My Lords, I regret that I have to inform the House of the death last night of Lord Steinberg. On behalf of the House, I extend our condolences to his family and friends.

To ask Her Majesty’s Government how they will ensure that doctors and pharmaceutical companies fully recognise the long-term side effects of prescribed tranquillisers and antidepressants, and the nature of withdrawal symptoms.

My Lords, the Government are aware of concerns around prescribing these medicines, particularly after the report of the All-Party Parliamentary Group on Drugs Misuse. The Department of Health is undertaking a review of addiction to medicines which is due to report next year, and of course the Medicines and Healthcare Products Regulatory Agency continuously monitors the safety of medicines on the UK market and issues advice to raise awareness of the potential for side effects.

My Lords, I thank the Minister for her reply and I welcome the review. Can she confirm that there are approximately 1.5 million people in the UK who are addicted to prescribed drugs such as benzodiazepines? I declare an interest. A member of my family is confined to his room; he is trying to withdraw from one of these drugs. He cannot work or take the children to school. There is no government benefit or assistance for people in his situation. Can the Government confirm that they are getting on with a proper NHS network of support for these patients?

The noble Earl is, I fear, not alone in direct experience of what can happen to people who suffer from withdrawal reactions to these drugs. There are support services available in some areas of the country which have a good success rate in helping people to withdraw from medicines to which they have become inadvertently addicted, but we recognise that the availability of these services is variable and patchy. Our review will seek to identify what needs to be done to better support people experiencing these problems. We will also review the services that are currently provided in order to gauge the level of support available, and draw on best practice to ensure that we get full cover and support for people in these situations.

My Lords, have the Government made their own special study of the effects of these tranquillisers? Are they able to impose their views on doctors and pharmaceutical companies? Does the Minister agree that pharmaceutical companies can be far more resistant to pressure from the Government than doctors and that it will require much stronger pressure on the companies than on the medical professions?

My noble friend asks a very pertinent question. Product warnings are kept under close review. One example of this relates to products containing codeine, where new, hard-hitting warnings such as “can cause addiction” and “for three-day use only” on the front of the pack will be introduced next year. Guidance to the healthcare professions will be considered as part of the review that is taking place.

My Lords, I declare an interest as a patron of Rethink, the mental health charity, which does excellent work. There is also the medication helpline of the Maudsley Hospital.

Will the Minister consider whether there could be improvements in the information available to those who suffer from mental health problems as the result of withdrawal from prescription drugs? There may be a gap there that we could help to fill.

The noble Lord makes an important point, and the review will be looking at that. There are examples in Liverpool and Bristol of counselling information, education and advice being made available to people, but the noble Lord points to the importance of telling people who are being prescribed these drugs what the side effects might be.

My Lords, will the inquiry bear in mind the advisability of advising doctors not merely on the dangers of addiction but on the method of keeping in view the condition of people for whom they prescribe these drugs long-term, and who will become addicted without their own knowledge unless they are carefully monitored?

There is a great deal of information available to prescribers of these drugs: the British National Formulary; product information; the National Prescribing Centre, which has an excellent record; and—for the treatment of depression, for example—NICE guidance talks not only about the effect of prescribing but about the need to provide other therapies to people who are suffering from depression.

Does the Minister agree that it would be beneficial if all pharmaceutical companies were required to print information about the half-life of tranquillisers and anti-depressant drugs, so that individuals trying to manage the process of coming off them could do so knowing what the effects were likely to be over a short period?

In answer to a Question put by my honourable friend Jim Dobbin, the Minister said that:

“The half-life of a drug intended for use as a sleeping tablet is only one of many factors that influences the safe use of a medicine. Information to aid … safe use … is provided in the product information which consists of the Summary of Product Characteristics … and the Patient Information Leaflet”.—[Official Report, Commons, 20/5/09; col. 1435W.]

The key point is that those resources are used at the right time.

My Lords, in setting up the review, will the Minister ensure that it takes full account of implementation? She will know as well as I do that there is a difference between policy and implementation. Does she have any thoughts about how to ensure that this policy, which needs to be a very personal one to every member of the primary care team, is disseminated so that people are not only aware of it but follow it in practice in all the individual cases that we are talking about?

The review will be completed next year, with a report published later in the spring. We are doing a counting exercise, reviewing evidence of the prevalence of addiction, effective treatment and the long-term effects of the use of a range of antidepressants, sleeping pills and codeine-based painkillers. That will influence future policy. The noble Lord is right, though, that the policy leadership within the department has to address how to ensure that this is rolled out and how to use the machinery and levers that we have to ensure that it is implemented.

My Lords, does the Minister agree that these drugs are obviously very complicated and must be of benefit to a number of patients or they would not be in such common use? Does she have any figures on the percentage of people who become addicted?

I do not have any figures on the percentage of people who become addicted. That is part of the exercise that we are undergoing. The noble Baroness is right that we must not forget the impact of depression, for example, on sufferers, and that depressive illness is a debilitating condition. One in four women and one in 10 men in the UK is likely to suffer from depression at some point in their lives, and these drugs will help to transform their lives and enable them to cope and recover.

My Lords, does my noble friend agree that “next year” is a rather long and elastic time? Could the review not be tightened up a bit?

We are moving with all speed because we know that this is important, but I promise my noble friend that I will take his views back to the department and see if there is any way that we can hurry up.

To ask Her Majesty’s Government what is their response to the Walton Report on Access to Specialist Neuromuscular Care, launched in August.

The department welcomes the Walton report into services for those living with muscular dystrophy. Following the publication of the National Service Framework for Long Term Conditions in 2005 to improve health and social care services for those with muscular dystrophy, progress to improve services has been made. However, in some parts of the country, services are not meeting the expected standards. The department is committed to working with stakeholders to improve overall standards.

I thank the Minister for that reply, especially the last bit about improving standards. Will the Government take urgent action to address the disturbing fact revealed in the report that the life expectancy of boys with Duchenne muscular dystrophy living in areas of Britain with poor specialised services is only 18 years, while in other regions with better specialised services it is now over 30? Will the Government in particular encourage the 10 national specialised commissioning groups to ensure that there is co-ordinated multidisciplinary specialist care throughout the country for boys in that situation?

I thank the noble Baroness for drawing this issue to my attention. We have enormous sympathy for people living with muscular dystrophy—and their families and carers—particularly those with Duchenne, a very severe disease with which about 100 boys are born every year. We are very concerned that life expectancy is shorter in some areas than in others. We are aware that in some parts of the country—for example, in the south-west and West Midlands—specialist services have been redefined and redesigned. We need to learn from that. I have asked Steve Collins, who is the deputy director for commissioning, to look at how other regions might learn from the south-west and West Midlands. I am happy to offer the National Specialised Commissioning Team to work with the muscular dystrophy association to set up the best practice commissioning workshop in the new year.

My Lords, I am deeply honoured by the fact that the all-party group should have decided, at a meeting at which I was not present, to attach my name to this report. Is the Minister aware that the most recent evidence from the highly specialised centres in Hammersmith Hospital, Oxford, Oswestry and Newcastle upon Tyne has been able to demonstrate that, for boys with Duchenne muscular dystrophy, the average age of death is now in the 30s, with a few boys now living into their 40s? To ensure that there is stronger national leadership and clearer accountability for the development of specialist health services for neuromuscular diseases, will the Government instruct the NHS National Specialised Commissioning Group to appoint a national named lead, who will be responsible for the development and co-ordination of specialised commissioning for these patients?

I have to say—I am sure that the House will join me in this—that I am not surprised that the report was named after the noble Lord, given his record and work in this area. For those with rare neuromuscular diseases whose services are commissioned by the National Commissioning Group, there is already in place a named commissioning manager, medical adviser and finance leader, who have responsibility to commission these services. However, of course this varies across the 10 SHAs and groups, depending on the type of commissioning that they are doing. I should like to take the noble Lord’s question back and ask again whether we will be looking for a named lead responsible for those services. I suspect that, given his intervention, the answer will probably be yes.

My Lords, what progress has been made in embedding in the NHS the vital posts of neuromuscular care co-ordinators in the UK, several of which are reliant on charitable funding? All of them are vital in maintaining equal access to healthcare for people with muscular dystrophy and other neuromuscular conditions. Does the Minister realise that this is an equality issue, not just a health one?

The noble Baroness points to the very important work that neuromuscular care co-ordinators do and we are aware that several of them are reliant on charitable funding. The local health authorities are responsible for ensuring that they have the correct mix of health and social care professionals to meet the needs of their local population who live with muscular dystrophy. PCT commissioners should consult the local stakeholders on their plans for commissioning.

My Lords, I declare an interest as a supporter of the NeuroMuscular Centre in Cheshire, one of the flagship providers in the charitable sector for people with serious muscle-wasting diseases. The well named Walton report refers to a lack of clarity and responsibility in the NHS for supporting services for people with these diseases. What pressures can be brought to bear on the one-third of primary care trusts in the north-west that refuse to provide any support to the NeuroMuscular Centre for the work that it does on behalf of their patients, while the other two-thirds of the PCTs are glad to do so?

The right reverend Prelate points to where we started with this Question, which is the patchy nature of some of the services. I am hopeful that, if our National Specialised Commissioning Team will work to set up the best practice commissioning workshop, we will attract people from across the country who are dealing with this issue and that we can encourage them to use the best practice.

Does my noble friend accept that there is a widespread problem of access to these services? There has been reference to the centre of excellence at Newcastle upon Tyne, which certainly is a centre of excellence. However, is she aware that those living on the west coast of Cumbria, for example, have to travel right across the United Kingdom to Newcastle to have access to those services? Is that really satisfactory?

I think that it is probably absolutely not satisfactory, which is why we have to attend to reviewing this and are calling on our local services to make sure that they provide local care at local level.

To ask Her Majesty’s Government what restrictions apply to political activities of former chief armed forces officers whilst they are still in receipt of remuneration from the armed forces.

My Lords, regular service personnel are free to join political parties. They are not permitted to take an active part in political activities during their service with the Armed Forces.

My Lords, in thanking the noble Baroness for that Answer, I am sure that the House will appreciate that my Question has been provoked by the announcement that General Dannatt is to become a Tory adviser on defence. First, does the noble Baroness think it appropriate for a senior officer who is still being paid to be paraded in this way by a political party? Secondly, does she agree that, to ensure that senior officers are not seen as party political, it would be better for there to be a significant gap before the Chief of the General Staff, after his resignation, joins a political party? Thirdly, does she agree that in the event of a change of Government, were that to happen, General Dannatt’s replacement as CGS will be placed in an impossible position if his advice to the Prime Minister is countermanded by his immediate predecessor?

My Lords, the noble Lord raises some interesting speculation about what might happen on some future hypothetical occasion should there be a change of Government. Queen’s Regulations give very clear guidance on what should happen when members of the Armed Forces seek to participate in politics. As I mentioned, it is possible to be a member of a party but not to be active in it. There are also rules about gaps between leaving service and taking paid employment. As for who should sit on the current Opposition Front Bench, or on any future Government Front Bench that is not from my political party, I would not dream of speculating.

My Lords, does the Minister consider that, in this context, a pension counts as remuneration?

My Lords, the pensions of those who serve in our Armed Forces at senior levels come into play as soon as they leave the service and they are significant. They are something that people work for and pay for. I think that those who leave senior positions in any area of life have to be extremely careful about what responsibilities they take on subsequently.

My Lords, as I understand it, this appointment is being made in the period that is known as the period of terminal leave, which is a paid period. Can my noble friend tell us, as a matter of fact, whether there are any restrictions on the political activity of former members of the Armed Forces during the terminal leave period? Also, given the serious disquiet that there has been in some quarters about this appointment, not least in the MoD, can she tell us whether there have been any formal complaints to Her Majesty’s Government and whether she has received any informal representations?

My Lords, I do not wish to talk about informal representations from the Dispatch Box, and, of course, any formal complaints would not come to Ministers because Queen’s Regulations are enforced by the Army itself and not by Ministers. My noble friend is right that this is the terminal leave period. The former CGS stood down from his responsibilities on 28 August and does not leave the Armed Forces until 22 November. Queen’s Regulations state what should happen when people want to take up paid employment. They actually say that a candidate must take all steps within his power to ensure that no public announcement is made before he has retired or resigned. However, I think that the leak may not have come from the individual but perhaps from a party leader of a particular persuasion.

Does the Minister not have some sympathy for General Dannatt? When he was appointed, he specifically said that he was taking up this appointment because of the lack of expertise on the Tory Front Bench in this matter.

My Lords, I have found the Tory Front Bench, as indeed all Members of this House, very diligent in their responsibilities in questioning what is happening in the Ministry of Defence.

To ask Her Majesty’s Government whether they will examine and consult on the recommendation of the Electoral Commission that election turnout could be increased by transferring polling to weekends.

My Lords, the Government have already conducted a full public consultation on the merits of moving election day to the weekend and whether it could be expected to support greater participation. The Government’s response to the consultation will be published shortly in the context of the Government’s wider thinking on promoting engagement in the electoral process. However, the responses reveal that there is a wide range of views on whether weekend voting would have a positive impact on turnout.

My Lords, I am truly grateful to the Minister, unusually, for that reply. Will he confirm that it is the Government’s overall intention to seek ways to increase participation in elections, particularly in parliamentary elections, because that is so crucial to the future of our democracy? Will he therefore take this opportunity to say in straight terms that the proposals of officials in the Ministry of Justice to the Treasury that there should be restrictions on the number of hours for polling and a marked reduction in the number of polling stations, particularly in rural areas, are dead and buried? Will he also confirm that Mr Straw said that these proposals were completely unknown to Ministers? In those circumstances, can he explain what would have happened if they had gone to the Treasury without being leaked? Would the Treasury then have sought to implement them without reference to Ministers?

My Lords, as my right honourable friend the Justice Secretary made absolutely clear on Friday, the document referred to by the Times newspaper was a working paper produced by officials collating ideas for further consideration. It does not represent agreed government policy. Had Ministers seen the proposals, officials would have been informed that many of them were simply unacceptable. They will not be developed any further.

My Lords, are there not reasons profounder than the possible inconvenience of voting on a Thursday why turnout at elections has declined? Does my noble friend think that they may include public revulsion at adversarial politics and negative campaigning, disillusion with a consumer model of politics, routine trivialisation and disparagement of politics by the media and loss of respect for politicians?

My Lords, there clearly are a large number of reasons why in recent decades the number of people voting at general elections has on the whole gone down. However, I should point out that the 2005 turnout was higher than the 2001 turnout. I am sure that my noble friend has stated some of the reasons why that has happened and it is right that we, particularly in this House, should defend politics. There is no doubt that politics and politicians get a very raw deal at present from what passes to be the media in this country.

My Lords, following on from what the noble Lord, Lord Howarth, said about people being alienated from the electoral process, does the Minister accept that his Government’s policies are wrong, particularly on matters such as immigration—even the Home Secretary has admitted that—and have been wrong over the past few years, which has led to support for fringe parties such as the BNP and, as the noble Lord, Lord Howarth, said, to a large number of people being alienated from the voting process?

My Lords, I do not agree at all with what the noble Lord suggests. The fact is that all political parties from time to time face the onslaught of the media, including individual and party politicians. That is a danger which we all face in a democracy such as ours. For the noble Lord to categorise one aspect of policy as if that somehow led to one result does not give enough seriousness to the issue we face.

My Lords, given that we live in an electronic age in which most of us use computers on a regular basis, does my noble friend agree that it is time we introduced electronic voting in this country to ensure that the maximum number of people can vote from a maximum number of places? Does that not mean, to ensure security, that we must eventually introduce compulsory ID cards?

My Lords, on the first part of my noble friend’s question, which is very much relevant to the Question I was originally asked, e-voting, as he knows, has been trialled in statutory elections in the UK and it certainly remains one of many possibilities for further consideration as a voting method. But the introduction of voting by internet would require careful consideration. We would have to be sure that the necessary technological and legislative provisions were in place to maintain confidence in the electoral process. Of course, that would require primary legislation, too; and I have to tell him that it would not be right to bring forward changes of such substance to the parliamentary election rules this close to a general election. Indeed, if we did, we would be criticised for it.

My Lords—

My Lords—

My Lords, I am sorry, but it is the Liberal Party’s turn, although I am sure we will hear from the noble Lord, Lord Forsyth.

My Lords, when the Government respond to the consultation on voting will they indicate whether they have taken into account the fact that France, Germany, Spain, Italy and a majority of countries in the European Union hold their voting in general elections at weekends? What impact might that have on voting turnout?

I am sure that we will take account of what happens in other countries. The Electoral Commission survey led to this Question. It made an interesting finding, but it is perhaps worth noting that the answers to the survey, particularly when responding to a prompt from an interviewer, as was the case here—I remind the House that the commission asked non-voters if the opportunity to vote at the weekend would have made them more or less likely to vote—are not always a good indicator of voter behaviour, perhaps in part because people still feel some social obligation to vote.

My Lords, given that the Electoral Commission now costs more than £100 million over the course of a Parliament— £25 million a year—which is more than all the political parties will spend altogether on all the elections conducted during the course of a Parliament, including a general election, does the Minister not think that this body has too much time and money on its hands?

My Lords, I do not. The noble Lord will remember, from legislation that this House helped to pass a few months ago, that we have reformed the Electoral Commission so that it can do its job even better than it does at the moment.

My Lords—

My Lords—

My Lords—

My Lords, I am seldom lobbied on any matter to do with the business of the House, mostly because my friends and family recognise that I have very little influence over the business of the House. However, I am lobbied constantly on the disruption to the lives of working parents when schools are closed on Thursdays for elections. Does the Minister agree, now that more mothers are participating in paid employment, that it is important to recognise this when responding to the consultation exercise that has taken place?

My Lords, certainly it is an important consideration. There is another consideration on the other side—there always is—which is that people do not always like to have their weekends disrupted.

My Lords, is it not the case that when people are sufficiently enthused and motivated by political parties and candidates, and by the democratic political system, they will go out and vote; and that until such time as they are, no matter what tinkering the Government want to do with the mechanics of voting, people have a perfect right to stay at home and say, “We are having nothing to do with any of you”?

My Lords, in strict legal terms, of course they have a perfect right to stay at home. Whether they have the right in other ways, I am not as convinced as the noble Lord. Many people gave a lot of time and blood to make sure that those over the age of 21—except of course those in this House—had the right to vote. That is something that should be taken extremely seriously. Enthusiasm about politics and politicians is very important, and politicians have a role to play in that. However, if I may go back to an earlier theme, so too do the media.

My Lords, with the leave of the House, my noble friend Lord Mandelson will now make a Statement on higher education. My noble friend Lord Myners will repeat the Statement on banking reform immediately after the Statement on higher education.

With your Lordships’ permission, I should like to make a Statement about Higher Ambitions—The future of Universities in a Knowledge Economy that we are publishing today and placing in the House Libraries.

The past 10 years have been a decade of outstanding achievement for higher education in this country. Talented people and enterprising institutions, backed by public investment and reform, have delivered the twin objectives of widening access and creating excellence.

When the Government reformed university fees, we were told that students, and especially poorer students, would be put off from applying. The opposite has occurred. A record number of students now attend university, and the gap between socio-economic groups has narrowed, not widened. For the first time, a million people will start their studies this year. The quality of student academic achievement is high. Drop-out rates have fallen by a fifth and the number of Firsts has doubled. This demonstrates that wider opportunity is not the enemy of excellence, as opponents of change have alleged.

We have a disproportionate share of the world’s leading research universities. With just 1 per cent of the world’s population, we achieve 12 per cent of the world’s scientific citations. Institutions across the sector have contributed to the success—the newer universities alongside the older ones.

Public funding for both research and teaching has increased by more than 50 per cent in real terms since 1997. Universities have developed new sources of income, and tuition fees are bringing in £1.3 billion a year to boost the quality of a student’s education. We should thank universities, their teaching staff, administrators and students for this outstanding record of very real achievements.

The strategy that we are publishing today aims to set a course for an equally successful decade ahead. But new times and new conditions require some fresh policy choices and judgments. The coming decade will see public expenditure inevitably more constrained. Attracting the best students and researchers will become more competitive. Above all, it will be a decade when our top priority is to restore economic growth, and our universities need to make an even stronger contribution to this goal. Able people and bright ideas are the foundation stones of a thriving knowledge economy. Producing both are what good universities are all about. So in the next 10 years we will want more, not fewer, people in higher education and more, not less, quality research.

