Wednesday, 23 March 2011.
Arrangement of Business
My Lords, before the Minister moves that the first statutory instrument be considered, I remind noble Lords that in the case of each statutory instrument the Motion before the Committee will be that the Committee do consider the statutory instrument in question. I should perhaps make it clear that the Motions to approve the statutory instruments will be moved in the Chamber in the usual way. If there is a Division in the House the Committee will adjourn for 10 minutes.
Tax Credits Up-rating Regulations 2011
Considered in Grand Committee
My Lords, I shall also speak to the draft Guardian’s Allowance Up-rating Order 2011, and the draft Guardian’s Allowance (Northern Ireland) Up-rating Order 2011. In my view, the regulations and orders are compatible with the European Convention on Human Rights.
The Government inherited an exceptional fiscal challenge. It is important to sketch out the background to these important statutory instruments and to put them into proper context. The state is borrowing one pound in every four that it spends, and just paying the interest on the nation’s debt costs £43 billion—around £120 million a day. The unprecedented scale of the deficit has meant that the Government had to make tough choices in the June 2010 Budget and in the spending review about how taxpayers’ money is allocated.
We believe that fairness starts by taking the right decisions to tackle the deficit so that future generations are not burdened with unsustainable debts, meaning higher taxes and diminished public services. Tackling the deficit in a fair and responsible way means that those that can contribute do and those who are less able to do so are supported. Analysis shows that after combining the impact of tax, tax credit and benefit and public service spending changes announced by this Government, the top 20 per cent of households will make the greatest contribution towards reducing the deficit as a percentage of their income and benefits in kind from public services. That is a statement that was true after the Budget and spending round as of last year, which encompassed the measures we are talking about, but of course it remains true and confirmed in the numbers that came out with the Budget today.
The regulations and orders before the Committee put into effect a number of reforms to tax credits, announced in the June 2010 Budget and the spending review. These changes will ensure that we tackle the deficit in a way that is fair and ensures that tax credits are targeted at those who need them most. Tax credit elements which were previously uprated by the retail prices index will be uprated this year by the consumer prices index, apart from the basic and 30-hour elements of working tax credit, which will be frozen. The rate of guardian’s allowance will also be uprated by CPI. However, significant above-indexation increases to the child tax credit will help those households with children.
Under the current system, tax credits are available to families earning up to £58,000. If households have an increase in income up to £25,000 in a year, they can earn up to £83,000 and still benefit from tax credits. This means that people in the top income decile are eligible, which is unjustifiable within the current economic climate. Reforms to tax credits included within these regulations and orders mean that support for higher income households will be reduced by increasing the rate at which tax credits are withdrawn, while reducing the threshold at which tax credits are paid. Households will also no longer experience an increase in household income of up to £25,000 without their tax credit eligibility changing. Under the current system, around nine out of 10 families with children are eligible for tax credits. Once the tax credit changes have been introduced in April this year, seven out of 10 families will still be eligible for tax credits.
Spending on tax credits has increased from £18 billion in 2003-04 to an estimated £30 billion in 2010-11. The system of tax credits under the previous Government was not only unsustainable in fiscal terms; it was also unrealistic in terms of meeting its stated policy objectives. From 2004, progress on relative poverty stalled. However, the previous Government continued to pump money into the tax credit system. They spent more than £150 billion on tax credits since 2003.
Although a large proportion of tax credit spending was directed at children, the Institute for Fiscal Studies has estimated that meeting the 2020 child poverty target would require an extra £19 billion of welfare transfers. The previous Government had a static view of poverty, believing that it could be reduced, or even eradicated, by directing money at it. The way that child poverty is currently measured means that, perversely, reducing the income tax paid by millions of lower earners, or providing additional support to low-income pensioners, could push up the poverty line. This would increase the number of children calculated as being in poverty. We want to take a long-term, strategic view to tackling poverty, which is about more than just welfare transfers. This is not about moving families and children above an arbitrary line—where one day they are in poverty and the next they are not—but is about transforming their life chances.
The Prime Minister asked Frank Field and Graham Allen to undertake reviews on poverty and life chances. Findings from both reviews have fed into the child poverty strategy, which will be published shortly. While awaiting the conclusions of these reviews, the Government have used some of the savings from withdrawing child benefit from families with a higher rate taxpayer to fund significant above-indexation increases in the child tax credit over the next two years. This means that the child tax credit will increase by £255 in 2011, benefiting 2.4 million of the poorest families. This increase is better targeted at low-income families and will ensure that the spending review will have no measurable impact on child poverty in the next two years.
