it clear that we on these Benches will support legislation that fast-tracks these changes for all CSA clients. The families who are struggling to work with the CSA need a speedier, more accurate assessment to process immediately.

I look forward to hearing the Minister’s response to my questions and to the comments of other noble Lords who will speak in this debate. There has been far too little information on these amendments and the wider problems that they are intended to resolve. I hope that the Minister’s response might go some way to filling in the blanks, as well as explaining the Government’s extraordinary method of improving the CSA’s assessment process.

I am very pleased to contribute to the consideration of these regulations and the Committee has little option but to accept them. If the Government were to leave the policy so much at odds with the House of Lords judgment, it would bring unfairness in the short and middle terms. For that reason, if no other, the Government are right to do this in the short term and I therefore support the suggested changes in these amended regulations, so far as they go.

I look forward to further discussions when the Child Maintenance and Other Payments Bill comes before the House in the next Session—I have always been of the view that, since its inception, the Child Support Agency, which has been beset by problems that we all understand, has been far too lackadaisical and not robust enough about recalcitrant self-employed non-resident parents. The evidence of the old and new systems demonstrates that, particularly for self-employed non-resident parents, maintenance calculations have been notional. The changes made as a result of the Smith judgment do not much improve the situation, but I hope that when we consider the more fundamental primary legislation in the next Session we will get a chance to look at that very clearly. There are lessons to be learned from Smith.

The Minister founded his case on the operational improvement plan. He is right to do that; the plan is very important, we are in its second year and I am advised that we cannot expect to see the increased outcomes that we would wish for until year three. I am prepared to believe that because a lot of training and spending is involved in year two. Is the Minister confident that the operational improvement plan will help to deal with the 7 per cent caseload of self-employed people who are difficult cases by definition, because of the trouble there is in trying to assess the real disposable income available to them? I am nervous about overturning House of Lords judgments willy-nilly, because you should do that only if you really, really have to. Reading the judgment is instructive, although the Committee would not thank me for rehearsing some of the finer legal points.

The noble and learned Lord, Lord Nicholls of Birkenhead, in paragraph 1 of his judgment in the House of Lords case, used a phrase that caught my eye. Bearing in mind that Smith was an old case scheme, he said that the regulations were,

“a singularly unhappy piece of drafting”.

That was an understatement when you look at the impact it had in that case. “Total taxable profits” was something that was left completely undefined in the original 1993 scheme. It was not even picked up and put right in the scheme that was introduced as Child Support 2 in 1999 to 2000.

The conclusion I draw from that is that when we turn to the forthcoming legislation next Session in the Child Maintenance and Other Payments Bill, we need seriously to consider applying a Social Security Advisory Committee-type mechanism so that the fine print of the legislation is poured over by people who are much more expert than we as parliamentary proponents and practitioners can possibly be expected to be. You really need to be a professor at law and a specialist in child support legislation to be confident that you can pick up all these things without the assistance of something like the SSAC, and I would be quite happy to tag this on—if I can put it that way. I do not mean to sound facetious or casual, but I think that Parliament would like some reassurance that there was another level to the process.

None of this is ideologically difficult. There are no differences between any of us in terms of the concept. The past two pieces of legislation from both Administrations of different stripes have been largely accepted by Parliament, but you get into the problems and implementation stage. So it seems to me that maybe Parliament should be looking for extra handers, if you like, in making sure that we get this right when we get to the secondary legislation level.

The department does its best, and I do not complain about that, but it is very difficult. I think the lesson of all of this is that we should be much more careful about scrutinising the secondary legislation and the way it is implemented.

The Smith case is a minority issue. It will only affect a very small number of the 7 per cent of self employed, but, by goodness, when it does kick in and applies it makes a very big difference. People involved in the Smith case were sentenced to a decade of legislation. Goodness knows what that cost. I do not know whether legal aid was involved. Trying to work out what “total taxable profits” meant in reality had a huge impact on that case. It had to go all the way to the House of Lords for that to be decided. That is nonsensical. Somebody should have seen that coming a long way down the track to prevent all that having to happen.