Our first objective, therefore, is that all who have the ability to benefit can access higher education. There should be no artificial caps on talent. Our goal remains for at least 50 per cent of 18 to 30 year-olds to enter university. We have made great progress in the number of people beginning a three-year degree at 18 or 19 years. But the challenge for the next decade is to offer a wider range of study opportunities—part-time, work-based, foundation degrees and studying whilst at home—to a greater range of people. So we will encourage the expansion of routes from apprenticeships and vocational qualifications to higher education, and offer more higher education in further education colleges.

Inadequate information, advice and guidance at school still bar too many young people from fulfilling their potential. We will work with the Department for Children, Schools and Families to rectify this. To meet the social mobility goals in Alan Milburn’s report, all young people must be encouraged to strive for challenging goals by teachers with ambitious expectations for them.

Universities should also do more to reach out to all young people with a high potential. I want to be clear that this Government will not dictate universities’ admissions procedures, nor undermine excellence. All students must continue to enter higher education on merit. But I believe merit means taking account of academic attainment, aptitude and potential. Many universities are already developing their use of contextual data, and we hope that all universities will consider incorporating contextual data into their admissions processes better to assess the aptitude and potential of those from disadvantaged backgrounds.

I am also asking Sir Martin Harris, who heads the Office for Fair Access, to consult vice-chancellors on improving access to the most selective universities, and he will report back in the spring.

The Government’s second objective is for universities to make a bigger contribution to economic recovery and future growth. Knowledge generation and stewardship in all subjects have public value and are important in their own right. They are vital, in particular, to creating wealth through the commercial application of knowledge and preparing our people for employment. We have therefore decided to give greater priority than now to programmes that meet the need for high-level skills, especially in key areas such as science, technology, engineering and maths. A new contestable fund will provide universities with the incentive to fulfil this priority. Areas where the supply of graduates is not meeting demand for key skills will be identified. We will seek to rebalance this by asking HEFCE to prioritise courses which match these skills needs.

We will look to business to be more active partners with our universities. Employers should fully engage in the funding and design of university programmes, the sponsorship of students and offering work placements. We believe this is possible without compromising universities’ autonomy and educational mission.

Our third objective is to strengthen the research capacity of our universities and its commercialisation. The investment of the past decade has greatly strengthened the public science base. We will continue to protect its excellence. This will require a greater concentration of world-class research, especially in the high-cost scientific disciplines. Research excellence is, of course, spread across a wide number of institutions and subjects. The challenge now is to develop new models of collaboration between universities and research institutions, so that the best researchers, wherever they are located, co-operate rather than compete for available funds.

The Government’s fourth objective is to promote quality teaching. The quality of education provided by our universities is generally good but needs to be higher. I welcome the action that universities are taking to raise standards in teaching and to strengthen the external examiner system. Students deserve nothing less. They will rightly expect to be better informed about how they will be taught and their career prospects. We want the Quality Assurance Agency to provide more and clearer information to students about standards in our universities. Students’ expectations and actual experience should be central to the quality assurance process.

Our fifth objective is to strengthen the role of universities in their communities and regions and in the wider world. Universities provide employment, enhance cultural life and offer many amenities to their surrounding communities. They shape and communicate our shared values, including tolerance, freedom of expression and civic engagement. We will support universities in safeguarding these values. We will ask universities to continue developing their role in local economic development with the regional development agencies and with business. The Government will also do more to champion the international standing of our universities as world leaders in the growing market for higher education across borders and continents, including by e-learning.

In the decade ahead, we will expect more from our universities than ever before. They will need to use their resources more effectively, reach out to a wider range of potential students and devise new income sources, while maintaining excellence. As we look to our universities to do more, we will also need to look afresh at securing the funding that excellence requires and how all who benefit from higher education—taxpayers, students, and the private sector—should contribute. It was agreed in 2004 that the new fees structure in England should be reviewed at this stage and the Government will make an announcement about this shortly. But I should stress that we will seek a properly and fairly balanced approach, without placing an unreasonable or counter-productive burden on any single source of funding.

At the heart of the framework published today is a strong and creative vision of higher education: about strong, autonomous institutions with diverse missions and a common commitment to excellence; about a shared framework for extending opportunity to all who can benefit; and about our universities as a cornerstone of our country’s cultural and social vitality and our future economic prosperity. I commend this Statement to the House.

My Lords, I thank the First Secretary of State for the Statement and for his courtesy in showing it to me beforehand. Like him, I pay tribute to the great strengths of our higher education sector and to the talented people who work in it. This strategy document has been a long time coming. When, in his first week in office, the Prime Minister established the Department for Innovation, Universities and Skills, many people might have expected a clear statement of the Government’s approach to higher education. Unfortunately, before that happened, the department was shut down. We were then led to understand that a strategy paper would, none the less, appear in late summer or early autumn. There were even leaks about the possibility of no-fee degrees for those living at home, which I did not hear the noble Lord mention today. Then, after a speedy U-turn, we were told that the document would appear in mid-October. But even if it is third time lucky, we still welcome the main themes.

It is right to focus on the quality of the student experience. My honourable friend David Willetts has raised this issue repeatedly in recent months, so it would be churlish of me not to welcome the Government’s perhaps somewhat belated commitment to this issue. Students are borrowing much more than they used to in order to attend university, and the sum of money that each university receives per student has increased markedly. Universities have strived to reflect this in the education they offer, but the national student survey shows no clear trend in student satisfaction.

Irrespective of the future level of tuition fees, we need a new focus on the quality of the education on offer as well as the consequences in terms of salary and life chances of studying different courses at different institutions. That was the conclusion of the Government’s own student juries and it explains why my party’s work on the problems of social mobility has produced, among other things, the concept of a new, independent, all-age careers service and a proposal for a new social mobility website.

We also welcome the Government’s commitment to improve the links between businesses and universities. At every level, education is and should be about so much more than the financial benefit in career terms. But too often the whole debate about higher education has downplayed, or even excluded, the role that businesses can play, and increasingly want to play. Strengthening the links between business and higher education offers benefits to students, companies and the wider economy.

It is regrettable that more progress has not been made over the past decade and that the issue is only now receiving the Government’s attention—now that companies are struggling to cope with the effects of the recession. Nevertheless, the most innovative universities have made steady progress and are already showing the benefits that accrue from stronger links with business. So even if progress is overdue, we welcome that new commitment also.

Today’s document is not primarily about the student finance review, but while that is still to come this document is likely to be closely studied for clues about that whole area. We have been calling for more than two years for the review to start. However, now that it will soon begin, we do not think that it is in anyone’s interests to rush to judgment. It cannot be, as some people would like, a 10-minute review in which a small group of vice-chancellors agrees simply to raise fees. No decisions should be taken until we know more about the educational impact of the last increase in fees, or about the public spending consequences of a further increase. We are also clear that the review must be broad.

Sometimes, this Government have tended to think of students as exclusively young, full-time undergraduates. But the student body is so much more diverse, with mature learners, part-time learners and second-chance learners. We would like to encourage further diversity in years to come, as the number of young people falls and as we rebalance the economy. So when the student finance review finally starts, it must look at higher education in the round. If that happens, we will do what we can to co-operate on a cross-party basis.

While we welcome the Secretary of State’s focus on the student experience and improving links between business and universities, and while we look forward to co-operating with the review, we have some real concerns about the Government’s approach to higher education. Not all the key indicators have been moving in the way we were promised. A decade ago, the Government adopted a suspiciously round target of having 50 per cent of all young people at university by 2010. Today, despite numerous changes to the way the data are measured, the proportion of young people at university is still way below that level.

Despite the shortage of other opportunities during the recession, and record increases in applications, Ministers are now threatening to fine universities which have over-recruited students this autumn. Universities must sometimes feel as though they are in an absurdist play in which one hand of Government urges them to take on more students while another seeks to punish them for working to achieve that. Ministers used to speak a great deal about widening access to university—we heard more talk of that today—but the key figures show that progress has been regrettably slow. The number of students from socioeconomic groups four to seven has inched up from 28.2 per cent to 29.4 per cent since 2003-04. We also deprecate the slow progress that has been made in helping part-time students, who are on a funding regime that is clearly indefensible, and on older learners, many of whom have been put off from going back to university by the Government’s penal changes to the equivalent and lower qualifications rules.

I finish by posing four specific questions to the Secretary of State on the back of today’s Statement. First, will the student finance review team be free to consider questions about part-time funding, about the links between higher education and further education and about postgraduate funding; or will it be asked to look simply at the level of the fee cap and to rubber stamp the direction outlined in today's strategy document?

Secondly, the noble Lord mentioned the appointment of Sir Martin Harris to consult vice-chancellors on improving access to the most selective universities. Can he say whether and, if so, how, that exercise will tie into the funding review? Thirdly, given the mixed record of Aim Higher and other initiatives, how can he reassure the House that future efforts to widen participation will be more successful? Lastly, can he reassure the House that the current crisis in the Student Loans Company, which is hurting vulnerable students hardest of all, will not be forgotten as the longer term questions about higher education take centre stage?

My Lords, I thank the First Secretary of State for his Statement and say how very welcome it is. We share with him the celebration of what has been achieved by our universities during the past two decades in widening access and exploiting their research opportunities, so that we are challenging the United States in spin-offs per capita and the quality of education provided.

Equally, a number of problems are posed to our universities today. Whether one can, as the noble Lord did in his Statement, cite the fact that there has been a doubling of first-class degrees as an indication of the quality of performance of our universities, I am not sure. The Select Committee in the other place raised some real questions about that issue, but also about the quality of teaching being provided generally. We have seen difficulties in the trade-off between money to be spent on research and money to be spent on teaching in our universities, with the emphasis on research coming from the research assessment exercise such that, on occasion, money for teaching has been squeezed in favour of research.

I have a number of specific questions for the Minister, some of which reflect concerns expressed by the official Opposition. First, he talks about widening the range of routes into university and of the widening of study opportunities, which is welcome. Precisely how are the Government considering the inequity between part-time and full-time funding for students? At the moment, all the incentives are to be a full-time student, not a part-time student. It is unfair that a full-time student who does 20 hours work a week can claim a full-time grant, whereas those who are honest about it and try to learn and earn at the same time are penalised for doing so. It would be interesting to hear how the Government propose to address that inequity.

Secondly, the noble Lord talks about careers opportunities and how vital they are. In the Apprenticeships, Skills, Children and Learning Bill, currently before the House, we have been considering the importance of careers teaching for young people and how apprenticeships, in particular, should be widened. However, there is a crisis in the Connexions service. There are not enough qualified people to provide the service in schools. What does the Secretary of State propose to do about revamping the Connexions service and providing a proper careers service in schools?

The Statement refers to prioritising STEM subjects and to a contestable fund for HEFCE. Will it be limited to science, engineering and maths subjects or will it be extended to other subjects where there is a strategic shortage of teachers, such as languages, and even to some of the creative arts subjects where employment opportunities are expanding fast but we have to look overseas to meet them?

The Statement also refers to concentrating research resources. Is there evidence to support this? I was involved in research by the Science Policy Research Unit in the 1990s. We looked at the productivity of research groups and found that, except in exceptional circumstances, such as in astrophysics, research concentration did not increase productivity in publication or patenting terms. What was needed was a group of half a dozen like-minded people who could bounce ideas off each other. In the early 1990s, that was within their own little group, but the internet makes collaboration that much easier. The Secretary of State is quite right to emphasise collaboration. The degree to which there is evidence to support concentrating research funding rather than encouraging diversity, because from diversity comes creativity, is vital.

Finally, I return to fees. We recognise that the Statement does not address them. A review will be announced next week. We on these Benches are rather sad that the two main parties have connived to make sure that the review reports after the general election. Fees are a highly contentious issue, so it is obviously very convenient to have the report after the general election rather than before it. We have two questions. First, in considering how far fees should increase, how far is it right that our young people should be burdened with even greater debts than at the moment and should have to start out life with these huge debts? Is this a good way of funding their contribution? Secondly, are the Government looking at some of the more creative ways of funding the student contribution that, for example, the National Union of Students is now exploring? I echo the points made by the noble Lord, Lord De Mauley, about the Student Loans Company. Student loans are now worth £30 billion as part of the national debt and are increasing by £7 billion to £8 billion a year. At the moment, the Student Loans Company—the public exchequer—is having to meet increased fees. Is that really sensible?

My Lords, I am very grateful for the relevance and precision of all the questions put to me. I shall respond first to the noble Baroness. As I said in my original Statement, it is important that we reduce the inequity—as she calls it—between full-time and part-time students. In the next 10 years, we will face a falling number of teenagers, and we will therefore want to attract older people into higher education. In doing so, we must vary patterns, lifestyles and backgrounds—those in work and not—to maximise our recruitment to higher education. Therefore we will look at how those who want, or are available for, part-time as opposed to full-time study may be attracted into higher education, and how we can make that more possible.

I have been in this House on occasions during debates on the Bill. Indeed, I have heard the noble Baroness, Lady Sharp of Guildford, speak about careers teaching in our schools. I am very glad that the Secretary of State for Children, Schools and Families has recently proposed to make available much better information, advice and guidance, and we will work closely with his department to promote that.

The noble Baroness asked about the priority given to STEM subjects. My view of this and whether we should extend the finance available from contestable funding is that it depends on the relevance of other subjects, some of which she mentioned, to the economy’s skills needs. She mentioned languages. Employers do look to languages—they are an increasingly important skill need, despite the preponderance of English speaking in the world—so when we consult HEFCE and others on how contestable funding will operate, we will certainly take her observation into account.

I see the noble Baroness’s point about research groups and research concentration. None the less, there are now many examples across the country of where concentrating funds on a greater critical mass of researchers has given dividends. This year, the Engineering and Physical Sciences Research Council has established 45 multidisciplinary centres for doctoral training that are building links between different teams and universities and with industry on the basis of previous experience and a track record. We need to experiment with models of that sort to see whether research concentration will give us even greater benefits and dividends in the future.

The noble Baroness also talked about the fees review. If she does not mind, I would prefer to describe that review and its remit and terms of reference when I have consulted on them, when they have been agreed and when I am ready to announce them to this House. That will be before too long.

The noble Lord, Lord De Mauley, asked about the Student Loans Company. I am very sorry, as I have said before, that the company’s service has fallen well short of the expectations of students and their families. More students than ever before have applied to universities, so the workload has been huge. None the less, there is no excuse for the service which the company has provided. We are inquiring into what went wrong to ensure that it does not happen again.

The noble Lord asked whether the fees review will include the financing of part-time students. I think that I have answered that. It will. Similarly, Sir Martin Harris looked at access to the more selective universities. Where they are relevant, there will be plenty of time for his findings, which I expect next spring, to be fed into the work of the fees review, which we expect in the next nine to 12 months.

The noble Lord asked about wider participation and hoped that there would be more success with that in the future. We are at 43 per cent and rising, which is not a bad record given our target of 50 per cent. It just shows that we have more to do in, among other ways, the approaches that I have described in the Statement.

Overall, I have to thank the noble Lord for what he has said. It must have something to do with the clarity, relevance and coherence of our proposals that I do not think that he has been able to find a thing I have said this afternoon with which to disagree, which I welcome. In following our approach, I hope that the noble Lord will check his homework and his figures with his colleague the shadow Chancellor, from whom it seems that education is not very high on his priority list. I can only take at face value what Mr Osborne says. When we hear from Conservative Party spokesmen, we just have to bear in mind their record when they were in government. It is very serious.

I am slightly torn, but I feel that I have to quote the chancellor of Oxford University, Chris Patten, the former Conservative Party chairman, in this context. Last year, the noble Lord, Lord Patten of Barnes, said:

“What is true is we”—

talking about the Tories in the 1990s—

“expanded higher education hugely by reducing the investment in each student. In just over a decade we doubled the number of students and halved the investment in each. The Treasury calls that higher productivity”.

That, he said, is,

“a euphemism for poorer pay, degraded facilities, less money to support the teaching of each student”.

We do not have to look into the crystal ball to know what might be offered by the Conservatives. We just have to look at what happened last time.

My Lords, I will try to resist the temptation to engage in such base politics, because I was going to welcome much of what the Secretary of State said. Perhaps he might recognise the fact that the greatest expansion of university education took place when I was Secretary of State, but that is ancient history. I welcome in particular two aspects of what he said. The first is that he will ensure that, as the cost of education is borne more and more heavily by students, universities give good value for money, which is absolutely essential. Secondly, I welcome the fact that he is going to make more higher education studies and faculties available in further education colleges. We must bring the further education and the higher education sectors together. If we are to produce a skill-based economy, it must be a seamless robe.

The Secretary of State used a very engaging phase in the Statement in saying that he wanted no cap on talent. Perhaps I may ask him about the numbers going to university. This year there has been a record application and it looks as though next year will exceed that by a substantial figure, because those who did not get in this year are applying again and there has been a surge in overseas student applications. In his discussions with the Chancellor in the next few weeks, will he do everything that he can to ensure that, next year, all those British students who want to go to university and who are qualified to do so will be able to? There should be no cap on talent.

I welcome what the noble Lord has said and take this opportunity to wish him a happy birthday. It is very important to stress this point: if we are going to ask students to make greater individual payments and to take out loans, which they pay back subsequently, they have to be treated like quality paying customers of these institutions. Therefore, they have to know which institutions, universities and courses they are choosing between and among. They need more information to choose from. That information must include the quality of teaching, the number of teaching hours and the amount of face-to-face contact between themselves and university teachers. The QAA has a particular responsibility to make a great and proactive effort to elicit, categorise and tabularise that information and make it available to students. I can assure the noble Lord that, in the discussions that I will have with the Chancellor, I will emphasise the great need, for the vitality of our society and for our economic strength and growth, to continue to invest in universities and higher education programmes as much in the future as we have in the past 10 years.

My Lords, I must declare great enthusiasm for what my noble friend said. Some of us tried to run universities under the previous regime and this is a pleasant improvement. It is worth pointing out that some of the Government’s other policies have also assisted higher education. I am thinking particularly of devolution and our higher links with Europe, bearing in mind what my noble friend said about the need for promoting regional development and extending higher research collaboration with other universities.

There is a possible mismatch between two of the excellent objectives that my noble friend mentioned—namely, the existence of high-level institutions and clusters of people working at that level and the need for developing professional skills. Our best institutions and departments seem to me to be concerned with something else: developing the intellectual resources of students. For example, you train students in the principles of jurisprudence, not how to be lawyers. It is important that the work of universities is not diminished or cheapened in that respect.

The point about part-time students is extremely important, given the Government’s commitment to lifelong learning. I should like to hear from my noble friend a further affirmation of the need to resource that, bearing in mind the trouble that we had earlier with ELQs and their diminishing effect on, for example, the Open University. One hopes that that will be overridden.

Perhaps I may make a final plea as one who was once a vice-chancellor. Universities would get on very much better if they had to grapple with less bureaucracy, which has been a managerial constraint. Mankind is in paper chains in our universities, but it would be nice to be free.

I certainly agree with my noble friend that as much form-filling and box-ticking as we can persuade others to reduce is welcome, but perhaps I may emphasise one of my noble friend’s other points. Universities are not factories for producing workers; they are educational institutions that exist not only to generate, transfer and inculcate knowledge but also to enable those who benefit from higher education to use that knowledge. When I talk of skills, I refer to a range of attributes of a graduate that together make up an individual’s employability. As employers constantly stress to me, they look as much for generic and soft skills as for specific and hard skills, if I can use those expressions.

My Lords, would the Minister say a little more about the concentration of research, particularly in the science, engineering and technology fields? I agree entirely with the noble Baroness, Lady Sharp, about collaboration, which can take place in these subjects as well. However, in certain subjects it is difficult to supply the equipment necessary to more than one institution. This does not mean that the institution has the right to use all the equipment itself. A very good model can be found in the United States at the National Science Foundation, where centre status is allocated to given universities on the basis of the strength of their case that they will collaborate with anyone in the country by making the facilities available to them. This is essential in many subjects, but especially in my own, that of microelectronics. We have lost our competitiveness in this country because we failed to do that. The money was spread over about five institutions, none of which had adequate resources to sustain international competitiveness.

There are some areas where we have concentrated extremely well. Here I declare my interest as chairman of Diamond Light Source Ltd, which is the UK’s largest science project. It has been extremely successful, but I have written to the First Secretary to say that, unfortunately, because of funding difficulties in the Science and Technology Facilities Council, the future even of that resource is in jeopardy. Can the Minister reassure us that the facilities that we have established will not be put at risk in the future and that we are prepared to concentrate resources within individual institutions on the basis that they share their equipment with everybody?