As well as targeting financial support at low-income households, the spending review introduced a new fairness premium, which will fundamentally change the prospects of the poorest children by offering real opportunities to raise them out of poverty for the long term. The fairness premium is worth over £7.2 billion over the spending review period and will include a £2.5 billion premium to support the educational development of the poorest pupils. It also protects cash funding for Sure Start to support the poorest in early years and at every stage of their education.
Despite the last Government’s spending on tax credits, working-age poverty actually increased under Labour, as there are now more working-age adults in poverty than there were in 1997. The current welfare state too often traps people in dependency. Almost 2 million children are living in workless households. The spending review announced radical plans to reform the welfare state. The new universal credit, which will be introduced over two Parliaments, will replace the current complex system of means-tested working-age benefits with a single, streamlined payment. The universal credit, which will cut through the complexity of the existing benefits system, will ensure that work pays.
In that context, I commend these regulations and orders to the Committee.
My Lords, in the context of the overall fiscal position in which we find ourselves, it is not surprising that we are having to make some pretty unpalatable changes to some tax credits. As the Minister has said, expenditure on tax credits rose in cash terms by two-thirds over the seven years from 2003. In the current environment, that is simply unsustainable.
Although there are some aspects of the changes that we find quite difficult—for example, reducing the proportion of reclaimable childcare is not something that we would have done willingly—other elements are long overdue. It is crazy that people earning £50,000 or £60,000 or even £70,000 have been able to claim an element of child tax credit. Of course, the concept that parents find themselves in financial stress when they have young children is not new; it is dealt with at great length in Malthus’s great essay on population, where he talks about how poverty comes to young families at the point when they have children. However, that was talking about an era in which most people were poor for the whole of their lives. That simply does not exist today. A circumstance in which nine out of 10 families were eligible for tax credit does not really have any sense. Even with the changes, some seven families out of 10 will continue to get tax credits. That certainly encompasses all those who could even vaguely be said to be in need.
The situation we now find ourselves in at this end of the income scale was exemplified to me by a colleague in another place yesterday, who was telling me that she had had a letter from a constituent grumbling that the changes to tax credits and child benefit meant that she and her family would no longer be able to have their second foreign holiday that year, and asking what the MP was going to do about it. I suspect she got a fairly shirty response, but many people at upper income levels have been regarding tax credits and child benefit as not necessary for the ordinary running of the family but for luxuries, so to see that curtailed in the overall scheme is very welcome.
Slightly down the track comes the really welcome introduction of the universal credit. Just as, at the top end, people are getting some benefits who, frankly, do not need them for the good functioning of their families, at the bottom end there are still huge disincentives around work and huge anger among people who are trying to make a living and do the right thing.
At the recent Lib Dem conference in Sheffield I went to get my papers from a kiosk in the shopping centre in the centre of Sheffield, and the young woman behind the kiosk asked rather aggressively what I was doing there. I said very timorously that I was at the Lib Dem conference. She said she was a Labour voter. I was prepared for a tirade about how flinty hearted we were and I got a tirade, but the tirade I got related to the fact that because she was a single mum with two young children she could only work part-time and earn only £6,000 a year and her sister, who was 28 and had never done a day’s work in her life, was getting more from the state. At this point her colleague in the kiosk joined in. They were so intent on telling me about this injustice in the system that everybody else who was trying just to buy a paper had to come up in a very shamefaced way so as not to interrupt this flow of invective, which was being directed at politicians generally. I was able to tell her that the universal benefit was on its way and thereafter life would look somewhat fairer from her perspective.
I have two questions for the Minister around these proposals today. The first relates to what he said about Sure Start. There has been an awful lot of noise about Sure Start. He said that the Government are protecting the cash funding for Sure Start. I know that every Liberal Democrat council is able to maintain Sure Start and I know some councils cannot. Can the Minister tell me why, if the Government are protecting the cash funding for Sure Start, some councils might be choosing to cut it?
Secondly, the whole area of child poverty is to be the subject, I believe, of a child poverty strategy document due for publication shortly. Under the terms of the Child Poverty Act it is due to be produced by the end of March. It is now almost the end of March and I would like the Minister’s assurance that that document will, indeed, be winging its way to us over the next few days.