I have a question for the Minister on all of that. Has the department taken any steps to go back and look at the consequences of Smith, and, indeed, the consequences of putting it right in a policy sense? Are there any cases out there of a parent with care which might still be prejudiced as a result of either the Smith judgment or the policy rectification that we are engaged in this afternoon? It will not be a big number, but some of them could be prejudiced one way or the other really quite dramatically. I would like to go to my bed this evening to sleep more contentedly knowing that some effort was being made to look back at that, and not just leaving it to parents with care to say, “Well, now we have the Smith judgment. I have just read the House of Lords judgment. I will go down to my Jobcentre Plus to try to get some advice about whether this affects me”. I think that there is an onus on a department to put any disadvantage right which has occurred as a result of the Smith case, however complicated and difficult that might be.

As I said earlier, the CSA historically has been far too willing just to accept at face value the self-assessments of non-resident parents who are self-employed. In my previous experience, I came across not many, but some, extraordinary lengths to which self-employed people would go to make sure that their maintenance assessment was reduced to an absolute minimum. Of course, introducing “gross” rather than “net” will help that—and is to be welcomed. There are established concepts of deprivation of income in the social security canon of benefits law that could perhaps be used with a bit more creativity to deal with the situation more sensitively, and individual cases could be looked at a bit more slickly. At the end of the day, Her Majesty’s Revenue and Customs investigations into lifestyle versus what is carried in the account would help, too. I dealt with one or two cases in my former constituency in which the lifestyle of the self-employed non-resident parent was clearly at odds with his self-assessment of his income. In one case, a trading profit of £170,000 but a taxable income of £20,000 was shown in the accounts at the end of the year. That disparity is far too big. While in some of these cases there are difficult judgments to make, parents with care are clearly being short-changed if such situations are allowed to obtain in future.

We need to think about perhaps setting up some kind of specialist unit within the current Child Support Agency, or the new CMEC if the legislation finds favour in both Houses. We need to look carefully at definitions of capital allowances. I understand why the change is being made in this way in these regulations, but adopting even the definition that we have here is not the full answer. We are importing a taxation term that everyone understands and which is designed for a purpose that has been worked through and understood for many years. However, we are not looking at capital; we are looking at, in a child support context, the income of parents with care—which is a different context altogether from taxation rules and their definitions.

Although I think that what is being done by the Government is necessary and essential, we need to be much cleverer in looking forward to how we get a mechanism that allows the possibility of some kind of dialogue between self-employed non-resident parents that tackles capital allowances in a way that keeps his or her business going, because that is essential for everyone—if no profits are generated, then no one gets any money, including children. However, there should be some kind of dialogue with a little bit of discretion and variation. I know that I am always going on about having more simplicity and my suggestion might make the rules more complicated, but going to a tribunal appeal to deal with some of these cases is daft if we can achieve a process that is a little more flexible, allows a little more discussion and engages the self-employed non-resident parent in a way that says, “You cannot be expected to get away with gratuitous alienation and expect to hide assets in a way that disadvantages your children. That will not be allowed in future”.

However, if I were the government Minister I would be doing exactly the same as the noble Lord this afternoon. I hope that he is prepared to accept that this is not the last word on this issue. We must look again very carefully at the House of Lords judgment, take it away to the beaches with us over the Summer Recess, put a wet towel around our heads and come back with a system that is more sensitive to the circumstances of the reality of family incomes, rather than taxation law, because if we do not do that we risk failing parents with care.

I thank both noble Lords who have contributed to the discussion on these regulations. It has been an interesting prelude to what will come when we consider the Bill before too long.

The noble Lord, Lord Taylor, asked what these regulations do for faith in the CSA and asked why there was no regulatory impact assessment. It is important to consider in context the numbers of people likely to be affected, in particular by the capital allowance issue. Some 84,500 of the CSA’s cases deal with self-employed people—who noble Lords recognised as representing about 7 per cent of the total caseload. Within that cohort, very few are significantly impacted by capital allowances. I do not have the number with me, but I think it is literally a few hundred where it makes a significant difference. It is important that we see this in context.

Before the Minister sits down, if the noble Lord, Lord Skelmersdale, were here, no doubt he would be wishing that the Minister would see the Bill through because he often talks about temporary bosses and so on. I feel that I speak for other noble Lords in hoping that that will be the case. It has been nice to have a dress rehearsal.

The noble Lord is very kind. It could be the noble Lord, Lord Kirkwood. Who knows?

On Question, Motion agreed to.

That completes the business before the Grand Committee this afternoon, and it stands adjourned.

Grand Committee adjourned at 5.23 pm.