Yes, my Lords, I think that I can give the noble Lord that reassurance. In what he says he seems to be endorsing the approach that I have set out this afternoon. First, I would like to stress that, when I talk about research concentration depending on the volume and critical mass of the research being undertaken, that is not related to the size or status of a particular institution. It is very important to stress that. Secondly, the noble Lord is right to point out that, if we were to spread our resources thinly across too many institutions or research centres, it might result in each of them having insufficient resources. That is at the core of what I have described today; it is precisely what we want to overcome with what I hope is a smarter, more intelligent approach to the allocation of research funds. Incidentally, those funds have doubled over the past 12 years of the present Government. We have invested in particular in our first-rate, first-class science base and we intend to continue to protect that science base.

I want just to make a final point. The reason why I believe that science needs to attract particular funding and a concentration of resources is that it involves investment in technology and machinery that is much more expensive than in other disciplines. That is why we are drawn to science and why we have to look to applying the principles of resource concentration in that direction.

My Lords, I declare my interests as chairman of the council of the Royal Veterinary College and chairman-elect of the Institute of Education. The Statement mentions Alan Milburn’s Panel on Fair Access to the Professions, of which I was a member. The noble Lord will know that the paper produced by the panel identified real problems with the careers service and the advice on careers given by teachers in schools in relation to tackling the aspiration gap. The paper made some fairly specific suggestions on what universities should do about this, but I do not think that I noticed what specific guidance was going to be given to schools and the careers service about what they should do on their part. After all, they have longer contact in terms of years with young people in which to help them to develop their aspirations. I would like an assurance from the noble Lord, because I do not think that I got it from the Statement, that these deficiencies will be addressed as vigorously as he says he will address the apparent deficiencies in the performance of the universities, although I must say that I think most universities are making every possible effort to address those.

First, I thank the noble Baroness for the work that she put in with Alan Milburn and her other colleagues to produce an excellent piece of work and a first-rate report.

The noble Baroness is absolutely right to place emphasis on the careers service and the provision of information, advice and guidance on careers in schools. She would, if she had listened carefully, have picked up a sentence or more in my Statement. I invite her to look at the framework statement as a whole, where she will see the emphasis that we have placed on this. It is why we are going to co-operate even more closely and diligently than we have in the past with the Department for Children, Schools and Families, which has responsibility in this area.

I hope that teachers in schools will reflect on their own vital role in nurturing, cultivating and encouraging confidence and ambition. I benefited from education at a wonderful college at Oxford. I was the second member of my family to go to university but the first to go to Oxford. I would not have dreamt of applying there had it not been for my economics master, Mr Michael Brown. Despite my headmaster’s opposition to my going anywhere near Oxford or Cambridge—he was not in the mood for encouraging me to go anywhere but down and out of his school, for a variety of reasons which I shall not detain the House with— Mr Brown stood up for young Mandelson and said, “No, he should apply”, and I did. We need more teachers in our schools like the Browns, who do not think that going to university is elitist or superior but believe that it is an ambition that young people should rightly have if they have the aptitude, qualifications and potential to do so.

My Lords, I declare an interest as a member of the court of Leeds University. I particularly welcome the references in the Statement to potential, to serving all who benefit, and also to universities’ contribution to their local communities and the important part that that plays within the life of the towns and the cities of this country.

I have two specific questions. First, the Statement seemed continuously to stress economic growth and creating wealth as the chief aim of higher education. Will the Minister also affirm the tremendous contribution that particularly research departments make to, for example, pain research and the way in which the quality of life for the sick has been enhanced so greatly, especially by collaboration between our universities and the NHS?

Secondly, is the Minister prepared to say anything about the equivalent and lower qualification rules, which have been referred to a couple of times in this discussion, and about the way in which they damage widened access because they create considerable difficulty for people who seek to change their careers during their life?

I welcome what the right reverend Prelate has said. However, he should not take my definition of economic growth and creating wealth in the narrow way that he implied. When we talk about pain research or other ways of paying attention to the needs of the sick, we are talking not only about creating wealth to provide a first-class health service in our country but about creating wealth in the broadest sense of the term. There is such a thing as public wealth. Public goods and public services constitute wealth in our society, and university research and the graduates that it produces contribute to those as much as they do to any other sort of wealth creation.

My Lords, I welcome all the thrust of my noble friend’s Statement as well as the bipartisanship and commitment to continuity in policy on higher education that we have seen today. While agreeing absolutely with him that universities have a duty to be responsive to their students and to provide information, choice, value for money and a high-quality educational experience, I ask him to share with the House his thoughts on the following.

In a consumer culture—and my noble friend has just encouraged students to see themselves as customers of universities—and in a culture in which one person’s entry in Wikipedia is as good as another, how is the principle of academic and intellectual authority to be sustained, as well as an ethos of professional responsibility that reflects values other than those of the marketplace? If we raise the cap on student fees, as I believe it is absolutely necessary that we should, this problem will be intensified. So, will he say that people should not expect to be able to purchase academic goods, including good degrees, as they might purchase a car or other accoutrements of a lifestyle?

I am sympathetic to the sentiment that my noble friend has expressed. If he does not mind, though, I would like to reserve my response for the time when we launch our fees review.

My Lords, I welcome the Statement from the noble Lord, Lord Mandelson, under whom I have had much pleasure in serving for several years. There is no doubt that the present Government have done many good things, both for universities in general and for research in particular, but, as a voice from the trenches, I tell them that not all the trends have been happy.

One remarkable achievement that the Secretary of State did not mention is the growth in administrative and bureaucratic processes and staff in universities in this country. There is a study, based simply on the telephone directory of a major university from 15 years ago to today, that shows that the ratio of administrative staff to faculty has doubled. There are other studies of this kind. I assure him from my 20 years at Harvard, Caltech and Princeton, that that is totally different from the leanness of the administrative staff in American universities. While I do not wholly agree with the simple statement that producing growth is what higher education is all about—it has many other purposes—the one thing it is certainly not about is producing growth in administrative services.

I give the noble Lord the firm undertaking that, as we take forward and consult on all the proposals contained in this framework, I and my Universities Minister will want to be satisfied that any change that comes about will not lead to the growth of the trend that he has described.

My Lords, everything that the First Secretary has said—

My Lords, I am afraid that the 20 minutes for Back-Benchers is up.

With the leave of the House, I would like to repeat a Statement made by my right honourable friend the Chancellor of the Exchequer.

“Mr Speaker, with permission, I would like to make a Statement on the banks in which we have shareholdings. This morning the Treasury, Lloyds and RBS issued market notices in the usual way.

In October last year, I set out a range of measures designed to prevent the collapse of the banking sector. These measures are working, and countries across the world took very similar steps over the following weeks. But the uncertainty in global financial markets had a very serious impact on confidence, resulting in a world recession. This, in turn, worsened the outlook for our economy, leading to higher losses for UK banks.

It was clear that further action was needed to strengthen the banks, and in January we announced the asset protection scheme to prevent a further shock to confidence and ensure that lending could continue. We continued to support the economy through fiscal and monetary policy and co-ordinated a global policy response at the London summit in April. These measures are working, too. Fears of a global depression have receded and market confidence has started to return. As a result, we are now able to achieve our objectives on financial stability and banking reform at a lower overall cost to the taxpayer.

The asset protection scheme that I announced in January has played a vital role in supporting confidence in financial markets. Let me remind the House of the key features which I set out then. It provided insurance against losses arising on a pool of bank assets and, in return, the banks paid a fee in the form of shares. The effect of the scheme is to strengthen the capital position of any bank in the scheme but, of course, this carries a risk of exposure for the taxpayer. The scheme was open to all major UK banks. In the event, improved market conditions meant that only two banks decided to participate. Since then, further improvement in market conditions means Lloyds has been able to develop a better plan. It does not now need to participate in the scheme, which will significantly reduce the cost and exposure for the taxpayer.

I will now explain in detail our proposals to better restructure the banks and make them stronger. I turn first to Lloyds. Following the recapitalisation last October, the Government owned 43 per cent of the bank. In March, we reached an agreement in principle with Lloyds on its participation in the scheme. This would have increased, through the fee, its capital by over £15 billion, increasing the cost to Government and increasing our stake in Lloyds to 62 per cent. We agreed then in principle to insure £260 billion of assets, giving us a very large contingent liability. But now that market conditions have improved, we have agreed a better proposal for Lloyds, to bring in substantial private capital and reduce taxpayers’ exposure.

So, Lloyds has announced today that it will raise £21 billion in the open market. This capital raising is fully underwritten by commercial banks. As a shareholder, the Government have the option to take up part of the newly issued equity. If we did not do so, the value of the existing taxpayer shareholding would be diminished. So, to protect the value of our shares, we have decided to take up our share of the new capital, investing £5.7 billion net of an underwriting fee.

By raising capital in the markets, Lloyds will begin its transition from state support to private finance, and no longer need the insurance of the asset protection scheme. Because Lloyds has benefited from the existence of the scheme since March, it has agreed to pay the Treasury a fee of £2.5 billion and to reimburse our costs.

Today’s decisions make Lloyds a stronger bank and provide better value for the taxpayer, ending exposure through the insurance scheme, with a substantial fee in return for the insurance provided to date and a substantial capital contribution from the private sector, while maintaining our shareholding at 43 per cent.

I turn to the Royal Bank of Scotland, which is a bigger bank than Lloyds, with a more complex balance sheet, and greater exposure to losses, mainly due to its purchase of the Dutch investment bank ABN Amro. Under February’s agreement in principle, the Government would insure £325 billion of assets through the asset protection scheme, as well as providing an additional capital injection of £13 billion, a second tranche of capital amounting to £6 billion, and a further £6.5 billion worth of capital support through additional shares issued to pay the fee. Together, this would have increased RBS’s capital by £25.5 billion, taking the Government’s stake to 84 per cent.

Before we could reach a binding agreement, we needed to carry out due diligence on the assets, and ensure that the final terms were consistent with emerging European Commission guidelines. The restructuring guidelines were published in July, following extensive work with the UK and other countries. We and the FSA have now also completed due diligence work on the RBS balance sheet. As a result, we are making a number of changes to the terms of the scheme, which will improve incentives and better share risks with the private sector.

While market conditions have improved, RBS still needs to do more to be able to stand on its own feet, so we will continue with our plan to invest £25.5 billion of capital into RBS, but there are three key changes. First, there will be a £43 billion reduction in the pool of assets covered by the insurance scheme, reducing the Government’s contingent liability. Secondly, the first loss on these assets—payable by RBS—will be increased from £42 billion to £60 billion, further protecting the taxpayer. Thirdly, in return, RBS will pay an annual fee of £700 million for the next three years and £500 million per year thereafter, giving it an incentive to leave the scheme as conditions improve, and when it does leave the APS, it must have paid a minimum fee of £2.5 billion or 10 per cent of the actual capital relief received.

To reflect the increase in the first loss, amounting to £18 billion more payable by RBS, we will no longer require RBS to give up its tax losses, which it estimates at between £9 billion and £11 billion. In the unlikely event of a severe downturn, it may be necessary to provide up to £8 billion of contingent capital, but this will only be triggered if there is severe stress, taking its core capital ratio below 5 per cent. Again, in return for this, RBS will pay an annual fee of £320 million for as long as the contingent capital is available.

In the case of RBS, the overall level of government support will remain broadly the same as announced in February, but this revised deal is better structured, with better risk sharing and greater incentives to exit. There is a higher first loss payable by RBS of £60 billion, up from £42 billion. There are better incentives, with a fee of £700 million for three years and £500 million thereafter, and fewer assets to be insured—£282 billion instead of £325 billion. I will also provide the House with full details of the operation of the scheme when the final agreement is signed and approved by the Commission.

As part of these restructured deals, we are pushing forward with reform at these banks with improved lending and remuneration policies. Both Lloyds and RBS will be in a stronger position to continue lending. Lloyds will increase lending capacity this year and next, with an additional £11 billion for businesses and £3 billion for homebuyers in each year. RBS will continue to meet its lending commitments of £25 billion this year and next. Both will publish customer charters on good practice on SME lending, increasing transparency and improving loan conditions for business customers.

On pay, all major retail and investment banks in the UK need to meet the G20 principles and FSA rules, so that bonuses have to be: transparent, variable, and with no multi-year guarantees; between 40 and 60 per cent deferred over a number of years, not paid immediately; and subject to claw-back, to ensure pay is aligned with long-term performance. However, we have agreed with RBS and Lloyds that they will go further than this. For this year, there will be no discretionary cash bonuses except for staff earning less than £39,000 a year. In addition, the executive boards of both banks will have their bonuses deferred in full until 2012. This goes much further than any G20 agreement and further than any other banks in the world.

I will continue to strengthen the supervisory regime, building on my proposals in July by adopting the recommendations of the Walker review on corporate governance for banks, reforming the mortgage markets, and legislating to make banks put in place “living wills”, as well as enhanced powers and objectives for the FSA, to further strengthen regulation.

I believe these steps are better for the taxpayer, better for the banks and better for the economy. As a result, the likely cost to the taxpayer and the risks faced by the public finances have reduced markedly. The total assets protected have reduced by over £300 billion, there is more private sector investment and the fees received are better structured. I also expect, subject to wider factors, to revise downwards the provision for financial sector interventions in the Pre-Budget Report.

As I said in my statement in July, our second objective is to encourage greater banking competition in the high street and for small and medium businesses. Since the financial turmoil started in 2007, the banking industry has become more concentrated in most advanced economies. But over the course of the year we have been working with the Commission to agree on how to restructure the banks while meeting state aid rules. For Northern Rock, I have already set out my intention to split the bank into two separate companies, and we now have Commission approval for this. This will mean less capital support is needed to keep Northern Rock lending, and when the time is right, it will facilitate a return to the private sector. Lloyds will sell Cheltenham and Gloucester, the Intelligent Finance internet bank, the TSB brand, Lloyds TSB Scotland, and some Lloyds TSB branches in England and Wales—altogether more than 600 branches by 2013. RBS plans to sell its insurance businesses, including Direct Line and Churchill, as well as its commodity trading arm and its card payment processing operation. It will also divest more than 300 branches across the UK by 2013.

Together, these businesses could potentially amount to about 10 per cent of the retail banking market in the UK, and in each and every case we will insist that these institutions should not be sold to any of the existing big players in the UK banking industry. So, Lloyds and RBS will each be required to sell their retail and SME businesses as a single viable package to a smaller competitor or new entrant to the market, and this, together with Northern Rock, will potentially create three new banks on our high street in the space of five years. This will increase diversity and competition in the banking sector, giving customers more choice and better service.

The financial services sector will remain an important part of our economy. Yesterday’s job losses, announced by RBS, are a reminder that for many employees these are very difficult times. We will do everything we can to work with the banks to help find new jobs for those affected. I believe my proposals today will ensure that we have a strong and vibrant financial services sector in the future. This will mean stronger and safer banks better able to support the recovery and more competition and more choice for the people who use them. I commend this Statement to the House”.

My Lords, I thank the Minister for repeating the Statement made by the Chancellor in another place. The Minister made it sound like some sort of triumph for the Government, but the truth is very different. A year ago the Government came to Parliament to say that they were injecting £37 billion of taxpayers’ money in order to recapitalise RBS and Lloyds. In their usual hubristic way this was presented not only as saving the banks but also saving the world. Thirty-seven billion pounds was an almost unbelievable sum of money last year. Since then, of course, we have become almost inured to the scale of the banking bailout against the background of government debt scheduled to rise to £1.5 trillion, with £175 billion to be borrowed this year alone. But today the Government pop up to say that, “By the way, we are putting another £39 billion of taxpayers’ money into these two banks”. That is £13 billion more than the worst case provided for in this year’s Budget Statement. Even more taxpayer cash for the banks is the true story of today's announcement.

Another story is muddle and confusion around the asset protection scheme first announced last January. We were told that both Lloyds and RBS would participate in it and that it would cover nearly £600 billion of assets. As the months passed it became increasingly clear that the Treasury's grand design was not roadworthy. It cost too much, was too complicated and involved too much extra government equity. Lloyds has been trying to wriggle out of it for some time and today's announcement confirms that it has succeeded. Who could blame it? The release fee of £2.5 billion might sound like a large sum of money but Lloyds made it very clear today that it was fantastic value for money compared with staying in the asset protection scheme.

Poor old nationalised RBS did not have the flexibility available to Lloyds and it has been stuck with putting £280 million of assets into the scheme and increasing the government shareholding to 84 per cent. I know that the Minister likes to pretend that RBS is not nationalised, but in my party we believe in calling a spade a spade. On the other hand, RBS appears to have done rather well out of its negotiations with the Government. It has completely renegotiated its terms of entry into the asset protection scheme. It has managed to get its tax status revised, whereby it now looks as if the taxpayer will not see much in the way of corporation tax receipts for some time to come. Can the Minster give further detail about this tax deal? Why did the Government agree to it and what is its cash impact?

Much of the rest of today’s announcements show that the Government have been playing catch-up with my party. A week or so ago, my honourable friend George Osborne proposed that the banks owned by the taxpayers should not pay out cash bonuses except for lower-paid staff and with a cap of £2,000. Mr Liam Byrne, the Chief Secretary to the Treasury, gave an extraordinary response and said that our policy would,

“water down the rules we’ve put in place”,

and that it was “unworkable”. Even more extraordinary is the fact that today's announcement shows that the Government are adopting our policy. The Evening Standard is even reporting—based, I am told, on government briefing—that the bonuses will be capped at £2,000. Will the Minister confirm that and will he say what brought about this damascene conversion?

We welcome the competition measures which are a part of today’s announcement. Our clear policy has been to ask the Competition Commission and the OFT to carry out a review of the impact of consolidation on competition in the banking sector.

Mr Stephen Timms said last April that my party was,

“isolated and on the wrong side of the argument”.

This morning, the Lobby briefing reported that the Chancellor told the Cabinet that there was not enough competition among banks. Well, all I can say is that I am glad that the Government are now on the right side of the argument. Will the Minister now admit that the Prime Minister was wrong to promote the Lloyds/HBOS merger and that the Government were wrong to bypass competition law at the time?

The sad thing is that the Government have not come to this position by themselves. They have had it imposed on them by a Commissioner in Brussels determined to make her mark in the dying days of the current Commission. For our part, we are not convinced that it is enough, and our policy will remain that a competition review for the UK banking sector remains essential.

Of course the Statement makes the usual obeisance to restoring lending with a few embellishments such as a customer charter, but businesses, particularly SMEs, are clear that banks either do not want to lend to them or will do so only at a high cost. The banks have been trying to present the lack of lending as a lack of demand, but that ignores the evidence to the contrary from small and medium-sized businesses the length and breadth of our country.

The plain fact is that the Government have failed to restore sufficient credit to the economy. The latest evidence is that the flow of lending to the business sector has fallen for the seventh consecutive month. It is no surprise that our economy, uniquely among the major economies, remains in recession when our businesses cannot get the credit that they need.

The Government’s bewildering array of schemes has also delivered little. What is the point of a £5 billion scheme to deliver trade credit insurance if it provides only £13 million? What is the point of a £2.3 billion automotive support scheme if nothing actually gets paid out from it?

Indeed, the question that really cries out to be answered from today’s Statement is: what is the point of this Government?

My Lords, we are grateful to the Minister for making this Statement, particularly as it is in reality his Statement, rather than the Chancellor’s. He is the man who negotiated this and, therefore, it is fortunate for your Lordships that we have an opportunity to ask him questions, because I suspect that he, more than anyone else in government, knows the answers.

My first comment on the Statement as a whole is the extraordinary scale of all the figures involved. Possibly the smallest figure involved is £700 million. After a while, one comes to believe that the figures are in the normal run of one’s daily business. I suspect that in the negotiations, and more generally, the banks almost lost sight of the scale and implications of the recklessness of their previous management. We are dealing in figures which, if we were talking about health, education, aid or any other area of government, would be deemed extraordinarily large, but here they are tossed off as though they were commonplace.

The Statement is in two parts. The first deals with the Asset Protection Scheme and the way in which the banks will continue to be run, as though there were no restructuring. The second deals with the restructuring. As far as concerns the Asset Protection Scheme, the change in the detailed arrangements makes sense for RBS. I have some concern about the provision of £8 billion—again, the figure is tossed in as though it were of relatively little consequence—which it might be necessary to provide in the event of a severe downturn. This is a significant additional figure given everything else that has been done with RBS, and raises issues about the ongoing underlying health of RBS. Will the Minister tell us more about the stress tests that were undertaken by the FSA, which have caused the Government to make this significant additional figure available? It is worrying that, despite everything, RBS may still need an additional £8 billion. How likely is that, and on what basis has the decision been taken?

The Statement then talks about the lending levels of the banks, which the noble Baroness mentioned. I share her concerns. RBS is going to increase its lending capacity, but it does not say that it will increase its lending levels. The Statement says that RBS will,

“continue to meet their lending commitments”.