My Lords, I had thought that the problems with these statutory instruments would be that our contributions might be not so much after the Lord Mayor’s Show as coincident with it, as the Budget Statement was made today. The other place and all the media are concentrating on the 2011 Budget while here we are, engaging in a debate on instruments that relate to last year’s decisions. I therefore assumed that the Minister would stay fairly close to the technicalities of the instruments and that we were unlikely to engage in a substantial debate on the economy, but no such luck.
The Minister, not content with successive Thursday debates that string out ahead ad infinitum and in which he will regale the House with his perspective on the economy, has taken this rather modest measure as another opportunity to inveigh on those issues which, I suppose, pass for coalition home truths about the situation that we are in. Well, if we must engage so be it. I had not really come prepared for this but I have one or two obvious rejoinders to the noble Lord’s position ready to hand. I am not quite sure why he is not prepared to engage in the debate on how far and how fast, regarding deficit reduction. He presents the issues in terms of the inevitable: that slash and burn is the only response regarding support and the public contribution. Of course, that is because the British economy is very close to the Greek, the Irish and the Portuguese economy—teetering on the brink of utter collapse, with stupendous interest rates and the collapse of the known world. That is specific and special pleading.
The noble Lord rarely addresses an economy that is marginally more significant than the German or Irish economies by looking at the United States. If he looks at its response to this issue, the question is whether destroying so much of the support given at present will grievously affect demand. He is therefore stuck with the fact that the one word he did not mention at all is that which presently revolves around every conceivable contribution in the other place: namely, growth. The decline in growth predicted by the OECD is now confirmed by the figures that the Chancellor made in his Statement today. What does the noble Lord think that lower growth represents? It means more people unable to sustain themselves. I heard him lament the fact of working-age poverty. What on earth does he think will happen to that as unemployment rates in this country begin rapidly to increase?
We have not yet seen the burden of the cuts but, my goodness me, it is quite clear that the nation is already alert. It is not as if this date, 23 March, is not insignificant in the nation’s awareness of the implication of cuts. In three days, on 26 March, a very substantial proportion of our people will indicate that a Government who go too far, who reduce potential for growth and who massively increase unemployment and promote poverty can ill afford to parade the idea that there is no other way, when in fact other Governments—whose economies are at least as significant as ours—are pursuing very different strategies indeed. However, I did not come here for peroration. I came just to look at the gentle terms of this instrument. I thought it somewhat otiose to engage today in a debate on government policy when our youngers—and, if not our betters, perhaps our more committed—at the other end are involved in that exercise, debating the 2011 Budget while we are dealing with instruments that derive from last year’s Budget.
Within the terms of the instrument, I accept some aspects of the Government’s attention to the problems that beset the less well-off in our society. I appreciate the fact that there is an above-indexation increase in the child tax credit of £180 for next year and a little less the year after for those of very limited means. I respect the fact that there is some attention to the particular problems of those who are least well off in our society. I do not accept the Government’s position, supported by the noble Lord, Lord Newby, on child tax credits. I shall make the obvious point on the eradication of child poverty: it is a massive target. We all know the projection on how long it takes and how much it costs but, despite this gesture, the Minister never makes the slightest reference to the tremendous onslaught on child poverty which was the product of policies pursued over the past decade through many strategies, the effectiveness of which he is proposing to reduce. To make the most obvious point, what we now have enshrined in stone for the future under this Administration is one criterion and one index for how much uprating will occur. This is an uprating measure. The RPI, currently at 4.6 per cent, is buried and the CPI is now confirmed as the rate that will obtain across the benefits. It is now 3.1 per cent, or two-thirds of the RPI inflation rate, which many households would regard as a far more accurate definition of the challenges that they face in making ends meet.
I appreciate other aspects of the measure. I heard the noble Lord, Lord Newby, say that people should not expect to get tax credits if their income is over a certain amount. He can make that case if he wishes. He knows the outcry that has occurred as a result of the change from £50,000 to £40,000 in the threshold for credits. He knows very well that ordinary working families, on whatever income, budget according to their expected income and how they run their life. Significant government changes in this area cause distress. The noble Lord, Lord Newby, may regard that distress as synthetic. We shall see the response the nation makes to that significant change in tax credits.