However, RBS’s briefing earlier today said that it would continue to “work towards” meeting its lending commitments. There is a big difference, because it is not meeting them. The reason that the banks give, as the noble Baroness said, is that there is no demand. The reason that businesses give is that the banks are piling on charges, fees, requirements for additional collateral and other charges and requirements that make it practically impossible for them to accept the additional lending even though they want it. The banks are still in denial about the level of pent-up demand for loans from small and medium-sized businesses.

The Statement then talks about bonuses. I know that the Minister has been fighting in the trenches on this matter. However, it is difficult to believe that what is in the Statement is a revolutionary development. All that is happening—even though it has taken some time to get to this point—is that bonuses are being paid later, or in a different form from what was originally envisaged. There is no suggestion that the total quantum of potential benefit available under bonuses is being reduced, and it is that quantum of benefit that causes so much anger among the public.

I turn to the restructuring. The Statement is a play in two acts when it deals with the main banks, but there is a little intermezzo in the middle into which Northern Rock is inserted. The Minister points out that the Government intend to split the bank into two. The Statement does not say that the Government also intend to sell off the good bit of Northern Rock, presumably under a quick timetable. We on these Benches are concerned about the pace at which the Government plan to sell off part of Northern Rock. We believe that they may not get the best deal and that the timescale is politically driven. Will the Minister reassure us that the Government have their eye on the bottom line rather than the headline when it comes to selling the good bit of Northern Rock?

With regard to the other two banks, the Government announce what they are doing as though it is a result of their decision-making. However, as the noble Baroness said, the truth is that it is the result almost exclusively of decisions taken in Brussels. Unlike the noble Baroness, we do not think that this is necessarily a bad thing, not least because in our view, if it were left to the Government, no restructuring of these banks would currently be planned. Although we have some concern about the timetable, in that the parts of the two banks that are to be hived off should not be sold too soon or in a fire sale, it seems that the Commission has beneficially stepped in here in a way that the Government might well not have done. I know that to save her life the noble Baroness cannot admit that this might be a good thing, but on these Benches we think that it is probably a positive development. However, regarding the four-year period that has been proposed before the sell-offs can take place, can the Minister assure us that there will not be any political drive to sell off parts of these banks prematurely before the election to prove a point when the Government will almost certainly get poor value for money from any sale?

Finally, the Statement does not deal with what we consider to be the most fundamental issue concerning the state of the big banks going forward—namely, the extent to which the whole gamut of activities from utility to casino can be carried on under one roof. It does not address the issues raised by the Governor of the Bank of England or the arguments that are raging about the desirability or otherwise of splitting the banks on that basis.

The Chancellor made it clear on the radio this morning that the Government remain the lender of last resort to the banking sector despite these changes today, and that, if there were another crisis, the Government would still have to step in in respect of not only, say, Barclays’ deposit-taking but its entire portfolio of activities. Therefore, does not the Minister agree that it would be appropriate to expect the banks to pay some insurance premium for the cover that they are still recovering from the Government?

My Lords, I thank the noble Baroness, Lady Noakes, and the noble Lord, Lord Newby, for their contributions and observations. The noble Baroness is on the horns of a dilemma. Her comments are in many cases contradictory, and I shall point out some of them in the time left available to me. Let us remind ourselves that the Conservative Party rejected the support provided to Northern Rock: it was not willing to step in and provide that support. It was hesitant about the recapitalisation in October—it simply did not know how to react to it—and it was totally confused by the asset protection scheme. Having listened to Mr Mark Hoban on the “World at One” today, the Conservatives seem to me to remain confused by the further refinements to the asset protection scheme as announced today. We have a picture of inconsistency and contradiction.

The noble Baroness suggests that the extra money invested exceeds the amount that we indicated in the Budget as a worse-case scenario. I wonder whether she has forgotten some of her professional training at the auditing firm of KPMG, because importantly we are investing here to acquire assets, not losses. The numbers are big, as the noble Lord, Lord Newby, said, but the important numbers are coming down: the contingent liabilities are coming down; the first losses are going up but the Government’s exposure is coming down. I have said that the Chancellor of the Exchequer is confident that in the PBR he will give the House good news about reduced public exposure to the losses arising from these schemes. The schemes have worked: they have stabilised the banking system. The share price of Lloyds has quadrupled since January as a consequence, and that is why we are being paid £2.5 billion for an insurance policy on which no claims have been presented.

The noble Baroness again completely contradicted herself by saying that Lloyds could not wait to get out of the insurance scheme because the pricing was punitive. If it was punitive, I make no apologies because I have always fought to ensure that the deals with the banks are done on terms which deliver good value to shareholders. The fact is that it has withdrawn from the scheme because it believes that it is in its shareholders’ interests and it is able to raise private capital. Goodness me, I thought that the Conservative Party was in favour of private capital. Here we have a solution which brings private capital to bear and the noble Baroness cannot bring herself to congratulate us on securing an excellent outcome. The noble Baroness refers to Lloyds wriggling out of the scheme. Far from it, Lloyds has found an elegant way to recapitalise itself through markets which are willing to provide capital, plus an innovative scheme which we have structured with it which involves a number of novel elements and which is much admired—I hang my head in shame here—by many investment bankers.

The noble Baroness inquired about the tax deal. The tax undertakings offer taxpayers uncertain future revenues at an unknown time. We had to agree to that because RBS could not afford any other way of paying. That was why I put the tax agreement into the structure. It no longer has to do that, so removing the tax undertakings from the deal in exchange for a higher first loss, increased transparency, and a lower pool of risk assets covered has meant better value for the Exchequer and far more visibility and transparency in the scheme.

The noble Baroness chooses to take her financial information from the Evening Standard. I can assure her that bonuses have not been capped at £2,000. We have been very clear: cash bonuses for employees on the front line earning £39,000 or less and no cash bonuses for any other employees in RBS or Lloyds.

The noble Baroness seems to forget our Competition White Paper which was issued before the Summer Recess. It clearly stated that we believe that there needs to be more competition in the British high street for banking services. I remind the noble Baroness that competition has declined over 25 years since the Conservative Party encouraged the reckless demutualisation of building societies.

I say to the noble Lord, Lord Newby, that the numbers are large but they are improving. The contingent capital will earn us a generous fee of 4 per cent per annum. Again, those are excellent commercial terms for the Government. The details of the stress test were detailed by the FSA in May. It is called the 1980s extreme U test. As I have already mentioned, the lending agreements which RBS and Lloyds are continuing to maintain will provide what is necessary to support the UK economy. The banking system is stabilised, stronger, more commercial and better able to meet the needs of its customers as a result of this extraordinarily good package which we have been able to announce today.

My Lords, I thank the Minister for this comprehensive and highly significant Statement. However, is the reality not as he stated in his initial remarks that the banks do not need the insurance scheme, but that they cannot afford it and that that is why they have had to restructure it? While it is indeed welcome that the pool of assets to be insured is to be considerably reduced, is there not a danger that the banks carrying a higher proportion of the risk may not recognise the full extent of the impairment of bad loans on their books? If that is not faced up to, we will be left with a problem that is not being solved and with a problem with which this crisis began. Although more competition in the banking sector is very much to be welcomed, are not these measures, which are being forced on the Government, an absolutely tiny mouse compared with the elephant in the way of competition which the Government put there when they facilitated the merger of HBOS and Lloyds with disastrous results?

My Lords, I must disagree with the noble Lord. Quite clearly, Lloyds is able to exit the APS by raising some £13.5 billion of new equity from its shareholders, plus converting tier 2 and innovative capital instruments into a contingent capital instrument which has allowed it to exit the scheme. It has done so with its own resources and with its own advisers, supported by the Government and endorsed by UKFI. It could certainly afford to participate in the APS, but it judged that it no longer needed the protection that the APS afforded. I believe that one of the reasons was that the management of Lloyds has a much better grasp of the assets that it acquired when it merged with HBOS and much better judgment about the probability of default and any loss in the event of default.

Work to support the announcement made today in respect of Lloyds and Royal Bank of Scotland has clearly required extremely detailed review by the FSA, by the Treasury and by our own advisers. I can say with a degree of confidence that we know much more about the assets of Royal Bank of Scotland than the old RBS knew about the assets for which it was responsible. There was an intolerable failure of corporate governance by that board that was a consequence of abominable leadership by the chairman and chief executive of that company. But that is now behind us—we have new management in that bank which we are supporting and a much better knowledge of the assets held. Furthermore, the underwriters to the Lloyds issue will have looked very carefully at the quality of the Lloyds asset book before entering into the largest equity underwriting that this country has ever seen. While the noble Lord raises perfectly appropriate and correct questions, I want to reassure him that there is a reality in the view that the management of RBS and Lloyds now have about their businesses.

My Lords, I thank the Minister for repeating the Statement. However, I am most concerned about the headlines screaming that thousands of people are being made redundant by RBS. Quite frankly, the management must surely realise that making all these people redundant is no help to the economy. These people cease to be taxpayers and become recipients of benefits. Really, management should not be encouraged in any way to get rid of staff—they should endeavour to keep them wherever possible.

My Lords, I am grateful to my noble friend for her observation. It is of course worth noting that had we not stepped in to support Lloyds and the Royal Bank of Scotland, those banks would have failed and there would have been no jobs. The 3,700 job losses announced yesterday by Royal Bank of Scotland are deeply regrettable. Nevertheless, it is the view of the management of RBS that the vast majority of those job losses will be covered by natural wastage and there will be little, if any, need for compulsory redundancy.

My Lords, I want to refer to the latter points in this huge document, which contains big numbers that most of us have difficulty with. Some of us can understand the idea of the three new banks and we see that the die is not yet cast. We recall Northern Rock and Cheltenham & Gloucester in their former existence as building societies. The Minister referred to the disastrous demutualisation process and the fact that every demutualised building society is no longer independent. Also in the list of names is the TSB. It is difficult to call what happened to it many years ago “demutualisation”, but it was the precursor to the demutualisation. Of course, the TSB was an orphan, yet the Government took the money. It is suggested that these three new banks, which will be set up some time before 2013, will be new entrants to the market. Is there not now an opportunity for the Government to create one modern mutual out of those three new creations?

There is nothing that I would like more than for a new mutual to be created, but I cannot find a way to do that which would not represent a substantial subsidy from the taxpayer to the members of that new mutual. It would involve a gifting of value to the members. If noble Lords or others can come up with a constructive way to do that, I assure them that I will give it active consideration, but I have struggled to find a way in which it would be possible to create a new mutual on the scale suggested.

That said, we will of course continue to support the concept of mutualisation, as we have through recent legislation. There is a real prospect of brand names such as TSB, Williams and Glyn’s and Cheltenham and Gloucester once again reappearing on the British high street. That is not just due to the EU. I salute Commissioner Kroes for what she has done in promoting competition—another great benefit that comes from our partnership as a member of the wider European community—but there are many aspects of this arrangement which the Government have required. In particular, the restriction that those businesses must be sold as a package, rather than broken up; the restriction on existing large players buying any of those assets; and a restriction on Lloyds buying any new business for the next three years have come not from Brussels, but from London, as part of our contribution to increasing the diversity, strength and range of competitive operators in the British banking system.

It must be clear to everyone here that the European Competition Commissioner must have played an impactive and substantial role in the ultimate package decided on. With his usual commendable generous candour, can the Minister indicate the distance of travel from when the Treasury came very near to a meeting of minds with Lloyds and RBS and the ultimate result, after the impactive intervention of Ms Neelie Kroes, the Commissioner? It would be of great assistance if he could give some idea of how vast that distance is.

The Commission spelt out its views on state aid in the late spring. When we announced the asset protection scheme in January, we said that it would be conditional on the Commission’s policy position. Of course, the Commission has engaged actively in state aid in Germany, Holland, Belgium, Spain and here in the United Kingdom. We have had extensive and lengthy negotiations—I was speaking to Commissioner Kroes late on Sunday evening to cross the final “t”s and dot the final “i”s—and the outcome that we have been able to secure is very close to what we regard as good for the British system of finance, namely well capitalised banks, viable but with every prospect of new competitive entrants. That will be as a result of that outcome, but also because of new entrants such as Tesco, Metro Bank and lenders from the Far East and Scandinavia coming to the UK market and offering us the prospect of reversing a 25-year trend in competition in the high street, which started under the Government of the party opposite.

My Lords, perhaps the Minister can help me. If the Government's position is that it is in the public interest to have more competition in the high street in the banking sector and to break up the Lloyds Banking Group, does that mean that the Government think that the Prime Minister made a mistake in agreeing to waive the competition rules to allow the merger between Lloyds and HBOS, which had such catastrophic consequences not just for the shareholders of Lloyds but also for its employees?

Much as I would like to help the noble Lord, Lord Forsyth, I find it very difficult to conclude that those transactions had catastrophic consequences compared with the counterfactual, which would have been the failure of those banks. Remember that back in October, we got very close to a point where the cash machines would not have operated. In HBOS and Royal Bank of Scotland, that was particularly acute.

As for Lloyds, the Government concluded, and made representations to this effect, that a merger of Lloyds and HBOS, if it was the wish of the shareholders of those two companies, would be appropriate in the interests of financial stability. However, we made it clear that that would be conditional upon any EU remedies required in connection with state aid. We understood that there would need to be remedies from Lloyds, but it was a decision by the shareholders of Lloyds to merge with HBOS. I recollect that 97 per cent voted in favour of so doing. This was not a decision made by the Government; the Government merely enabled the shareholders to make that decision if they judged it was in their best interests. They perhaps regret it, but that is where we are now.

My Lords, I welcome the Statement and support the action that the Government are taking in this second, very important, phase of activity. It is greatly to be welcomed that we are about to get into a period where, we hope, we can have more competition in the retail and corporate banking sectors. Given the ongoing support for the Royal Bank of Scotland implicit in the Statement, it feels as if it is still a bank that is too big to fail. Can the Minister tell us why the Government still seem so opposed to decoupling investment banking from retail banking? The Governor of the Bank of England seems to have changed his mind on that. Can the Minister tell us why the Government have set their face against it?

My Lords, the decoupling of investment banking from retail banking has never been achieved anywhere. There is logic to an integrated bank. The issue is how we ensure that the investment bank does not place the retail bank at risk. This is something that the Conservatives have not grasped, because last week Mr George Osborne was talking of limiting bonuses of £2,000 to retail banks. When is he going to understand that the problem did not arise with the retail banks but with the investment banks? Perhaps because he was speaking in Canary Wharf he was unwilling to be honest and upset people by suggesting it was the investment banks. I have no difficulty in doing that.

We are going to ensure that we never see a repeat of this situation by requiring much more capital behind the riskiest activities, higher liquidity and more robust regulation. I noted what the Governor of the Bank of England said in Edinburgh. I am still wrestling to try to reconcile it with what he said to the Treasury Select Committee in response to a question from Viscount Thurso, when he said that it would not be possible to separate investment banks from retail banks. He has changed his mind on that. I have not yet been able to find where he has explained why, but I am sure he has found good reasons for doing so. We do not believe that this is an appropriate and necessary line to pursue.

My Lords, I declare an interest as treasurer of the Lords and Commons Tennis Club, which banks with Lloyds, as do I, and as a modest shareholder. The truth of the matter is that it was not that 97 per cent of the shareholders of Lloyds really supported the HBOS amalgamation; it was simply that the Prime Minister of the day pinned the chairman of Lloyds in the corner in the best traditions of Chief Whips in another place and said, “We need your support. We need your help. We need you to see us through this difficult situation”, and he responded. Does it not short-change that bank, which now, according to the Minister, has agreed to £11.6 billion in business loans and £3 billion in private loans, to find that there is a rights issue and that the Government are getting it half-price because they are requiring Lloyds to provide £2.5 billion, which is, roughly speaking, half of what the rights issue would cost any other shareholder in Lloyds?

My Lords, before I became a Minister, I was at the occasion when Sir Victor Blank raised this subject with the Prime Minister. It was an event hosted by Sir Win Bischoff, who was then chairman of Citigroup and has now gone on to become chairman of Lloyds. My recollection of the situation, and indeed of Sir Victor Blank’s earlier conversations with the Prime Minister, is that he was absolutely gagging at the prospect of acquiring HBOS. There was no need to hold him back at all. He absolutely was not pinned into a corner, not least because he is about a foot and a half taller than the Prime Minister and I do not think that the Prime Minister could have pinned him into a corner.

On the terms, not taking up the rights would have cost us about £2.2 billion of diluted value. That would have been absolute folly, so I had no hesitation in advising the Chancellor that we should take them up. We own the same shareholding in a much stronger, better capitalised bank as a consequence. It is for others to express views on whether £2.5 billion was the right fee to charge for an insurance policy on which no claim had been made. I am quite content that we got £2.5 billion for the taxpayer.

My Lords, I understood my noble friend to say that the Royal Bank of Scotland would divest itself of 300 branches. If I am correct, does a thread link those 300 branches and how many branches will the Royal Bank of Scotland be left with after those 300 have gone?

My Lords, from recollection, I believe that the Royal Bank of Scotland will be left with approximately 2,400 branches. The branches that are being divested are the Royal Bank of Scotland branches in England and the NatWest branches in Scotland—plus, importantly, a number of commercial and service centres that are necessary to provide the infrastructure to make those branches a viable business collection.

My Lords, the Minister said in the Statement that the Government had to carry out due diligence on RBS’s assets. No mention was made of similar government due diligence on the assets of Lloyds. In view of the widespread concern about the value of assets of HBOS in particular, has this been carried out and, if so, what was the conclusion?

My Lords, it was quite expensive to carry out due diligence on the APS. We have used a number of advisers but have ensured that the full cost incurred by the Government has been passed back to the banks. Indeed, Lloyds will pay its share of the work that was done to set up the APS, even though it will not participate in it. We have carried out due diligence on the assets of Lloyds TSB, as it was, HBOS and the Royal Bank of Scotland. As I said, we know more about the assets of those banks than their boards of directors did. On the question of whether Lloyds carried out sufficient due diligence before the Halifax transaction, I recollect that Mr Eric Daniels told the Treasury Select Committee that he would like to have done more but then revisited his conclusion and said that he had done enough.

My Lords, the Minister may recall that when we suspended the competition rules and, indeed, when we went ahead with the Lloyds/HBOS merger, I was concerned that we were limiting competition for consumers and small businesses. I therefore welcome the impact of this Statement and the fact that we will increase competition as a result of the Government’s latest interventions. However, I regret that this involves a restriction on the number of high street branches.

The Minister touched on another point when he said that we now know more about the banks’ assets than their boards of directors originally did. Will he expand on his plans for changes to the governance of the banks? Whether there are five, seven or eight banks on the high street, if the same kind of people with the same myopia run our banking system in the future, we will be back with very similar problems.

My Lords, given the very limited time available, I will say simply that I have high hopes for and expectations of the report on corporate governance from Sir David Walker later this month. He will lay down very clear calls for action from institutional shareholders. It is very frustrating that we as a Government are fighting hard on the bonus issue when the institutional shareholders are so supine in protecting the interests of their own customers, savers and investors.

My Lords, in speaking to Amendment 1, I shall speak also to the other amendment in this group, Amendment 8. However, with the leave of the House, before addressing this first amendment, I should like to return to some matters that we debated earlier.

On Report, I said that we would consider further the Government’s position to require those lone parents with a child in receipt of disability living allowance to undertake work-related activity. This matter was raised by the noble Baroness, Lady Thomas. Work-related activity is an important part of our strategy to move lone parents from inactivity on benefits to an expectation of actively preparing for the time that they are able to work, but we are determined that lone parents must be able to balance these activities with family life. We have already announced that lone parents will be able to fit the work-related activities around school or free nursery hours and that no lone parent with a child under the age of three will be required to undertake such activities.

We realise that lone parents caring for younger children who receive disability living allowance may find fitting work-related activity around their caring responsibilities more difficult. We have already introduced a number of safeguards to ensure that lone parents can balance these responsibilities. After careful consideration, we have now decided to ensure that lone parents on income support who have a child under the age of 16 and in receipt of any rate of care component of disability living allowance will not be required to undertake work-related activities. Of course, they will still be offered full support to help them to prepare for work, which they can take up on a voluntary basis. As it was previously our intention that the exemption relating to children in receipt of the middle and highest rate DLA care component be dealt with in regulations, it is our intention that this procedure be applied to cover the extension to children in receipt of the lowest rate care component of DLA.

As regards Amendment 1, Clause 28 inserts a new paragraph in Schedule 1 to the Jobseekers Act 1995, which will introduce an automatic 13-week exemption from the jobseeker’s allowance conditionality rules for victims of domestic violence. This clause, which was inserted in the Bill following a government amendment on Report, includes provision for secondary legislation to deal with more detailed issues, such as the exact definition of what constitutes domestic violence and the circumstances in which the exemption will be applied.