The guardian’s allowance uprating is a minor aspect that reflects the fact that a very small number of beneficiaries are covered by these orders in Great Britain and Northern Ireland. We should notice what indexation means at a certain level: just minuscule increases per week are represented by these figures. I am all too well aware that there are limitations on the public purse and that generosity from the Government—“tax giveaways”, the Chancellor said this morning—were not the order of the day. We understand that, and it is bound to be the case, but that should not alter the fact that we should appreciate that a failure by Government to take proper concern for welfare support could be a very grievous failure indeed. We are moving into a position where, without the slightest doubt, a greater number of our people will be plunged into hardship. The Government’s response, as evidenced by these statutory instruments, shows that the Government put deficit reduction as their supreme objective, at whatever cost to our community.
My Lords, I am very grateful to noble Lords. As is becoming a pattern here, we have had a small, focused and to-the-point discussion. I am disappointed that the noble Lord, Lord Davies of Oldham, did not appreciate my approach this afternoon. On other occasions, when I have gone perhaps to excessive lengths to point out every detail of measures, I did not always seem to be grasping his attention right through, so I thought I would try another attempt and go for the sunny uplands this afternoon, but it seems that that has not worked either. I shall have to try some other approach next time. I do not want to be drawn too much into the big picture because, as the noble Lord, Lord Davies, said, we shall have a long debate tomorrow and another one next Thursday. However, I cannot entirely let his remarks go unanswered.
Every commentator, from the IMF to the OECD through to all the domestic commentators, has reiterated the fact that the Government need to stick to the clear deficit reduction plan. To be fair to the noble Lord, he recognises that, as he says that he understands that we cannot give away money through taxes or otherwise. I welcome his partial recognition of the reality. It is against the background of the situation last year and the background that still persists that we bring these measures forward.
Welfare spending now accounts for one-third of all public spending. As I said in my introduction, spending on tax credits has increased from £18 billion in 2003-04 to an estimated £30 billion in 2010-11. My noble friend Lord Newby made the point that in respect of what we are discussing this afternoon, it is unsustainable and, in significant respects, unfair. The reforms to tax credits outlined within these regulations and orders are fair and proportionate. They tackle the deficit in a way that ensures that tax credits are targeted at those who need them most. Again as my noble friend Lord Newby points out, it is in the broader context that the critical move to the universal credit over this and the next Parliament gets driven forward.
I was grateful to the noble Lord, Lord Davies of Oldham, for recognising that we will use some of the savings from withdrawing child benefit from families with a higher-rate taxpayer to increase the child element of the child tax credit. That is important. It is an increase of a further £30 above indexation in 2011-12, and a further £50 above indexation in 2012-13, in addition to the above-indexation increases of £150 in 2011-12 and £60 in 2012-13 announced in the previous Budget.
While we are on indexation, I hesitate to take the opportunity to give a reminder to the noble Lord, Lord Davies, who raised questions about RPI and CPI. As he says, it is correct that RPI is now 4.6 per cent. However, the previous Government were intending to uprate by applying RPI minus 1.5 per cent. Of course, 4.6 per cent less 1.5 per cent takes one back to 3.1 per cent. So, in practice, there is no difference in these rates between the old and the new policy.
I will get back to my noble friend on his specific question about funding for Sure Start because I want to make sure that I have my facts right. I certainly agree that if, under the flexibility and the money that councils are allowed, some councils are able to continue I am not sure why others cannot. I will check the details of that.
To conclude, I believe that reforms at the Budget and the spending review, of which these are an important element, have been carried out in a fair and responsible way. We have ensured that everyone who is able to contribute to the deficit does so, while those with the lowest incomes continue to be supported. The critical test is that, after combining the impact of tax, benefit and public services spending review changes, it is the highest quintile of earners who will make the greatest contribution towards reducing the deficit as a percentage of their income and benefits in kind. I commend these regulations and orders to the Grand Committee.
Guardian’s Allowance Up-rating Order 2011
Considered in Grand Committee
Guardian’s Allowance Up-rating (Northern Ireland) Order 2011
Considered in Grand Committee
Access to Justice Act 1999 (Destination of Appeals) (Family Proceedings) Order 2011
Considered in Grand Committee
My Lords, these statutory instruments are necessary to support the implementation of the Family Procedure Rules 2010, which will come into force on 6 April 2011. The Family Procedure Rules are being made as required by the Courts Act 2003, which gives power for new rules to be made for all family proceedings. This means that one unified set of procedures can be applied to all types of family proceedings in all types of courts dealing with such cases. The Courts Act provides that the rule-making power is to be exercised with a view to securing that the rules are both simple and simply expressed.