In considering this amendment, the Delegated Powers and Regulatory Reform Committee expressed concern that regulations under this new provision would be subject to the negative procedure. It was particularly concerned that the power to define what is meant by “domestic violence” should be subject to appropriate parliamentary control. Amendment 1 will ensure that the affirmative procedures apply to all regulations made under this new provision.

Amendment 8 corrects a drafting omission and will ensure that orders made under Clause 47 will be made by way of statutory instrument. Noble Lords will recall that this clause covers the power to remove the exclusion of community care services from the right to control provisions. Clause 48 provides that such orders will be subject to the affirmative resolution procedure in Parliament, the Scottish Parliament and the National Assembly for Wales. I beg to move.

My Lords, I thank the Minister most warmly for this welcome amendment. He and his whole team have bent over backwards to meet our concerns about lone parents on income support who have a child in receipt of the lower rate of the care component of DLA falling within the scope of mandatory work-related activity. His acknowledgement that it could be very difficult for some of those lone parents to undertake that mandatory work-related activity is much appreciated. We look forward to the regulations in due course.

As I have mentioned, the Minister’s whole team has been helpful and I pay tribute to it, particularly to its leader, Andrew Latto, who has been helpfulness itself in answering the silly questions that I constantly ask. We could not have had better service, so I thank him most warmly.

My Lords, I, too, thank my noble friend and the officials in the Box, because I know how difficult it can sometimes be to change policy quite so late when you are required to involve parliamentary counsel, even if you have been persuaded by the arguments. The fact that this is being carried by regulations gives everybody, including the Government, welcome elasticity in the system. I am grateful. There were many concerns about the Bill at the beginning. Like other Members of this House, I know just how hard my noble friend has worked to ensure that it has met the proper concerns of all your Lordships. We can confidently say as a result that the Bill goes forward to help lone parents to engage in the labour market without their children having in any sense to endure a penalty because of the commitments that their mother is required to undertake. I am grateful for my noble friend’s amendment, which is splendid.

My Lords, I, too, thank my noble friend for the amendments and his statement. I, too, raised the matter of the pressure that might be exerted on lone parents to indulge in work-related activity if they were not in a position to do so—because they had a disabled child, for example. My noble friend’s statement covered the concerns that many of us raised and I am grateful for it.

I concur with everything that has been said in relation to the Minister’s statement on disability living allowance. It was a tricky one: Ministers must have had some difficulty persuading the technicians, not to mention the Treasury, about the definitions. I think that this will affect a relatively small number of people, but, my goodness, it will make a transformational difference to those whom it does. It could not have been an easy battle and the Minister deserves the credit that he has been given today.

On domestic violence, the 30-week exemption is extremely welcome. That was again hard fought for in a very constructive Committee stage. However, I hope that the 30 weeks will allow some discretion. I do not think that many cases will need more than half a year, but there may be some. As a former divorce lawyer in a previous age, I know that some family circumstances mean that domestic violence cases can become intractable and go on for years, so a little discretion at the edges for some of the advisers dealing with these tricky decisions would be welcome. I hope that the Minister will bear that in mind. I am absolutely in favour of the amendment as it stands, but if he could assure the House that some flexibility might still be available in exceptional circumstances, to make sure that we protect people in danger of some really vicious violence at the hands of their former spouses and partners, it would be welcome.

My Lords, I thank every noble Lord who has spoken in support of the amendment. I also appreciate their thanks to members of the Bill team—I think that they will have chance to do that more fully in a little while. The noble Lord, Lord Kirkwood, asked whether there would be additional discretion in relation to the domestic violence provision. Yes, there is.

I shall speak also to the other government amendments in this group. The amendments will place in the Bill the reassurances that I gave on Report in relation to drug testing and mandation to treatment. The main thrust of the amendments deals with voluntary and mandatory rehabilitation plans, drug testing and the replacement of the substance-related assessment with two assessments. The remaining amendments are consequential and I shall deal with them at the end. In making the amendments, we have taken account of the opinions both of drug professionals who work on these issues and, of course, of noble Lords, with their great experience.

Mandating individuals to medical treatment is not going to work for those who are not ready, but doing nothing is no longer an option, and problem drug users must be expected to engage with the rehabilitation process where their drug use is a barrier to their finding work. After careful thought, we have also amended the drug testing provisions to make the policy more effective.

Amendments 10 to 12 for jobseeker’s allowance and Amendments 19 to 21 for ESA divide the substance-related assessment into two stages: an initial assessment and a follow-up interview a few days later to discuss matters arising at the initial assessment. Where problem drug users are not already in treatment and are neither prepared nor ready to engage with treatment services, they will be required to attend a series of assessments with the aim of encouraging them into treatment. If they fail to attend these assessments without good cause, they will be subject to a benefit sanction. Amendment 13 inserts a provision into the drug testing provisions that enables us to offer an individual who refuses to attend an assessment because they are adamant that they are not a drug user a drug test in order to demonstrate this. If they refuse the test, they can be sanctioned and re-referred for the assessment.

As indicated in the debate at the Report stage, we have looked at further limiting the circumstances in which mandatory drug tests would apply. To this end, individuals will be directed to undertake a mandatory drug test only where they have not self-identified their drug misuse, are not already in treatment, have not been referred to a substance-related assessment on the strength of information obtained from the criminal justice system, and have been subject to sanctions for not attending the substance-related assessment on two consecutive occasions. The Bill provides that permissible samples for testing are urine and other samples as described, so long as it is not an intimate sample as listed in some detail at paragraph 3(8) of the new schedule. Our current intentions are that the test will be based on samples of saliva.

Amendment 15 introduces powers to mandate problem drug users who refuse or are not ready to enter into treatment to agree a rehabilitation plan, which will require in particular that they attend a six-week education and motivational programme. The programme will encourage problem drug users to engage with treatment services. If the individual refuses to attend or does not complete the programme, a sanction will be applied. If the individual attends the educational and motivational sessions and decides that treatment is not for them at the present time, no sanction will be imposed. If, however, after a period of time signs of drug use being a barrier to work are displayed, they will be referred back to the assessment process. This ensures continuity of contact with treatment providers until such time as a person feels ready to receive treatment.

It is important that those identified as problem drug users take the first steps on the journey to overcome their addiction. Where claimants take up treatment voluntarily, they will be offered a treatment allowance and a place on a new drug and employment support programme that will provide integrated and personalised support for problem drug users on JSA or ESA. This allowance will be paid to the claimant as long as they agree via a voluntary rehabilitation plan to maintain their treatment and take advantage of the additional support available. It will remove some of the normal conditions of entitlement for benefit in order to allow drug users the time and space to focus on their recovery. For example, this will mean that those on JSA will not be required to sign on or show that they are actively seeking work.

Concerns have been expressed as to the extent that being labelled as being in receipt of a treatment allowance could expose the recipient to stigma and discrimination if they were to apply for housing benefit or concessionary rates of paying for goods and services. I therefore take this opportunity to provide reassurance that on any supporting documentation, and therefore from the perspective of the outside world, the individual will be recorded as being either on ESA or JSA and that there will be no mention of either a treatment allowance or relaxed conditionality.

If an individual drops out of the programme because they are not adhering to their voluntary rehabilitation plan, they will be returned to mainstream benefit with no sanctions. If, after a period of time, signs of drug use being a barrier to work are displayed, they will be referred back to the assessment process. Amendment 24 makes the same changes to the provision for ESA customers.

Finally, consequential Amendments 18 and 28 insert the new rehabilitation plan provisions into the evaluation report for JSA and ESA respectively, while Amendment 2 inserts the voluntary rehabilitation plan’s functions into the contracting-out clause for JSA. Amendment 26 carries out the same function for ESA.

I hope that noble Lords will agree that this represents a balanced package of measures to encourage problem drug users to engage with treatment services and with the additional help and support on offer through the benefits system. I urge noble Lords to support the amendments. I beg to move.

My Lords, the scale of the drug problem in this country is clearly most disturbing, with 400,000 problem drug users, the bulk of whom—some 350,000, according to the Government—are on benefit. Against this challenge, the Government’s response looks late, timid, underresourced and, regrettably, underresearched. As was made clear in Committee, under the plans in the Bill there will be a two-year pilot, which will then be assessed. It will be surprising to many that the Government have not already worked out what solutions may be more or less effective in this area. It is, after all, a problem that has been growing for decades now.

The pilots will involve 10,000 problem drug users. This is a bare 2.5 per cent of the total number, so we are hardly going to see a major revolution in provision. I hope that the approach is less one-dimensional than it appears in the Bill. Many, if not most, drug users have a number of problems, particularly psychological ones. The treatment here seems focused on drug rehabilitation and yet, if the psychological problems are not addressed at the same time, relapse rates will inevitably be high. We have still precious few centres that provide holistic support for this group of people. My concern is that the pilots will be completed and, in three years’ time, we will find that we are, sadly, not much further along.

My Lords, I take a different view from that of the noble Lord, Lord Freud, but I understand the point that he makes. I am still taken aback by the inclusion of drugs in the social security welfare-to-work field, which fell out of the sky in the summer of 2008 with the White Paper—or was it the Green Paper? I cannot remember. I have been watching this subject develop in parliamentary terms since 1983 and drugs have never been a part of welfare reform. As far as I am concerned—and my experience in drugs is much more limited than that of my other colleagues—drugs should be a health problem, not a social security problem. It is almost as inappropriate as Section 8 and the abolition of income support. I was determined to get that in somehow before Third Reading was over and I have now got it safely off my chest. The inclusion of drugs is a mistake.

Having said that, I think that these amendments substantially improve the Bill. I again pay tribute to the noble Baroness, Lady Meacher, who is unfortunately unable to be in her place today, and to the work that she did in driving opposition to the Government’s original position. Where we are now is at least defensible: we are not tying people to the floor and inflicting treatment on them that they do not want, which is progress. But the Government will have to watch this very carefully and I, for one, would have been happier if these provisions had not been anywhere near a social security Bill of this significance. I do not think it appropriate that they should be there but, if they are to be in the Bill, it is much better in this format than in the earlier format.

My Lords, I declare an interest: I work for a national drug agency. I am hesitant to make any comment because it is purely coincidental that I am in the Chamber at this point.

I agree with the noble Lord, Lord Kirkwood, that it is surprising to see this issue in this context. I have some little knowledge about the sufferings of men and women under these conditions. There is not enough co-ordination of services, and there are not enough centres of excellence, to address some of the problems that many of these sufferers already face, one of the main ones being stigma. Services are not co-operative because in many circumstances this is regarded as a self-inflicted wound, so the services that sufferers receive are already inadequate in many senses.

I welcome this discussion. Drugs and drug rehabilitation have been far from the mainstream agenda for a long time, but they affect the most vulnerable people in our communities—not only the individuals who are suffering but their families. There is some good work in progress up and down the country, run by various national organisations, looking at the drastic impact of this on families, but that has not yet been taken on board. I hear all the arguments about why there should be some punitive measures but I am concerned about the idea. I hope that my noble friend will take that on board and urge officials and staff in the services to be cautious; there is still not enough information and training within the workforce about supporting substance misusers.

My Lords, I thank noble Lords who have spoken in response to the amendments. I am not sure, from the contribution of the noble Lord, Lord Freud, whether he supports or opposes them. I agree with him that drug users often have multiple issues that they have to face, such as psychological issues and mental health problems, which is why the approach that is reflected in these amendments is so important.

That leads me on to the point made by the noble Lord, Lord Kirkwood, about why these provisions are anywhere near a welfare reform Bill. The reality is that many of these individuals lead chaotic lives at the moment, and in the benefits system they end up being sanctioned without the sort of support that should be available to them.

I pay tribute to the noble Baroness, Lady Meacher, who I now see in her place. She pressed the Government from the Cross Benches and helped us to focus on the fact that the key thing is to encourage people to be assessed and treated but to do so on a voluntary basis. Mandating people to treatment will not unlock the problem; individuals themselves have to reach the conclusion that they need to be supported.

I make the same point to my noble friend Lady Uddin. Of course there will never be enough resources to do everything that we want but this is an important step. This is not about punishing people; it is about enabling them to move towards the labour market, get into work and overcome the challenges that their drug misuse faces them with.

I shall speak also to my Amendment 7, which is grouped with this one, as it is on a similar topic. Noble Lords will know that I have endeavoured, throughout the discussion on the Bill, to secure a change in the title of council tax benefit. The reason for that was a suggestion made to me by the British Legion, which has undertaken much research among veterans, many of whom are entitled to council tax benefit but do not claim it. The research indicated that more would claim it if it were renamed “council tax rebate”. It is a matter of dignity, the British Legion believes; many are too proud to claim a benefit even though they may need it.

On Report, a government amendment set out arrangements for the renaming of the benefit. This was accepted by the House at the time, but the provision said that the Secretary of State,

“may by order provide for the benefit”,

to be renamed, and so on. It seemed to me that “may” was rather indefinite. In my amendment, I suggest that it should be changed to “shall”. I hope that my noble friend will feel that it is a positive amendment that would be acceptable to him.

My Lords, I am sorry in a way that this amendment has not been grouped with the subsequent group of amendments, because it could be a little difficult repeating our arguments. I have no particularly strong views on whether we should re-label council tax benefit as council tax rebate. On the one hand, that would detach it from the benefit system, which for some people would be desirable. However, on the other hand, others are passported on to it by virtue of housing benefit, and you may lose the connection with passporting by renaming the benefit a rebate. On one hand, there are gainers while, on the other, there may be losers.

Will my noble friend the Minister, in reply to my noble friend Lady Turner, or in his own speech later on, remind the House whether former servicemen, particularly those with war pensions—the constituency for which the RBL, rightly, campaigns—are entitled to 50 per cent reduction as of right of their council tax? If so, that may to some degree account for the relatively smaller take-up. It may be a dignity issue, but the sums involved may become that much lower by virtue of the reduction in the council tax bill for those people. As we all know, in looking at claims to benefits, although substantial sums are unclaimed, very often, as with pension credits, people at the very edges may have only £2, £3, £5 or £10 to claim and may think that it is not worth the hassle, because they judge the sums as relatively modest. Could my noble friend help me on that point?

My Lords, I support the thrust of the amendment, simply on the basis that Governments leave the statute book littered with provisions that are never enacted. You do not need to be a political scientist to work out that there could be a change in government in the next few months. The House at Report is entitled to get a reasonable timeframe. I think that three months is very tight; I would not like to undertake that responsibility myself. However, the case is a powerful one, and I think that—speaking for myself—the House would settle for some assurance that this will not be just another bit of legislation that gathers dust on the shelf.

The noble Baroness, Lady Turner, is to be congratulated on her determination to pursue the issue of renaming the council tax benefit. It is clearly a matter close to her heart, and it is clear from our debates in Committee and on Report that the measures she is seeking are acceptable to all parties, and particularly welcomed by us. The power to make all the changes are in the Bill, and all that is required now is for the Government to make it clear that they are going to use that power.

The noble Baroness is right to press the Minister on implementation. We do not wish to see the power to change “benefit” to “rebate” languishing on the statute book but never used, which, as the noble Lord said, has happened in so many other instances. We accept that there are more preparations to be made than might at first meet the eye before the change can successfully be enacted, but that must not be allowed to become an excuse for inaction.

Noble Lords will remember from Committee that the leader of the Conservative Party, my right honourable friend David Cameron, made it clear in his response to the Royal British Legion that, should this Government fail to act, a Conservative Government led by him would do so instead. Putting that to one side, we are quite sure that the noble Lord the Minister will be able to put to rest any lingering concerns held by noble Lords, and indeed those outside this House, that the Government would prefer this issue to go quietly into the long grass. He could do much in his response to set out what steps the Government are currently taking to prepare for the implementation of this measure, and by what stage he expects it to be complete. I know that he was reluctant to be that explicit on Report.

I accept that this may call for a certain amount of flexibility in timing, which is why I am hesitant to support the three-month time limit in the noble Baroness's Amendment 7. However, if we have an understanding of the work the Government are undertaking, it would help Parliament to keep an eye on the progress being made. We would prefer to hear a robust statement of assurance from the Minister than any more formal process.

My Lords, I thank my noble friend for tabling these amendments, which clearly demonstrate her commitment to reducing pensioner poverty by addressing the poor take-up of council tax benefit among pensioners. We have already done much to tackle pensioner poverty. I have referred to the 900,000 pensioners whom we have helped out of poverty since 1998. We are committed to ensuring that pensioners receive the support to which they are entitled, which is why we have already simplified the claims process. Since November 2008, pensioners can claim housing benefit and council tax benefit with pension credit entirely over the phone. The claim is forwarded to the local authority without the need for a signed claim form. I should say to my noble friend Lady Hollis that the change of name should not impact on the passporting of benefits. It is too soon for some of the recent measures we have taken to have fed through into the latest take-up figures. Nevertheless we accept that there is scope to do more.

We have engaged now in several debates on this matter. I set out the Government’s position at Report, last Tuesday. This is a change which we wholeheartedly support and a power that we intend to use. We have been convinced by the arguments so eloquently presented by the Royal British Legion and my noble friend in recent months and have demonstrated that we intend to make this small but significant change to help to remove a barrier so that pensioners take up the help they so richly deserve.

The Government have already said that we intend to make this change. The amendment moved in this House last week, now Clause 35 of this Bill, provides an order-making power which will allow the name change from benefit to rebate to be made quickly when we have completed the essential work needed to successfully implement the change. We have listened to the debate and understand the strength of feeling so clearly expressed by noble Lords again today and by the Royal British Legion on this matter. Because of this, we want to go further.

The amendment that I will move shortly will confirm that the order-making power can be used only to change the name of the entitlement to council tax rebate—a very clear commitment, I believe. In her amendments today, however, my noble friend has pushed us further, by seeking in Amendment 3 to substitute the word “may” with “shall”. I appreciate that the use of one word over another can make a big difference, and could help to provide the further assurance that noble Lords are looking for on this matter. I am therefore happy to accept this amendment and state unequivocally in the Bill that the Government intend to make this change. I hope that this reassures my noble friend, and I am indebted to her for giving the Government the opportunity to make it crystal clear.

I know that concerns remain over the timing of the change; we have heard those again this afternoon. My noble friend has proposed a further amendment to gain some more certainty of the date for implementation. I will, however, have to ask her to withdraw that amendment, as we just cannot commit to a timetable at this point. Amendment 7, tabled by my noble friend, aims to firm up the timing of the change. It seeks to commit the Government to the laying of the first order before Parliament within three months of the coming into force of this Bill. It goes further in requiring approval by resolution of each House of Parliament for all orders made under the power—not just the first. I shall deal with that aspect later.

Clause 59 provides for the commencement of the provisions of the Bill, and under it those provisions will therefore come into force on the day appointed by order made by the Secretary of State. As I have already made clear, the Government are committed to making the change as soon as is reasonably possible, but it is not possible to make any commitment to a timeframe at this stage without first completing the detailed work needed to assess the practicalities for local authorities and the precise costs involved. That will require reasonable time in which to properly consult them about the impact on their operational delivery of council tax and benefits, and on the best way to help customers take up the entitlement.

It is of overwhelming importance to ensure that when we implement the change it is done properly and effectively, so that it can make the difference we all desire—to help customers understand what help they are entitled to, and not to be put off from applying for it. It will take time to get that right, and with the best will in the world, changes—even one that looks as straightforward as this—cannot happen in a short space of time. One element of it is taking the time and care to deliver subordinate legislation that is accurate and provides all the necessary safeguards for claimants. That will have to be informed by discussion with local authorities and other stakeholders to ensure that whatever is done, and whenever, is effective and workable.

Three months is not a great amount of time to properly consult local authorities and to prepare regulations, but more important than the drafting process are the practical issues. I have already spoken about the extensive changes needed to computer systems. There are some 380 local authorities using several different systems. References to the benefit are embedded in IT systems used by each and every local authority, and in various parts of central government that link to those systems to facilitate easier claiming. All of those references will need to be changed. Local authorities must have at least six months lead-time for making changes involving IT, and some changes—even those that appear straightforward—take a lot longer, particularly when the effect is far-reaching.

Changes will also be needed to DWP computer systems, including those that provide the essential link with pensioner customers at the point of claim. Programmes for changing IT in DWP are always heavily subscribed, and it is essential to allow adequate time so that a previously unplanned change of this scale can be accommodated without risking other scheduled changes. It is not only IT systems that are affected. References to council tax benefit are made in a wide range of forms and leaflets, not only those relating to claims to the benefit, but in other information issued. In response to our soundings, one local authority has submitted a list of 115 letters that would need to be changed.

Moreover, local authorities and advisers must be in a position to effectively convey what this change means in order for it to have the impact that we all want. If we are to avoid confusing existing and potential customers, all of these references—in forms, leaflets and letters—will need to be changed. Simply telling people that we have changed the name while continuing to talk about council tax benefit in leaflets, forms and computer-generated letters would, I suggest, be a recipe for chaos. There is a danger that that confusion could actually reduce take-up.

My Lords, I thank my noble friend for that extensive explanation, and for his acceptance of my Amendment 3. He is quite right that the fact that the Government accept the amendment gives people who are interested in it—and in the change in name—the assurance they seek; that the Government are serious about it. I am very grateful for his acknowledgement that it is necessary and that he is prepared to accept Amendment 3.

On the timeframe, I thank noble Lords who have spoken in support of that question. It is a problem, but I accept that there are complications because of the involvement of local authorities. I am grateful for the assurances we have had that the Government desire to have the measure operative as soon as possible and that this is not what you might call a “long grass” type of legislation where everybody votes for it and then nothing happens. That is not the Government’s intention, as I understand it. I am very grateful for the extensive explanation, which will appear on the record, illustrating the difficulties involved with such a detailed measure involving local authorities. I thank the Minister for accepting Amendment 3. In view of the explanation that he has given, I shall not move Amendment 7 when we reach it.

My Lords, I beg to move Amendment 4 and speak to the other amendments with which it is grouped. We have just debated setting a clear timeframe for introducing a change in the name of the benefit. As I explained, I am unable to commit to a clear timetable for implementing the name change until the further work needed has been completed, but the Government have listened to the debate and the strength of feeling behind the issue. As I have already said, a key point that noble Lords made on Report was on the central importance of the name. The Royal British Legion focused particularly on the impact that a simple name change, from council tax benefit to council tax rebate, could have on take-up of the entitlement.

During our debates there has been considerable support, from all sides of the House, for the name change to “rebate” proposed by my noble friend. There are other possibilities, but we agree that a name change from council tax benefit to council tax rebate accurately describes the true nature of the benefit. It is hard to imagine that another title would improve on this. I am therefore very pleased to come back to noble Lords with further amendments which reflect the consensus that the new name for council tax benefit should be council tax rebate, and that this should be clearly stated in the Bill. This means we can get on with the important work of preparing local authorities for the change of council tax benefit to council tax rebate.

My Lords, all I can say in response to that is thank you very much.

We thoroughly approve of the noble Lord’s amendments.

My Lords, Amendment 9 fulfils the commitment made on Report, and follows a similar amendment put forward by the noble Lords, Lord Freud and Lord Taylor, on Report. It will help to ensure that Parliament can properly review the effectiveness of the power to disqualify a recalcitrant, non-resident parent from holding travel authorisation. It will do this in the same way as already provided for in relation to the driving licence provisions by Clause 51, prior to the legislation coming into permanent effect.

This amendment will ensure that a report on the operation of the driving licence and travel authorisation powers must be put before Parliament within six months from the end of a two-year review period. Based on the success of these measures, the Secretary of State will have the option of making the administrative system permanent or reverting to the existing court-based powers for either or both. Any decision to maintain an administrative system must be made by an order subject to the affirmative procedure and noble Lords will thereby have an opportunity to debate the success of each of these measures prior to a permanent administrative system being introduced.

As I said on Report, I appreciate the movement that the Opposition have made on this issue since it was first raised in 2007. I believe this amendment represents a significant workable compromise. I beg to move.

My Lords, I feel a bit short-changed in regard to this matter. I thought that we were talking about sunset clauses, but actually this is a pilot scheme. A pilot scheme is not a sunset clause. I do not want to labour that because we are where we are, but I would be much happier with a straightforward measure. The very powerful arguments made by the noble Lord, Lord Goodlad, during the passage of last year’s child support legislation were much more in that vein than the amendment we are discussing, which stands in the Minister’s name. I wish to register that objection but, more importantly, what will the report contain that will make it a useful tool for the House to consider in two years’ time to enable it to decide whether it is sensible to continue with these powers? The House will have nothing to compare the report with. It would be much more sensible to, say, run one system in Callendar Park and another in Plymouth and compare and contrast them after two years. You would then be able to see what the counterfactual was.

CMEC and the Child Support Agency will change their behaviour as soon as this amendment is passed and motor as hard as they can for the next two years to ensure that the measure looks as good as possible and then present the House with no alternatives. What are we expected to say? What will the report contain that will enable us to weigh in the balance whether the current system, which contains the protection offered by the court, is better than or different from the new system? All we will get is a report on whether the new system has worked. The Government will pile resources into this to ensure that it works, count up the extra child maintenance that is paid—I am in favour of that—and then say that there is no alternative. I do not know how the proposed report will enable the House to make a sensible judgment at a future date on whether to keep the new powers or to revert to the status quo. Until I receive reassurance on that, I am not sure that I support the amendment.

My Lords, I come at this with somewhat less passion than the noble Lord, Lord Kirkwood. I thank the Minister for the amendment, which I believe achieves the ends that I sought on Report. It was extremely peculiar to have two different approaches to assessing the impact of removing driving licences and passports respectively from non-resident and recalcitrant—as the noble Lord described it—parents. The amendment brings the measures into line. I welcome that attack of common sense.

On that point of agreement, of which we have had many, and as we draw to the end of Third Reading, I thank the Minister and the Bill team for shepherding us through the Bill, which we are extremely pleased to support.

My Lords, I have been pursuing this matter for almost two years. However, since just before the Summer Recess, I have been extremely careful not to interfere publicly in the deliberations of my noble friend Lord Freud. The Minister has my personal thanks for coming up with a sensible answer at a sensible time. I say more power to his elbow.

My Lords, I thank all noble Lords who have spoken on this issue. I thank the noble Lords, Lord Freud and Lord Skelmersdale, for their support and kind words, and for their kind words about the Bill as a whole and the work of the Bill team. This is not the time to reopen and go over the debates about the difference between driving licences and travel documents, as we have debated that previously.

I should to say to the noble Lord, Lord Kirkwood, that the provisions have the same effect as a sunset clause. A power cannot be used for more than two years without another process kicking in. He asked, “What on earth good will these reports be at the end of that period?”. I have not sat down to work out in detail what they might cover, but I presume that such reports would cover the number of occasions that the provisions have been used, what might happen under the appeals process, and how that has progressed. They might touch on the amount of money that has been collected for children by using these processes. One could envisage a range of useful things coming out of a report that would enable a judgment to be made about whether or not they continue. However, that is a debate to have when we see the reports in due course.

I thank the noble Lords, Lord Freud and Lord Skelmersdale, for their support. I am not sure where the noble Lord, Lord Kirkwood, stands on this, but I hope that he will not seek to divide the House.

My Lords, I shall speak also to the other amendments in this group. I bring them forward to place in the Bill the reassurances that I gave in response to concerns expressed in Committee on medical details and the passing on of information that the department receives.

These amendments tighten up the data-sharing powers considerably, in particular by preventing Jobcentre Plus from obtaining information about a person’s medical and social work history. The amendments also provide that the information provided by the police and probation service can be used only by those involved in administering the new programme.

The revised data-sharing provisions are intended to help Jobcentre Plus identify problem drug users so that they can be provided with the support that they need to prepare for and find work. We are aware that some problem drug users will not disclose that they have a drug problem due to stigma or embarrassment, or for other reasons. I also take this opportunity to remind noble Lords that in criminal proceedings the prosecution may adduce no evidence relating to any answer given by a person to the department about his or her drug use.

Information will be provided about persons who have tested positive for drug use when arrested or charged for an offence by the police, but who fail to attend either an initial or a follow-up assessment of their drug use. Information will also be provided by the probation service to Jobcentre Plus on individuals subject to drug rehabilitation requirements issued by the court as part of a community sentence. Such people should already be in treatment, but provision of their details will enable them to be included in the programme. Existing powers will allow information about people who have recently left prison to be provided by the Prison Service. However, all these information flows will be one-way. Jobcentre Plus will not provide data to the criminal justice system. The information will be passed on only to Jobcentre Plus service providers or the drugs workers responsible for carrying out the substance-related assessments.

The information will be disclosed elsewhere only if Jobcentre Plus, or the person holding the information, is ordered by a court to do so, or where they are required to disclose in order to comply with a statutory duty. As a further safeguard, the affirmative parliamentary procedure will apply to all the regulations made under Schedule 3. Before they can come into force, they will have to be approved in draft by both Houses. The regulations will also be drafted to ensure that the requirements that they impose on benefit claimants are compatible with the European Convention on Human Rights.

With these restrictions now in place and the reassurances I have given, I hope that noble Lords will accept these amendments. I beg to move.

My Lords, I apologise to the House and particularly the Minister that I was unable to be in the Chamber when he moved the raft of government amendments relating to Clause 9 and Schedule 3, which offer a real opportunity to draw in claimants who are dependent on drugs to a process which might induce them over time to accept treatment, and thus offer them a real opportunity—probably not immediately—to find a way back to a normal life and health, and to work. I am most grateful to the Minister, other Ministers and the Bill team for their work on those amendments.

This group of amendments in relation to information supports the general thrust of the earlier amendments and, therefore, is critical in enabling the DWP to play its part in the real rehabilitation of this most excluded group of claimants. If these claimants are criminalised under our Home Office provisions, they will run a mile if they feel that information that they give to the DWP is passed to others who could cause them severe damage. That would prevent the other important amendments having the effect that I believe they will have.

I pay tribute to the Minister and the Bill team for this series of amendments that dovetails with the others. We now have a coherent and constructive Clause 9 and Schedule 3, and this has transformed my feeling about the potential of the Bill for public good.

I thank the noble Baroness, Lady Meacher, for her comments in support of these provisions and the earlier amendments. Particularly, I pay tribute to the fact that it was her due diligence in Committee which caused us to focus on and, in a sense, recast the thrust of these provisions. If we have ended up in a good place, much of the credit is due to the noble Baroness.

My Lords, I wish to make it clear from the outset that I do not intend to press the amendment. I move it only as a means of completing the discussions that we had last week. The House will remember that, following a lively debate, the Minister kindly offered a meeting to see whether a way forward could be found on the issue of joint birth registrations, and for that we were most grateful.

First, I reiterate our agreement with the Government that we want unmarried fathers to take as active a role as possible in bringing up their children, starting with having their name on the child’s birth certificate. Even if the father is known to be violent or abusive, we still think that it is right that his name should nevertheless be registered on his child’s birth certificate. The only point at issue is that if he makes a declaration to the registrar independently of the mother and before her, and if the mother confirms his paternity, then he will automatically gain parental responsibility, however much she might fear for her safety or for that of her child. We know that this is likely to be a danger only in a very few cases—perhaps where the father is manipulative and devious—but we need to acknowledge that it may happen more often if more unmarried fathers are not just encouraged to sign the birth register but that it will be compulsory under this Bill.

The Government are keen to say that registrars should not be expected to police and screen individuals to guess which fathers might be violent or abusive and which will not. We do not expect registrars to fulfil this role either. We want them to have appropriate guidance so that they can inform mothers of the course of action that they can take if they fear for their, or their child’s, safety. Will registrars, for example, be able to say to the mother that if the purported father of her child has already made a declaration, she may wish to take advice before confirming paternity?

In the vast majority of cases, parental responsibility is a thoroughly good thing. However, as the noble and learned Baroness, Lady Butler-Sloss, pointed out, occasionally the courts deny it to a parent, usually a father, because it can in certain circumstances be a danger to the mother and child. I look forward to the Minister’s reply. I beg to move.

My Lords, I intervened on the point of joint registration for the first time on Report. I support the points made by the noble Baroness, Lady Thomas of Winchester. I was slightly dismayed to find that the Minister did not accept what I said on Report. I gave specific evidence—I know that in this House I should not “give evidence”—from my experience as a judge in my former life, where I heard cases in which a tiny minority of fathers had misused parental responsibility. It remains a real concern that this tiny group of cases will fall through the net under the joint registration scheme in the Bill.

I reiterate to the Government that they must not treat as unimportant the tiny group of men who get parental responsibility because of joint registration and may misuse it. I have tried these cases. Other judges who have also tried the cases sometimes rule that fathers who have acquired parental responsibility are not entitled to use it. They may keep it—fathers who are married to mothers automatically have it—but occasionally an order is made saying that they cannot use it. I should like the Government to take account of this and not treat what I said as lightly as I fear that they did, as if this was not a matter of real concern. In a tiny group of cases, it remains a matter that the Government should treat very seriously. I very much support what was said by the noble Baroness, Lady Thomas.

My Lords, I am grateful to the noble Baroness, Lady Thomas, for giving us the chance to conclude our discussion on this matter, following the meeting that we had last week. I respond for the Government with the agreement of my noble friend Lady Crawley, who has led for us on this issue. For understandable family reasons, she was not able to make that meeting. I say to the noble and learned Baroness, Lady Butler-Sloss, that I would hesitate not to accept her advice—that would be a slippery slope indeed.

I start by addressing concerns around the fact that these provisions will result in more unmarried fathers having parental responsibility than is currently the case. That is our intention. It is important to recognise the positive role that the vast majority of fathers play in their child’s life and the value of their involvement in terms of outcomes for the child. The noble Baroness, Lady Thomas, was very clear on that point as well. On Report, we debated a suggested link between parental responsibility obtained by a parent through birth registration and an increased risk of harm to mothers or children. It was argued that, notwithstanding the considerable benefits that we all think will flow from joint birth registration, there might be an extra risk arising in respect of a few manipulative individuals who could exploit parental responsibility.

We accept that some fathers can be abusive. However, as we said on Report, we have seen no evidence that the fact of having parental responsibility leads to an increased risk of such abuse. This is despite having consulted with stakeholders on the issue, and having discussed detailed concerns—for example, relating to access to medical and other information—with relevant organisations including the Department of Health. However, we are keen to engage in an ongoing dialogue with stakeholders in order to understand better such concerns.

If we were to accept that this could place either the mother or the child at risk of harm—I stress that we have not seen evidence supporting this—then the remedy would lie not in imposing on the registrar extra responsibilities to police and screen out relevant individuals. We believe that the remedies that are available in other situations should also apply here and that it should remain a matter for the courts. We acknowledge that there might be, as there are now, a small number of cases where the courts decide, based on evidence from both parties and in the best interests of the child, that a father’s parental responsibility should be restricted, or indeed that he should not have parental responsibility at all. However, merely because the courts considered the removal of parental control to be an appropriate sanction or part of the remedy, it does not follow necessarily that the existence of parental responsibility caused the abuse, manipulation or violent behaviour on the part of the father. Whether we agree or disagree on the matter, we travel the same path in agreeing that it should be for the courts and not registrars to determine what remedies should be applied.

My Lords, I particularly thank the noble and learned Baroness, Lady Butler-Sloss, for her contribution to the short debate on my amendment, and I thank the Minister for his very full reply. It would be churlish of me to go into any more arguments about this matter—I think that we have probably heard enough about it. We look forward to the ongoing dialogue which has been promised. On that note, I beg leave to withdraw the amendment.

My Lords, I am glad that we are returning to the Bill on Report because there are still many extremely important issues to debate. I am sure that the Minister shares with me some disappointment that we have to start the first day of Report at 6.25 pm, giving us less than three hours to debate it today. Of course, we will abide by the rules of Report but we will not be able to curtail our arguments in support of our amendments. The Government chose to make two Statements today, which meant that the Bill has been delayed until now. Nevertheless, there are still huge issues to debate, and I warn the Minister that we will not be able to treat them with any less importance just because we have begun several hours late due to the Government’s timetabling.

I turn to Amendment 1, which returns us to the issue of transparency in policing—policing being the subject of Part 1 of the Bill. In Committee, we debated whether ACPO should be subject to the Freedom of Information Act. The Minister helpfully said that, although ACPO was registered as a private company limited by guarantee and was not open to FoI requests, it seemed to him that there were anomalies. I had rather hoped that between Committee and Report there might be a chance for the Government to solve those anomalies. However, no solution has been forthcoming and therefore I have tabled this modest amendment. It merely seeks to give the Government the power to solve the anomaly to which the Minister referred in Committee as regards the FoI Act, as they would be able to designate ACPO in the interests of transparency, and they would be able to do so as soon as was practicable.

This whole issue is of critical importance. The noble Baroness, Lady Hanham, put her finger on it in Committee when she said that,

“we need to understand the status of ACPO, not just as an organisation with members but now in its position of having a statutory role in appointments”.—[Official Report, 22/6/09; col. 1366.]

It is that statutory role that leads me to table this amendment because I believe that ACPO’s transparency is fundamentally important. Although it may not be governed by any statute and is a private company limited by guarantee, it now has a constitutional role to play. As we move on to the Report stage of a Bill that gives ACPO new powers, we need to have regard to that essential need for transparency.

ACPO says that it is aware of this debate. Its website is clear that it is not a staff association, although in Committee the Minister said that effectively it was. However, I believe that he was thinking of the Chief Police Officers’ Association. ACPO’s work involves setting strategy, and it has developed to the stage where we believe that it should now be subject to the Freedom of Information Act. It is doing a lot of work in the public interest. It sets guidance on all sorts of things of incredible interest to the public, from the ACPO strategy for children and young people, for example, to guidance on the use of incapacitant spray. It also gives guidance on a subject that is very topical at the moment—cannabis possession for personal use, although when I looked at its website today, that was currently unavailable, which may say something about the state of the controversy. The public need to know as much as possible about discussion in ACPO, advice received and so on. It is right that it should be subject to the FoI Act. I beg to move.

My Lords, I support my noble friend Lady Miller of Chilthorne Domer. At the outset I declare an interest as a former police authority chair and, at present, as a vice-president of the Association of Police Authorities.

I referred in Committee to an article written by Henry Porter in the Guardian online on Tuesday 10 February. With your Lordships’ permission, I should like to return not to what I said then but to the article, as it is very pertinent to the amendment. It stated:

“Too often it seems ACPO is the driving force behind policy … Now the police have set up the confidential intelligence unit to monitor the political life of this nation. The only reason we know of this is because the Mail on Sunday followed up an internal police job advertisement for the head of the confidential intelligence unit, who would work closely with government departments, university authorities and private sector companies ‘to remove the threat of criminality and public disorder that arises from domestic extremism’. The story tells us that the CIU”—

the Criminal Intelligence Unit—

“will also prevent details of its operations being made public … Of course there are extremist groups hoping to make use of troubles ahead but it is surely a matter of the gravest urgency that parliament involves itself in defining the limits of the CIU's activity and bringing ACPO into the 21st century by forcing it to become more accountable and open. We cannot have the police making decisions about what constitutes legitimate politics in this country”.

Quite, my Lords.

My Lords, as the House will recall, my noble friend Lady Hanham had sympathy with this amendment in Committee. Later parts of the Bill give ACPO a role in the appointments panel for senior officers but, as I understand it, this is the first time that ACPO will be named, and one of its roles defined, in legislation. Will that make ACPO a statutory body? There needs to be clarity about this. I agree with the noble Baroness, Lady Miller, that if ACPO is to have a statutory role in senior appointments then it will have to have proper accountability not just to its members but also to the public. Of course, there is also a wider point. The Flanagan review highlighted the confusion that has arisen from a lack of clear understanding about the roles and responsibilities of various bodies and organisations in the policing sector. Placing ACPO in legislation in a statutory role—if indeed the Bill does that—without proper clarification of its responsibilities and without scrutiny will do nothing to help the implementation of review recommendations.

My Lords, the purpose of the amendment is to make the Association of Chief Police Officers subject to the Freedom of Information Act 2000. All individual police forces are already subject to requests made under that Act. Furthermore, ACPO already seeks to place as much information as possible in the public domain, and the details of its accounts are available to view at Companies House. Nevertheless, having said all of that, the Government agree with the sentiments behind this amendment and have set out their proposals for a future Section 5 order, under the Freedom of Information Act, to include ACPO. This issue was discussed on the first day in Committee, in July, and on 20 July I placed a letter in the Library to highlight the Government’s response to the consultation, entitled Freedom of Information Act 2000: Designation of Additional Public Authorities.

By way of background, in October 2007 my right honourable friend the Prime Minister announced a public consultation on extending the coverage of the Freedom of Information Act to cover additional public authorities by way of a Section 5 order. As part of that consultation ACPO nominated itself as a suitable candidate to be covered by the Freedom of Information Act and subsequently it was included on the list of persons proposed for the Section 5 order. The government response to the consultation was published on 16 July 2009. It proposed an initial, focused Section 5 order to be accompanied by action outside the Act to promote proactive publication and openness by reminding public authorities and contractors of the existing guidance on access to information, which should inform contracting practices and responses to requests for information.