The Ministry of Justice and the Family Procedure Rule Committee—the body established to make the rules—have developed a set of rules to cover all family proceedings in the High Court, the county court and the family proceedings court. The new rules will bring a number of benefits, including modernisation of some language, a single unified code of practice for all family courts and, where appropriate, harmonisation of the procedure in family proceedings with the provisions of the Civil Procedure Rules. In fact, the approach followed in the Family Procedure Rules is already being applied to adoption proceedings. The Family Procedure (Adoption) Rules 2005 used the new approach to support those proceedings. When the new Family Procedure Rules come into force on 6 April 2011, they will help fulfil the Government’s intention that the new approach should be extended to all family proceedings.
The two instruments we are considering today are critical to the operation of the new Family Procedure Rules. They ensure that the new rules will operate as intended, and that other enactments will refer appropriately to those rules. I hope that the Committee will support their approval. I will take each instrument in turn.
The Family Procedure (Modification of Enactments) Order 2011 makes amendments to other legislation in consequence of the coming into force of the Family Procedure Rules. For example, Article 6(b) of the order inserts a new subsection (3) into Section 54 of the Magistrates’ Courts Act 1980. That new subsection provides:
“In family proceedings a magistrates’ court may stay the whole or part of any proceedings or order either generally or until a specified date or event.”
This gives magistrates' courts the same power to stay—in effect, halt—proceedings that the High Court and county courts already have. As a result, the procedural rules referring to such stays in the Family Procedure Rules can apply to all courts dealing with family proceedings. The order also amends various enactments which currently refer to rules which are to be superseded by the Family Procedure Rules 2010. This means that, from 6 April 2011, those enactments will refer to the 2010 Rules or to specific provisions within them.
The Access to Justice Act 1999 (Destination of Appeals) (Family Proceedings) Order 2011—the destination of appeals order, as it is known to its friends—makes various minor amendments to the routes of appeal. It provides that appeals from decisions made by a district judge of a county court will lie to a judge of that court and that appeals from decisions made by a district judge of the High Court, a district judge of the principal registry of the Family Division or a costs judge will lie to a judge of the High Court. It puts in place provisions in existing rules regarding the destination of appeals from a district judge which would otherwise be lost as those rules are replaced by the Family Procedure Rules. The new destination of appeals order consolidates these provisions with the provisions from an existing destination of appeals order, so that the routes of appeal in family proceedings are dealt with in one place. This is in line with our policy of simplifying the way in which rules for family proceedings are presented. Part 30, “Appeals”, of the practice direction that supplements the Family Procedure Rules sets out all the routes of appeal and the practice steps that people will need to take, which will provide considerable assistance to a person who wants to appeal against a court’s decision.
These orders have already been debated in the other place and have been approved. Members were generally supportive of the Family Procedure Rules and approved these provisions which support the implementation of those rules. The two statutory instruments are important to make it possible for the new Family Procedure Rules to operate as intended, and to ensure that other legislation is properly amended in consequence of the coming into force of those rules. The rules will bring considerable benefits to people involved in family proceedings. I hope that noble Lords will approve these two draft orders so that the benefits of the new rules can be fully achieved.
My Lords, we plainly welcome the move towards uniformity of procedures among the High Court, the county court and the magistrates’ court and the move to a single code of practice and harmonisation where possible, although it is not always completely possible, between family proceedings and other civil proceedings under the CPR. I particularly welcome the provisions that will give magistrates’ courts the power to stay proceedings and to make orders for costs in a way that they have not been able to do so in the past.
Also of considerable importance is the move to give magistrates’ courts the power to make an order of disclosure against non-parties. The lack of such a provision for the magistrates’ courts has been, and is, capable of giving rise to delay. When witnesses turn up, the documents are not in court and there has to be an adjournment in order for them to be obtained. For that provision to be effective, it should be borne in mind that the burden is on solicitors and litigants to ensure that they use the order and the provision by applying for orders for the production of documents in good time so that, when matters come for a hearing, all the documents are before the court.
The destination of appeals order is also extremely helpful in dividing appeals from the junior judges in the High Court to High Court judges from appeals from junior judges in the county courts to county court judges. However, one further point that I would make, which is a matter for listing officers rather than for the legislation, is that those of us who practise in family proceedings will well know that we have extremely experienced district judges at both levels, but we also have a number of rather less experienced deputy High Court judges and deputy county circuit judges sitting as circuit judges. It is a matter of importance that we do not list appeals from very experienced district judges before very much less experienced deputies at the senior level. That is not a point for the order, but it is a point of some importance in practice.