On 9 September the Government wrote to ACPO inviting it to outline any matters that it thought the Secretary of State should take into consideration before deciding whether it is appropriate to include it in a Section 5 order and asking for its views on the length of time that ACPO would need between making an order and its commencement. It is clearly important that any new body being brought within the scope of the Freedom of Information Act is given sufficient time to prepare, and that includes establishing a publication scheme and training staff so that they are adequately resourced to deal with requests. It is quite something to get all that in place, as I know from being in the Home Office.

The Government propose bringing forward the Section 5 order early in the 2009-10 Session and it is a requirement of the Freedom of Information Act that the order be debated in both Houses. As the noble Lord, Lord Skelmersdale, said, ACPO is a private company limited by guarantee and is not established by statute. It is, however, referred to in statute. Both ACPO and the APA are referred to in the Police Act 1996, for example, where Section 37A places a duty on the Secretary of State to consult both ACPO and the APA on strategic priorities. I hope that that clarifies the issue.

I hope that I have been able to reassure the noble Baronesses that the matter is in hand and that we are moving in that direction. On that basis, I invite the noble Baroness to withdraw the amendment.

My Lords, will the Minister clarify one issue before I decide on the fate of this amendment? Will he kindly repeat the reply that he gave to the noble Lord, Lord Skelmersdale, about whether this Bill creates any form of statutory role for ACPO?

My Lords, this Bill does not make ACPO a statutory body, but it is referred to in statute, as it has been previously.

My Lords, given that, and given the tremendous progress that the Government have made, which is heartening, I am anxious—as I am sure the Minister is, because he has delved deeply into this—that this key issue in terms of transparency and policing is not lost in the busy six months of next year. Given that the Government have made so much progress on this, “as soon as possible” will be easy to fulfil, and it would help all concerned if this provision were in the Bill. I therefore want to test the opinion of the House.

My Lords, in speaking to this series of amendments about the senior appointments panel, I must first declare an interest as the president of the Association of Police Authorities and as the chair of the Security Industry Authority.

I listened carefully to what my noble friend the Minister had to say about this part of the Bill when it was debated in Committee and I have considered the issues further since then. I have accepted some of the points that he made, at least in part, such as the need to ensure flexibility in the functions of the senior appointments panel. The Minister will see that I have also accepted his point that creating a statutory body for senior appointments will give a stronger, more strategic and more proactive influence to the panel in the appointment of senior officers. However, I do not agree with some of the other points that he made in Committee. My amendments today therefore deal with my remaining concerns, which are substantially about the composition and some of the functions of the panel.

I start with the composition of the panel. I applaud what the Minister said about the Government’s intention to make it more independent, but I am not convinced that this is actually reflected in the Bill. It does not anywhere mention the word “independent” and seems to give the Home Secretary two bites at nominating members to the panel—first, by appointing the chair and, secondly, by appointing representative members.

It is absolutely essential to success that the panel should be owned equally by its tripartite partners and should be seen to be so owned. Its membership must reflect that. If that tripartite balance is not built into its composition and the panel is skewed in a way that might be used to favour the centre to the detriment of local concerns and interests, that will undermine the credibility of British policing in one of its most important functions—that of appointing the most senior police leaders in the country.

I know that the Minister will assure me that it is not the Government’s intention to act in this way, but legislation must have regard to the future and we must consider how it could be used in 10 or 20 years’ time. My amendment would ensure that an appropriate tripartite balance would be maintained in future on the senior appointments panel; I cannot think that the Minister would object to that. There is nothing to prevent the Home Secretary or, indeed, either of the other two bodies from appointing independent people as their representatives on the panel, suitably endorsed by the Office of the Commissioner for Public Appointments or a similar body. Indeed, I would be happy with that approach. However, the key and most fundamental point remains that, if this is to be a statutory body, the correct position for its governance—that it must be and must be seen to be tripartite—should be reflected in its statutory composition.

Moving on, I have reiterated a small earlier amendment about the payment of fees of panel members. That is to overcome difficulties experienced in the past with similar bodies, where representatives are required to sit on national organisations but the national organisation will not reimburse its members unless they are government appointees. The bodies that appointed them are left to pick up the bill. In this context, the money ultimately comes out of the public purse, but in the first instance from the budgets of much smaller organisations where the burden can have a disproportionate impact on what they are then able to resource elsewhere.

I move on to the functions of the panel. Although I have accepted the Minister’s point about flexibility in being able to confer additional functions, I still do not think that this section is transparent enough about what some of the obvious functions of the panel should be. I am unhappy about leaving this entirely to regulations about additional functions, when those are in fact core functions for the panel, on which its effectiveness will be judged.

Let me remind the House of the panel’s remit. It effectively conducts a co-ordination and pre-appointment advisory and screening process for potential senior candidates to potential senior police posts. That then enables police authorities to screen a range of potential candidates; it enables the Home Secretary to screen which candidates he or she will approve; and it enables chief officers to gather information about senior officers who may soon be joining their team and come under their command. Although its duty to advise the Home Secretary is picked up in the Bill, most of the rest of its remit is not.

It is crucial to make it clear that this is a pre-appointment screening process advising all the parties concerned, not just the Home Secretary. The vagueness of the Bill’s wording seems to blur that reality. At best, it is less than transparent about what the functions of the panel will be; at worst, the vagueness might be used to move into territory that could interfere with a local appointment itself. I am particularly concerned that the functions of the panel should not be tied back to facilitating the existing statutory functions of the key players under the current wording—the role of police authorities to appoint chief officers and the role of the Home Secretary to approve those appointments. I fear, given the focus on the national role that the proposals represent, that such an approach could be used to restrict the role of police authorities to make appointments locally rather than to facilitate it.

The current wording also fails to acknowledge that a key function of the panel must be to preserve the delicate balancing act between national strategic considerations and local requirements in appointing senior officers. That goes back to earlier points about the importance of ensuring that tripartite governance is essential and central to what the panel does.

We can all agree that the system for appointing senior officers needs to be improved to overcome existing problems and to make it more proactive and more strategic. My amendment about developing criteria for selection and prioritisation is intended to do that. I do not agree with the Minister’s criticism of my similar amendment in Committee, which he said would not allow the panel to undertake other functions, such as co-ordinating the appointment round. Co-ordination is certainly implicit in the need to prioritise appointments, but I point out that the existing wording does not mention co-ordination either. However, I accept the Minister’s point about additional functions and this might be one of the matters specifically included there.

The important point is that my amendment would make it a core function of the panel to develop ways to overcome the problems that have beset the process for many years. These include issues such as difficulties over the batting order for authority chief officer appointments, bottlenecks, lack of transparency and lack of information. Those problems are getting worse and must be addressed.

Last year, a police authority was given a late slot by the senior appointments panel for an important senior post and shortlisted all the six applications that it received, mindful that a number of nearby and adjacent authorities were allocated an earlier slot and that there could therefore be some withdrawals from the shortlist. Indeed, the authority found itself down to first three and then two applicants by the day of the appointment. After consultation with the chief constable and HMIC, it cancelled the process, made a temporary appointment and asked for an earlier slot in the timetable for this year.

It is not just that police authority that feels that a choice of one from two is entirely unsatisfactory for a post at that level. There is a general view that, at present, the system for drawing up the timetable for senior appointments is not working effectively and that potential candidates are themselves being very selective and are not always willing to move around the country and uproot their families at short notice, thus compounding the problems that police authorities face.

I am concerned that such problems should not be dealt with at the centre in a high-handed and pre-emptive way. The police service does not operate like the Armed Forces. Strong issues of locality are involved and solutions have to be found, and can best be approached, through a genuine three-way partnership operating through the senior appointments panel. That is what I am trying to achieve with these amendments.

My final amendment deals with consultation about conferring additional functions on the panel. I acknowledge that the legislation currently allows for consultation with the panel and that its members will include representatives from the APA and ACPO, but an individual member of the panel may not have sufficient knowledge of some of the wider issues or developments in the policing landscape, or some of the local issues relevant to particular areas or regions, and may not therefore be able to make wholly informed decisions about them. Given the important effect that decisions about functions could have, and given that appointing senior officers is first and foremost the statutory role of police authorities, it is important that police authorities should have a separate voice about what they think the panel should do. I have therefore included wording to ensure that the APA is consulted on this important matter.

I am still not entirely happy about some of the other provisions in this part. For instance, I am not convinced that only the Secretary of State should be able to refer HMIC reports to the panel. However, in the spirit of focusing on the most important matters at this stage, I have limited my amendments to those areas that I consider to be of central concern and I therefore beg to move.

My Lords, I support the noble Baroness, Lady Henig, because the amendments are designed to improve the current senior appointments panel proposals to guarantee tripartite balance in its membership and to be much clearer about its functions. I particularly welcome her points about the pre-appointment screening, with which I wholeheartedly agree. Once again, I feel that the powers of the Secretary of State are being brought to the fore, whereas it would be much better if we trusted the tripartite structure to deliver on these proposals.

My Lords, as in Committee, we have some sympathy with this amendment. The noble Baroness, Lady Henig, is right to highlight the significant powers that the Secretary of State is taking over the constitution of the panel. We understand the need for some flexibility, but the failure to specify the number of members or the relative proportions of the representative members means that in future the make-up of the panel could be very different from the model envisaged or from what we believe we are putting through your Lordships’ House. I am sure that the Minister accepts that a balance needs to be struck between national influence and local interest in appointing senior police officers, but we are not at all sure that the Bill guarantees what we regard as an appropriate balance. That point was powerfully made by the noble Baroness, Lady Henig.

On Amendment 5, we have sympathy with the need for the Bill to be more specific about the functions of the panel. There is a related issue: the power of the Secretary of State to confer additional functions on the panel. The Minister wrote to follow up a question that we raised in Committee about the scope of this power. He specifically mentioned that the Secretary of State might wish to confer a function in relation to the co-ordination of appointment rounds to the panel. I understand that the Government are still thinking about this co-ordination question and how it can best be achieved. It would be helpful if the Minister could say when he expects that work to be completed.

We accept that the Bill provides flexibility for panel functions, which could be useful, but can the Minister say why any changes will be made by negative statutory instrument? In his letter, he said that any changes would be subject to parliamentary scrutiny. Does he consider that an appropriate level of scrutiny?

My Lords, Amendments 2 to 6, proposed by my noble friend Lady Henig, would make changes to the statutory senior appointments panel clause and stem from her concern that the tripartite balance may be damaged in the membership and operation of that panel.

This issue was discussed in Committee and I can confirm, as I did then, that the Government are committed to working through the tripartite to get the best possible leaders for the future in policing. A more proactive statutory senior appointments panel will play a key role in delivering this. The function of the police authority to appoint senior officers set out in the Police Act 1996 is unaffected by the Bill. The panel will provide advice to Ministers about the approval of candidates for appointment and will increasingly take a more strategic overview of the talent pool, which we all believe to be necessary. We have talked about this before in the House.

Amendment 2 would remove the possibility of appointing independent members to the panel while retaining an independent chair. My noble friend Lady Henig spoke about the independence of the panel. I understand that underlying this amendment is a concern that a Home Secretary could unbalance the panel. However, as set out in the policing Green Paper, the Government believe that the new panel should have a greater independent element so that there is a broader perspective on leadership. We feel that this is important and needs to developed and grown within the police service. This is established by Clause 2. The provision in new Section 53B(2)(a) is intended for appointing a small number of independent members. Indeed, as the current non-statutory arrangements already include an independent member, the effect of the amendment would be to remove this perspective.

The precise number of independent members will be subject to consultation with the APA and ACPO as part of the panel constitution. Appointments will be made according to the Office of the Commissioner for Public Appointments principles. This means that they will be made on merit and that there will be openness and transparency in the appointments. Such appointments are made when people apply for certain jobs. There is an interview panel that makes recommendations to Ministers. We will discuss with tripartite partners how they might best be involved in the selection process for independent members.

Amendment 3 is also concerned with the composition of the panel and specifies that the representative members of the panel shall be of equal numbers. Again, the Government share with the Association of Police Authorities the view that a balanced tripartite contribution to the panel is important for it to deliver improvements to the appointments system. This is why the Bill specifies the ability of the APA, the Association of Chief Police Officers and the Secretary of State to nominate representative members to the panel.

However, while I understand the concerns behind this amendment about how, in theory, a future Home Secretary could unbalance the panel to exercise undue influence, I do not share them. Police authority appointment of candidates and the approval role of Ministers are statutory roles contained in the Police Act 1996. They are not changed by the establishment of an independently chaired statutory panel to provide advice. Seeking to appoint large numbers of representatives to the panel would only serve to undermine the confidence of authorities and the service in the work of the panel. I therefore believe that it is unnecessary to state the tripartite balance in the Bill and that the current proposals, whereby the panel constitution will specify that the tripartite is equally represented on the panel, are adequate.

Amendment 4 would allow the Secretary of State to pay fees to members of the panel representing the tripartite. It was not our intention to remunerate representative members for attending the panel, which is why the clause is drafted as it is. This is consistent with the statutory arrangements for the Police Negotiating Board.

Amendment 5 sets out particular functions of the panel. The panel will advise the Secretary of State in his role in chief officer appointments and ensure that he has sufficient information to enable him to undertake his role. It will also advise the Secretary of State and police authorities in developing the senior talent pool in policing, which we all felt to be very important. There is also important work to do to look at the assessments process for chief officers to benefit all involved, which the senior appointments panel has already begun to consider and on which there will be wider consultation. A key feature of the improved senior appointments process will need to be consideration of local needs alongside the strategic picture, a point that was made by a couple of speakers. Local need is important.

The Government are content that the Bill already provides adequately for the panel to undertake its functions, but there is also scope to provide for additional functions—a point mentioned by my noble friend Lady Henig—for the panel where needed, for example, to develop an approach to co-ordinating appointment rounds in order to increase the transparency and effectiveness of the process. I know that there are particular concerns from police authorities about co-ordinating the appointment of assistant chief constables and commanders on promotion following the strategic command course.

Amendment 6 specifies that the Secretary of State must consult the APA before conferring additional functions on the panel. New Section 53D(4) already specifies that the panel, on which the APA will have membership, shall be consulted. Therefore, I believe that the existing provisions meet this intent and that the amendment is unnecessary.

In summary, Clause 2 already provides the framework needed to oversee and manage police senior appointments most effectively. We understand how important they are, but I do not agree that the amendments are necessary.

The noble Baroness, Lady Neville-Jones, asked about the timing of the work that we are doing. It will be done within 12 months, following the commencement of the consultation and the SIs being in place.

On the basis of my explanation and assurances, I hope that the noble Baroness will withdraw her amendment.

My Lords, I am most grateful to the noble Baronesses, Lady Harris and Lady Neville-Jones, for their comments. The Minister acknowledges the legitimate concerns that we all have, the importance of the tripartite relationship and its being seen to be at the heart of policing, the importance of the local/national balance, the importance of co-ordination and the importance of what this body needs to do, but it is extremely frustrating that there is no acknowledgement that words need to be put into action. One can say anything in this House, but to make it happen out there is another matter entirely.

Some of us have knowledge of these affairs and have participated in them outside. On many occasions, we have been hampered by Home Office regulations, by the failure to spell things out and by vague legislation that we have to amend later on. It is frustrating to sit here and foresee how things may go wrong in the years ahead and to know that we will probably have to revisit some of these things. At this point, the Government and the Home Office see no need to do anything. I hear the Minister’s words and accept them; I am just sorry that he is not prepared to enshrine this in such a way that some of these things will actually happen. However, at this point in the proceedings, and having heard what the Minister has said, I beg leave to withdraw the amendment.

My Lords, in moving Amendment 7, I shall also speak to Amendments 99 and 100, which are grouped with it.

My original amendment in Committee sought to remove this part of the Bill altogether because of my concerns about the wide-ranging powers that it confers on the Secretary of State, yet again, to make orders about senior appointments and related matters. I reluctantly accept that the Government are determined to go ahead with the clause because they believe that it supports the previous clause on the senior appointments panel. By this logic, if the senior appointments panel is to be statutory, this clause needs to be, too. I accept that this is at least consistent, even if I am still sceptical about it being entirely necessary. Amendment 7 therefore seeks to improve the clause rather than to dispense with it altogether.

I remain concerned about the wide and rather unspecific nature of the powers which the clause gives to the Home Secretary. Having heeded what the Minister said about the important role of Her Majesty’s Chief Inspector of Constabulary in advising the senior appointments panel, and conscious that the clause is intended to support the panel’s work, I have linked the two together. Amendment 7 suggests that the powers of the Secretary of State should be exercisable, subject to the advice of the HMCIC, and that any proposed regulations are in the best interests of appointments to, or departures from, senior posts.

The amendment also suggests that the Association of Police Authorities and the Association of Chief Police Officers must be consulted before regulations are made. This reflects their important role in senior appointments. Let us not forget, as this Bill seems to, that the authorities are the ones that appoint senior officers. The tripartite structure should not be overlooked when developing regulations that will affect them in a very important area of their business, as we have already heard this evening.

These changes would provide appropriate and proportionate safeguards in the Secretary of State’s exercise of these otherwise very wide and vague powers, which, as with many other parts of the Bill, are entirely inconsistent with the stated government aim of greater devolution.

My Lords, on these Benches we think that Amendment 7 is sensible. Neither the Government nor the Bill say what the process for drawing up any regulations will be. All the organisations that the noble Baroness mentioned have legitimate interests in this area and should expect to be consulted. On a related issue about pay-offs for senior officers to whom some of these regulations will apply, in his letter to my noble friend Lady Hanham, the Minister did not say whether such powers already existed under employment law. Perhaps he could now do so.

In relation to Amendments 99 and 100, I have already spoken about the need for adequate positive parliamentary scrutiny and I will not repeat that point, which I think is a strong one.

My Lords, these three amendments relate to a concern about the regulation-making powers that the Bill gives to the Secretary of State. However, our highly respected Delegated Powers and Regulatory Reform Committee has scrutinised the Bill and did not find the powers to make secondary legislation inappropriate. Amendment 7 is to Clause 3, which specifies additional matters that may be included in regulations made under Section 50 of the Police Act 1996. That Act provides that before regulations are made under Section 50 either the Police Negotiating Board or the Police Advisory Board must be engaged. As the Association of Police Authorities and the Association of Chief Police Officers are members of the Police Negotiating Board and the Police Advisory Board, it is unnecessary to further specify a duty to consult them in legislation. I believe that that answers the point made by the noble Baroness, Lady Neville-Jones, about consultation.

Amendment 7 also creates an approval role for the Chief Inspector of Constabulary under Clause 3. While he will continue to have a key role in advising the senior appointments panel, he will not chair the panel. It will no longer be appropriate for him to hold this role under the new system as HMIC now has a strengthened role for performance improvement. Therefore, while the expert advice of the chief inspector will be important in improvements to the appointment and departure arrangements for chief officers, including changes made through regulations, I do not believe that it is right for him to gain a statutory role in regulations under Clause 3. This amendment would give the chief inspector this role in relation to all matters that may be included in regulations under Section 50 of the Police Act 1996, which includes police pay, allowances and annual leave. We do not think that it is appropriate for the chief inspector to have a role in these matters.

Amendments 99 and 100 amend Clause 111, which contains a general power to make an order containing supplementary, incidental or consequential provisions for the purposes of the Act. However, these amendments do not affect the powers to make secondary legislation in Part 1, whereas I understand that the intention of these amendments is to make all those powers subject to the affirmative resolution procedure. Therefore, the amendments are defective.

The noble Baroness, Lady Neville-Jones, asked about the powers in Clause 3 already existing in employment law. Clause 3 is needed to note provision for these powers expressly for the police. The police are not subject to general employment law, which is why it is focused like that. On the basis of what I have said, I ask the noble Baroness, Lady Harris, to withdraw her amendment.

My Lords, I am very grateful to the Minister who has once again given a very full and frank response. We are not going to get anywhere with these amendments, no matter how hard we try. I can only think that the future will be where we will look to say, eventually, “I told you so”. With those remarks, I beg leave to withdraw the amendment.

My Lords, now begins a series of amendments to Clause 5. Amendments 8 and 9 would remove the current power of veto which appears to have been given to chief officers over authority collaboration agreements and ensure that an authority only needs to consult a chief officer about agreements which affect the police force, as opposed to just the police authority. Amendment 8 seeks to remove lines 4 to 7 because the ability of a police authority to determine what is in its best interest when dealing with collaboration matters appears in the Bill to be handed over to the chief officer. I will develop this argument in following amendments, but I seek to hear the Minister’s views on these amendments at this point. I beg to move.