My Lords, I support the instruments wholeheartedly. I thank the Minister for his succinct introduction, but I have several queries.
Paragraph 4, “Legislative Context”, of the helpful Explanatory Memorandum to the Access to Justice Act 1999 (Destination of Appeals) (Family Proceedings) Order 2011 states:
“appeals in non-adoption cases from the decisions of a district judge of the High Court and from a district judge of a county court would be to the Court of Appeal”.
Is the Minister able to define these differences? Is there a district judge of a magistrates’ court that would be separate from those instances on which I have asked for clarification?
Paragraph 8, “Consultation outcome”, of the Explanatory Memorandum states:
“A total of 45 responses were received to this consultation”.
I thought this query worthy of being raised because, when one considers the vast number of magistrates’ courts, 45 seems rather a small number. In the spirit of debate, one is perhaps entitled to query and to seek reassurance that the consultation process has been widespread, comprehensive and effective. I presume that, of those 45 responses, the Magistrates’ Association of England and Wales put in its views and was consulted. It is reasonable to ask what form of consultation existed with that very distinguished body. Included in the 45 responses, is it reasonable to assume that the association for magistrates' clerks and executives—whatever name it now has—made a major submission? I would be surprised if it did not. Perhaps answers can be given in these proceedings.
The Minister is distinguished and is of a senior rank so, given that these instruments deal with magistrates’ courts, let me take this opportunity to ask him: is the magistracy secure? What future does he see for it? There have been many court closures and magistrates’ courts have been closing for years now. In Wales, it is getting harder to afford transport to the remaining courts. This is a worthy question in consideration of these instruments. I would not want to embarrass him by asking how many magistrates’ courts have been closed throughout England and Wales, unless he can speedily provide that answer. Given the many scheduled closures of magistrates’ courts, in this debate it is relevant to ask whether we shall have the means to facilitate what these instruments are designed to facilitate.
There has been an increase in the number of district judges who sit in magistrates’ courts. I do not know the percentage of the increases or the numbers, but against that fact I ask: does that development of giving more work to district judges presage fewer justices of the peace? Is there a downgrading of the justice of the peace in the system of law which the Minister heads, administers and, I presume, greatly respects? Does he agree that magistrates’ courts do a splendid job? Does he agree that three people of consequence and three people of the local community are well qualified to dispense local justice? Such people have dispensed such justice for centuries and, in facilitating these instruments, it would be rather nice if the Minister could give some reassurance that he convincingly backs magistrates’ courts.
My Lords, I thank noble Lords who have spoken in the debate and I congratulate the Minister for the succinct way in which he put these orders. It is not always easy to put orders before the Committee so succinctly, but he has managed it with great élan this afternoon. It is very good to have the noble Lord, Lord Marks of Henley-on-Thames, with his experience of the family courts, joining in the debate even on fairly uncontested orders. His experience will be very valuable to the House. I am also grateful to my noble friend Lord Jones for his staunch defence of the magistracy and the detailed questions that he asked about the orders. Let me say straight away that we do not oppose the orders at all; indeed, they seem to demand support and to make sense. As I understand it, they had general support from the other place and from the outside world.
The whole area of family law policy is being examined by the Norgrove committee as we speak, of course. We began that in government and the present Government have wisely carried it on. It is an important committee; we look forward very much to its report and the Government’s decisions on that report. Some of us feel that our family law needs to be brought up to present times and that many changes could usefully be made, but that is not the issue for today. These orders deal with procedure and rules and are a vital and much respected part of our legal system, which is widely—and rightly—admired elsewhere. Our procedures and rules must be known, exact and kept up to date; these orders certainly do that.
There is an interesting argument around family proceedings courts in the magistrates’ courts. I understand that the orders give the equivalent power to those courts as they do to the county court and the High Court. That is no doubt a good thing, but will the more serious cases still go to either the county court or, if they are even more serious, the High Court? I am sure that it is still the position; it ought to be, and I would not want any change to it.
My query is about Article 38 in the Family Procedure (Modification of Enactments) Order. This is not a trick question, and the noble Lord is welcome to answer at his leisure if he wants. The Explanatory Note states that:
“The amendment removes the reference to the exercise of the power to transfer where there is a real risk that a party to proceedings may lack mental capacity within the meaning of the Mental Capacity Act 2005 as the FPR now make provision (in Part 15) for protected parties in relation to all three levels of court including the magistrates’ courts”.