My Lords, when this issue was debated in Committee, I offered to consider further whether there was an anomaly here. Collaboration in policing depends on negotiation and consultation between the forces and their authorities from the outset. This assumption is well understood and it needs to be embedded in the legislation that supports it, which is why we have the proposed balance of provisions on consultation. All agreements between forces have to be approved by their authorities, but only consultation is required the other way around. All parties must have some involvement in plans for collaboration agreements, but the balance of responsibility rests with the police authorities, which have the ultimate accountability for ensuring that collaboration is supported and have the final say in the judgment of the best way to deliver greater efficiency or effectiveness.

Amendment 9 seeks to ensure that a chief officer is not troubled by being consulted on collaboration plans between police authorities about things which do not directly affect the running of the force. I would suggest that there is always a possibility that such plans might in some cases have an indirect impact on force business. Much of the business of police authorities, for example on performance and planning, is carried out in-force. I would hesitate to suggest that there is a clear distinction, as this amendment implies, between work which has a bearing on the force’s activities and work which does not. This close working is as it should be; and to include the chief officer in routine consultation on such matters is the most straightforward approach, would not impose a significant burden and would be appropriate.

Turning to Amendment 8, if employees are under the chief officer’s direction and control, a police authority should not be able to agree provisions affecting the functions they carry out without seeking his approval. I understand why this has been likened to the authority seeking permission from the chief officer to provide resources for itself, but this is not a condition applicable to all police authority agreements or all the provisions of any one police authority agreement. The limits of this approval are intended to be confined to the impact of the collaboration plans, in respect of the functions of those employees, on operational matters. This will be set out in detail in the statutory guidance which police authorities are currently helping to draft and to which chief officers must have regard.

We fully intend to ensure, with the help of our stakeholder partners, that the statutory guidance planned for publication alongside these provisions when implemented will make clear the extent of the consultation and approval processes within these provisions. The publication of guidance on collaboration is important to the successful implementation of these provisions. We are working closely on its development with the Association of Police Authorities, the Association of Police Authority Chief Executives, the Association of Chief Police Officers, Her Majesty’s Inspectorate of Constabulary, the National Policing Improvement Agency and practitioners within the police service with real experience of the challenges that collaboration brings.

The National Police Protective Services Board, representing the tripartite organisations, Her Majesty’s Inspectorate and the NPIA will sign off the statutory guidance and associated toolkit. An early draft of this material has been received enthusiastically and its publication, which is planned to coincide with the commencement of this Bill in the new year, is keenly anticipated by many in the service who already are in the midst of putting together their plans for closer joint working to meet the need for delivering leaner and more effective policing. In the light of that reassurance I ask the noble Baroness to withdraw her amendment.

I am grateful to the Minister for his response and welcome what he said about statutory guidance. I look forward to seeing whether it makes any difference.

However, the provision still gives powers to chief officers to veto authority collaboration agreements and confuses ultimate accountability for ensuring that collaboration. The police authority is the governing body of the police force. It is absurd to suggest in legislation that it should have to get permission from the people whom it governs to exercise its functions effectively. Police authorities respect the operational responsibilities of their chief officers, they respect that position in expertise and leadership in policing, and they would think very hard before going against a chief officer’s advice. We really must dispense with this power of veto. I shall withdraw the amendment at this stage, but I predict that there will be problems ahead with this part of the Bill.

To ask Her Majesty’s Government what measures they are putting in place regarding the management of water and the conservation of rivers.

My Lords, in introducing this debate, I thank those who are going to contribute to it and declare my own position in the question of rivers and angling: I am a keen salmon fisherman; I fish also for trout—in both cases, with variable success—and I am a member of the Salmon & Trout Association.

As many of us know, the European Union’s water framework directive establishes a new and integrated approach to the conservation of our rivers and watercourses, and it introduces new, broader ecological objectives designed to protect aquatic ecosystems and, where necessary, to restore those that are damaged. However, in particular, it emphasises that it requires member states to bring all natural rivers up to a good ecological status.

There are a range of issues of concern, but I shall focus today on one aspect of the water framework directive: barriers across rivers that obstruct the movement of fish and invertebrates. These are an important reason why many rivers are not achieving the ecological status that is sought. As I think most of us know, the ability to move up and down rivers is critical for migratory fish such as salmon, sea trout and eels, to name but few. However, other fish species also migrate within the river system, and barriers such as weirs and dams can reduce their chances of spawning successfully.

The Government have proposed some ideas for removing unnecessary barriers and installing fish passes, but there is a complicating factor: the fairly obvious one of the growing demand for hydropower schemes, which could lead to the construction of new barriers and new uses for old, obsolete barriers. If these schemes are not introduced in a managed and sustainable way, they could make it impossible to achieve the good ecological status that most of us would seek and the water framework directive requires.

I shall return to hydropower, but first want to address the general issues surrounding barriers. Under existing legislation, anyone who installs a new barrier in a river or stream that obstructs the passage of salmon or sea trout must install a fish pass. If they are altering an old barrier, they have to install a new pass in that way. However, the provision as the law stands has a number of defects. First, it applies only to salmon and sea trout and does not cover other migratory species, such as eels, shad and lampreys, or freshwater fish that migrate within the river system. Secondly, it does not apply to existing, unaltered barriers.

To remedy these defects, the Government issued a consultation paper in January which proposed to extend measures on fish passage to all fish that need access to different parts of the watercourse to help them complete their life cycle. It also required the installation of fish passes in an existing barrier. Similarly, screens would in principle be required on all abstractions from rivers.

The proposals were welcomed by all fisheries and angling bodies—no surprise there: they would, of course. However, I understand that the Government now intend to delay the necessary regulations until at least May 2011. This is regrettable. It will make it far more difficult to achieve the water framework directive’s objectives on the grounds that the Government are, I think, concerned at the economic implications of some of the proposals for small businesses and landowners, and we know that the economic climate is difficult.

While I understand some of the reasons that lay behind that decision to delay, the concerns are in many ways misconceived. Granting additional powers to the Environment Agency need not mean that they would be used immediately—I would in any case expect the agency to use any new powers sensitively. The suggested powers would enable the agency to respond much more effectively to proposals for new hydro schemes, and in ways that did not jeopardise the attainment of the water framework directive’s objectives.

I think that we all recognise that hydropower schemes have the potential to cause significant environmental damage. The Environment Agency estimates that 1,200 schemes will be operating by 2020, and those schemes require barriers. Barriers are needed to create the head of water necessary to drive the turbines. Unless properly-working fish passes are provided, barriers will prevent fish migration and the movement of invertebrates. Fish passes require a good flow of water through them to work effectively. Fish such as salmon are attracted to the very strongest flow in the river if they are moving up it to breed. If that strong flow is at some distance from the fish pass, the fish will not find or use the pass, may not find alternative migration routes, and will be lost to the breeding stock completely.

In addition, barriers can cause migratory fish to mass in unnaturally large shoals below them, attracting increased predation—from seals, for example—increased poaching, which is fairly obvious, and the risk of disease outbreaks. This can be a particular problem when the barrier is the first obstacle that salmon and sea trout encounter at the head of the tide in their return migration to their natural river to breed. An illustration of the damage that can be caused is provided by the monitoring data on the effectiveness of the fish pass in the Tees barrage. It was estimated that only 15 per cent of the fish seeking to go over the barrier there actually made it and that none of them went through the fish pass.

While I do not want to labour the point too much, I shall highlight one particular difficulty to emphasise it: what seems to be the conflict of interest within the Environment Agency. The agency is, first, the protector of the environment, with a duty to oversee implementation of the water framework directive and safeguard fish and fisheries—which is all about the environment. On the other hand, it also has a duty placed on it to further the development of renewable energy and help meet the Government’s ambitious targets for it. It is difficult to see how this dual role can easily be managed by one agency and within it.

Against this background, four steps might be taken. First, I hope that the Minister can give an assurance that the agency and the Government can agree that the first duty of the Environment Agency in these circumstances is to protect the aquatic environment and its associated ecosystem. Secondly, the agency has to be empowered to do the job properly. There should be no delay at all in introducing the additional powers that are now at the discretion of Government, particularly where hydropower schemes are concerned, and I contend that we should not have to wait until 2011 for that.

Thirdly, it is essential that the impact of barriers on fish migration is assessed in an integrated and coherent way, by which I mean that where hydro schemes are concerned, they must not be assessed in isolation. While one barrier on the river might be passable to migratory fish, it is fairly obvious to those of us who know anything about fish and rivers that a succession of barriers could constitute a cumulative obstacle that the fish cannot overcome, even if each barrier on its own is in theory passable. Moreover, existing barriers that are not involved in hydro schemes need to be looked at in the same way and at the same time. Lastly, I contend, fairly obviously, that the Government should encourage research into new and innovative ways of generating renewable energy that might not require barriers on large river flows and so have less impact on migrating fish.

I conclude by saying that if all this is done, it would be possible to succeed in what is admittedly a difficult balancing act, that of on the one hand reconciling the need to protect the aquatic environment and meet the objectives of the water framework directive, and on the other hand making use of the potential of our rivers to generate renewable energy.

My Lords, I am grateful to the noble Lord, Lord Dear, for selecting this subject for debate and for so admirably setting out the issues that confront us. I have a particular interest in engaging actively with this discussion given my role as chairman of the Environment Agency. As the noble Lord clearly spelt out, the challenges we now face with the implementation of the water framework directive are very considerable.

Over the past 10 years or so, we have made substantial progress in cleaning up the rivers and watercourses of this country. Under the old rules of what constituted good ecological status for a watercourse, we were at something like 70 per cent good condition across the rivers of England and Wales. The water framework directive, however, is much more demanding than the old rules. Instead of the five parameters by which we used to have to judge watercourses, we now have 34 parameters that we need to use to judge them, and those include both biological and chemical characteristics. As a result, at a stroke, the percentage of rivers and watercourses in England and Wales qualifying as having good ecological status has fallen from 70 per cent to 26 per cent. That is not because the water has changed in any way, but because the rules have changed. However, the rules are there, the water framework directive is in place, and it is our duty in the Environment Agency to implement those rules and to seek over the coming years to improve as best we possibly can with the resources available to us the quality of the water in our rivers. The task is not going to be an easy one, but we are already setting about it with vigour.

The water framework directive, as well as requiring a range of new tests to be carried out, takes a sensible approach in seeking to look at the whole of a river basin as one, so that we need to look not just at the river itself but also at the estuary, lakes and so forth. Before, under the old rules, we did not have to do so. To achieve an improvement in ecological status and rise above the figure of 26 per cent, which we have to do, we are going to have to look beyond the easy pollution sources—the point source pollution, for example, from a sewage treatment works. We have been doing that intensively over the past 10 to 15 years, and it has been the primary route to improvement over the period. But now we need to look much more actively at issues like diffuse pollution, pollution that comes into watercourses from agricultural land used for both grazing and cultivation. That is a much more difficult area for us to tackle, but with the co-operation of the farming community and with new catchment-sensitive farming practices which are now increasingly being adopted, I am sure that we are going to have some success.

However, I should like to touch on two further issues. I will come to the first of those in a moment because it relates very specifically to the issue of small-scale hydro power raised by the noble Lord. The second issue, which perversely I shall deal with first, is what is likely to happen over the next 20 to 30 years or so to the rivers of England and Wales as a result of climate change. We know that climate change is very much with us. Whatever happens in the next few weeks at Copenhagen, it is likely that we face a global rise in average temperatures of at least 2 degrees, and it may be a lot more.

We have done some careful work in the Environment Agency looking at what climate change will mean in terms of flows in the rivers of England and Wales in 20 or 30 years’ time. The automatic assumption among most people is that we have plenty of rain in the UK and rivers that flow freely, so it is unlikely that there will be much of a problem. The response to that is yes and no. We will face greater extremes of weather as a result of climate change. The summers will be much drier on the whole, while the winters will be rather wetter. We will have more floods and more droughts. The weather will become more erratic and extreme.

The consequences for the flow of water in our rivers, especially in the drier parts of the south and east of England are, during the summer months, likely to be severe. Our expectation is that in 30 years’ time, the level of flow in the summer in rivers in the south and east of England will be down by between 50 per cent and 80 per cent on what it is during the summer months now. The consequences of that will be considerable, not just for the flow of water and for the look and feel of the rivers for people who like to enjoy them, but also for fish populations, for levels of water abstraction, for the water companies and their ability to supply us all with drinking water and for the discharge into rivers—one of the important things is the dilution effect that a good flow can have on levels of pollution where it is discharged. It means that we need to look very carefully at the quality of the water, the levels of flow, and the levels of abstraction and discharge over the period. It also emphasises how important the task of tackling climate change actually is, because it is not just about a rise in sea level, erratic weather or more flooding; it is also about water resources and river flows.

This brings me to the dilemma that the noble Lord so accurately described. In considering the balance in small-scale proposals for hydropower in rivers, we need to bear in mind two potentially conflicting environmental objectives: on the one hand, the quality of water, the level of flow and the ability of fish to swim up the river in the way that they would naturally wish to do; and, on the other hand, the need to encourage as much as we can the development of renewable energy resources for this country. This is a classic issue where there is a dilemma of environmental objectives. We in the Environment Agency will seek to achieve a balance wherever we can. Where we cannot, where it is impossible to have sustainable small-scale hydropower, we will say that it is not sustainable and that we should not do it. Where it is possible to achieve both objectives, we want very much to achieve them.

Let me give the recent example of a small-scale installation on the River Monnow in Osbaston, Monmouthshire. The installation, which was built as an investment by a private house owner; has two Archimedes screws, which raise the water in a fish-friendly manner, in order to power the turbine; it also has a separate fish pass to allow the migration of fish. The installation harnesses around 670,000 kilowatt hours of electricity per year, enough to power 152 homes. The owner of the scheme diverts enough energy to power his own home and sells power on to the National Grid. That scheme has achieved free movement for the fish and renewable energy. In a small way, this has begun the process of tackling climate change. It is the kind of solution that provides a synergy between the two objectives. There will be occasions, of course, where proposals do not provide that kind of synergy, but where we can, we want to try to achieve a good, sensible balance between the two objectives.

Yes, our objective will always be to improve the quality of the water in our rivers and watercourses—that is our duty as the Environment Agency—and we also want, as far as we can, to embed the fight against climate change in everything we do.

My Lords, I thank the noble Lord, Lord Dear, for tabling the debate today. I should say at the outset that I know little about the water framework directive but the debate gives me the opportunity to say a little about water conservation in my home region of East Anglia. Like many other regions across the country, we face the challenges of the impact of housing growth, pollution, climate change and rising customer expectation and demand.

However, it is of particular importance to East Anglia that while we are one of the fastest growing regions in the country in terms of housing, we also have the driest climate. Even in this highly unexceptional summer, we had very little rain indeed. We are therefore highly vulnerable to drought and yet across East Anglia we have many water-dependent conservation sites, some of them designated at European, or even world, level. Some are large and very well known, such as the Norfolk Broads, the RSPB site at Minsmere and Wicken Fen in Cambridgeshire, which is the last remaining piece of original fen. However, we have many other small sites which are important in their own way. Not far from where I live, the Redgrave and Lopham Fen is the home of the great raft spider and is one of the few places in the world where this spider is to be found. It needs to be protected not only for that reason but because the spider is an indicator of the health of the water; it needs unpolluted, alkali water to thrive.

The Broads Authority in Norfolk has shown the value of an integrated approach and the work done by the RSPB and the National Trust has been absolutely invaluable. Across East Anglia there are small local organisations, such as the East Anglian Waterways Association, which work tirelessly to clear riverbanks, clean ponds, inspect canals and so on. In the north of the county, the Otter Trust in Bungay was so successful in reintroducing the otter that it has now disbanded, although I accept that the health of otters may not be too beloved of the noble Lord, Lord Dear, and fellow anglers. I am patron of the Pickerel Project in Stowmarket, in which volunteers look after the River Gipping on a regular basis. It is with the help of such organisations that East Anglians are trying to conserve their rivers; without them we would be in a far worse situation. However, it will require a lot more than local action by volunteers, however welcome that might be.

At our recent party conference in Bournemouth, the Liberal Democrats introduced a natural heritage policy paper which outlines some thinking in this area. How much thought are the Government giving to introducing to water conservation the kind of measures that they have introduced for energy conservation: for example, providing building control guidance in favour of rainwater harvesting; supporting energy efficiency in existing homes by the introduction of smart metering in water-stressed areas; and providing grants or preferential VAT rates for rainwater harvesting systems, water butts and dual flush toilets.

It seems apparent that the regulatory regime under which Ofwat operates is still a hangover from a bygone era; it appears to pay no serious attention to environmental or social concerns. It is time to alter Ofwat’s remit to put water resource efficiency at the heart of water companies’ plans, to include tougher leakage targets and provision to protect water quality through land management.

As the noble Lord, Lord Smith, pointed out, the other side of the drought equation in East Anglia is that we suffer badly from flooding. Annual flood damage now costs an estimated £2.3 billion a year across the country. This total is rising as climate change increases the variability of weather patterns. Both the Stern and Foresight reports state that major urban flooding is now inevitable and that costs will rise to £21 billion per annum later this century. Floods caused by flash rainfalls and overflowing rivers in England in June and July 2007 caused a number of deaths as well as £3 billion-worth of damage to homes, businesses and agriculture. This shows the extent of the impact of flooding.

Current funding is inadequate. The ABI, the Foresight report and the Environment Agency have all called for spending to be increased. What is the latest thinking on funding to deal with flooding? Equally, how much research is being done to improve our knowledge of flooding and the risks that it brings? How will we protect the vital utilities, such as water and electricity, and ensure that infrastructure is not irrevocably damaged when flooding takes place? What more can be done to regulate future developments, particularly building on flood plains?

There have been approximately 1,500 serious river pollution offences in the past five years—some of which have killed hundreds of thousands of fish and destroyed wildlife habitats and ecosystems—and yet the average fine for each breach is just over £4,400. This is not enough to deter businesses from polluting. Many of them, I fear, regard it as a business cost; a risk that is worth taking. While I commend the Environment Agency for the work that it has done so far in cleaning up the rivers, I hope that it will consider whether it is doing enough to deter polluters.

In conclusion, I again thank the noble Lord, Lord Dear. British rivers are an important part of our natural heritage and environment and play a key role in our lives. It is time that we began to take them seriously.

My Lords, I, too, congratulate the noble Lord, Lord Dear, on introducing this debate. Although it has ranged from the wide to the specific, it has nevertheless been very useful. It carries with it the advanced ripples of the coming debates that we hope we are going to have on the major Bill on floods and water management, which we hope that the Government will bring forward in the new Session.

My noble friend Lady Scott of Needham Market talked much more generally than the noble Lord and others on this topic, and did so usefully. She reminded me that in the part of the country where I live, our rainfall is somewhere around twice that experienced in the heart of the Fens in the northern part of East Anglia. If the forecasts that the noble Lord, Lord Smith, referred to are accurate, that difference is expected to increase, so part of the country will get even more rainfall than it does at the moment while other parts will be more subject to drought and extremes of rainfall, perhaps between summer and winter or even between different periods of weather. This is important because it introduces the element of diversity, to which I shall return in a while when we are talking about the necessity of finding a balance between the interests of small-scale hydropower and the preservation and enhancement of the fish stocks in our rivers.

The noble Lord, Lord Dear, referred to weirs and dams. This is a historic legacy on many rivers. I come from a part of the country where, if you walk and up and down any of the rivers, you can frequently find at least the remains or evidence of weirs that were used to power the local textile mills and, before that, small-scale mills for milling grain, bobbins and all sorts of other things. They are still there. The historic legacy of weirs and barriers on our rivers is one aspect of this. The other is the question of new schemes and perhaps upgrading and using existing weirs for new schemes, if they are not exactly new ones.

There are two issues here. The noble Lord suggested that there was a conflict within the Environment Agency, but it is not just within the agency. We are all in favour of the development of sustainable energy supplies, whether large-scale, medium-scale or small-scale, as a matter of principle, but we are also in favour of preventing those schemes from having undesirable ecological consequences. That is the dilemma. It is not just a question of small-scale microhydroelectric schemes; it is something that crops up whenever we talk about renewable energy. Even if you can find a perfect site for developing renewable energy, there is then the problem of the transmission lines. There is a major debate in the Scottish highlands at the moment on that. To what extent are we prepared for wind farms—“wind factories”, some people call them—severely to affect the environment on the great open moors and fells of this country, as well as at the coastal sites, which might be ideal for this? Even if we are talking about marine wind and the development of electricity from marine currents and tidal barrages, whenever we look at this, there are environmental pluses from the development of green energy and environmental minuses from the impact that these schemes have on the environment, ecology and the net carbon balance of carrying them out. Whenever we do this, there are these questions to be answered, and this occasion is no different.