Do I take it that, where that issue has arisen until now, the family proceedings court has not been seen fit to be an appropriate venue or forum for those cases? Obviously, the cases are made more difficult if someone lacks mental capacity within the meaning of the Act. Is it really appropriate that those cases be heard in the family proceedings court?
Apart from that, we support the orders and are grateful to the Minister.
My Lords, the House is extremely generous in its comments about my command of the subject. I am not a lawyer, so I feel like a lion in a den of Daniels when I look round and see the contributors. I am grateful for the comment of the noble Lord, Lord Bach, about the Norgrove review. We hope that Mr Norgrove will give an interim report in March and his final report in the autumn. I agree with the noble Lord that it will be a useful opportunity to review family law.
I also agree that we will be well aided in that review by the presence of my noble friend Lord Marks, who has already made his impact both in the Chamber and here in the Moses Room. His contribution today might be better read by the practitioners than by the House, in that he said that due notice for documents required would speed up and simplify processes. In looking at our criminal justice system over the last 10 months in my limited experience, I have frequently been amazed at how easy it is to disrupt the smooth running of the system. I hope that we can make the system work more efficiently. I am sure that his fellow practitioners will duly note his opinion about the value of the experienced district judges compared with others.
The noble Lord, Lord Jones, asked whether the destination of appeals order will apply to appeals from district judge magistrates’ courts, and whether magistrates’ courts have been consulted. The draft order relates to family proceedings in the High Court and county court only and does not apply to magistrates’ courts. On the wider issue that he raised, both the Magistrates’ Association and the magistrates’ clerks body responded to the consultation and were fully consulted. The draft destination of appeals order applies to all family proceedings, including adoption proceeding, and revokes the 2005 destination of appeals order. If that does not cover the points raised, I will gladly find out more.
The noble Lord, Lord Jones, widened his remarks a little more to ask about the magistracy. That gives me an opportunity to say that we have carried out a rationalisation of the number of magistrates’ courts. I believe that we have retained the essential strength of magistrates’ courts and of the magistracy, which is their localism. This is the 650th anniversary of the magistracy, which we will be celebrating later this year in Westminster Hall. On the attitude of the Ministry of Justice, my right honourable friend the Lord Chancellor is certainly looking very actively at how magistrates can be given more work—not less—and take on more responsibilities. We will be looking at that in various pieces of legislation later in the year.
Regarding the query on Article 38, prior to the coming into force of the Family Procedure Rules 2010, magistrates’ courts did not have the power to appoint such representatives. Only the High Court and county courts had such powers. However, under the 2010 Rules, magistrates’ courts will be able to do so. Therefore, the fact that a person lacks capacity will not require a transfer of proceedings so that a representative can be appointed. It follows that it is appropriate to omit sub-paragraph (h) from Article 15(1) of the Allocation and Transfer of Proceedings Order 2008. The Family Procedure Rule Committee considers that it is appropriate that magistrates’ courts should have these powers to avoid unnecessary transfers. However, complex cases can still be transferred in accordance with the allocation order. I have taken note of the concern that the noble Lord, Lord Bach, raised, which I hope is covered by that assurance about complex cases.
I hope that my response has covered the points that were raised during the debate—if it does not, perhaps colleagues would remind me. Like others who have spoken, I think that the order provides for a welcome consolidation of the courts and a welcome increase in responsibility for the magistrates’ courts, and I hope that, as in the other place, we can adopt these measures.
Family Procedure (Modification of Enactments) Order 2011
Considered in Grand Committee
Data Protection (Subject Access Modification) (Social Work) (Amendment) Order 2011
Considered in Grand Committee
My Lords, never underestimate the value of the Whip because, but for the intervention of my noble friend Lady Northover, I would have been well into this speech and would not have moved the Motion on the previous order. I am most grateful to her.
The draft order before us today amends an order made in 2000 with regard to the data protection rights of individuals in the context of social work. Specifically, the order brings the data protection obligations of the Children and Family Court Advisory and Support Service in Wales—CAFCASS Cymru—into line with those of its counterparts in England.
The purpose of the draft order is to ensure that officers of CAFCASS Cymru are exempted from the requirement to disclose personal data to an individual—known as a “data subject” in the Data Protection Act 1998—when they consider that to do so would be likely to prejudice the conduct of social work by causing serious mental or physical harm to the individual or a third party. As a result of an order made in 2005, CAFCASS Cymru’s counterparts in England can already use this partial exemption when replying to requests for personal data made under Section 7 of the Data Protection Act 1998. In 2000, when the DPA came into force, the Government brought forward such an exemption by order, which could be relied upon where the disclosure of the information would prejudice the carrying out of social work by causing harm to an individual or a third party.
I should explain that, even without this exemption, in certain situations data controllers may be able to rely on the principle that information shared with a social worker was given in confidence. Therefore, it might not be fair, or even lawful, to release the information, as to do so would be in contravention of the first data protection principle in the DPA. However, the social work exemption in the 2000 order gave a strong, certain and very explicit legal basis to withhold information and ensure that social work is not prejudiced. The schedule to the 2000 order listed those organisations and functions to which the exemption could be applied. This important exemption—the subject of our debate today—ensures that individuals’ rights to see their personal data do not inadvertently prevent social work from being carried out effectively.
With that background in mind, I will turn to the reason for the order before us today. In 2005 an order was approved by Parliament which added certain functions of CAFCASS in addition to those in the 2000 order. The 2005 order allowed CAFCASS to apply the social work exemption in appropriate cases. As Members will know, CAFCASS works with children and their families who are involved in family proceedings, and advises the courts on what it considers to be in the child’s best interests. Matters in which CAFCASS may become involved include where parents are separating or divorcing and cannot agree on arrangements for their child. The role that CAFCASS officers perform means that they routinely process information related to social work.
On 1 April 2005, the functions of CAFCASS in Wales were devolved to the Welsh Assembly, making CAFCASS in Wales—CAFCASS Cymru—a separate organisation to that of CAFCASS in England. Unfortunately, this was not taken into account at the time of the 2005 order, and therefore CAFCASS Cymru has not been able to apply this exemption, although its counterpart in England has. As a result, the intention behind the 2005 order that this exemption should apply across England and Wales, as agreed by Parliament, has not been fulfilled. It is important that this inconsistency in the subject access regime between England and Wales is rectified and that CAFCASS Cymru is able to use this exemption as was originally intended.
CAFCASS Cymru has told us that, between 2007 and 2009, there were 23 cases where it would have considered using this exemption, had it been available. In these cases, CAFCASS Cymru relied on the principle, mentioned at the start of my remarks, that there would have been a reasonable expectation that information that children share with a family court adviser would remain confidential and therefore would not disclose the information because it could give rise to an actionable breach of confidence. However, this approach has not been tested, either by the courts or by the Information Commissioner. The extension of this exemption to cover CAFCASS Cymru will provide it with parity and will ensure a stronger, more certain and explicit legal basis to withhold information if CAFCASS Cymru considered that this would be likely to prejudice the carrying out of social work, by causing serious harm to the physical or mental health of a child.
I want to emphasise here that the Government take the issue of individuals’ rights to access their personal data very seriously. Just as we have made clear our commitment to transparency in terms of public data and official information, we are also committed to upholding people’s rights to see what information is being processed about them in both public and private sectors. Indeed, the Ministry of Justice’s recent call for evidence sought views on how the current subject access regime is working. Responses to this confirmed that individuals see this as an important right and that data controllers by and large take their responsibilities in this area seriously. But there can be no doubt that in certain, specific circumstances, such as those we are considering today, releasing information may not be in the interest of an individual, or indeed of others, including the children of the individual concerned, or those involved in protecting them.
I should make clear to noble Lords that a right of appeal remains for those individuals who believe that a subject access request has not been complied with fully. As with any subject access request, there is a right of appeal through the courts under Section 7(9) of the Data Protection Act. Alternatively, individuals may approach the Information Commissioner, who may investigate whether the data controller has complied with the obligations under the Act. In addition, this order, should it be agreed, will add employees and contractors of CAFCASS Cymru, acting in their professional capacity, to the list of “relevant persons” in the 2000 social work order, as is the case with CAFCASS in England.
Section 7 of the Data Protection Act acknowledges that there may be times when the personal data of another person may be released as the result of a subject access request. In most circumstances, the data controller will need to seek the consent of that other person or assess the reasonableness of disclosure before giving out the data. However, the personal data of a “relevant person”, as defined by the 2000 order, is not subject to these conditions of consent or reasonableness. This means that CAFCASS Cymru must disclose personal data given by its employees in the course of their professional duties if this is required to provide the data subject with personal data under the terms of a subject access request. Consent and the reasonableness test are not factors in the disclosure.
A concern was raised in another place about how relevant persons will be protected from harm by having to release their personal data to others. It is important to remember that this draft order would allow CAFCASS Cymru to withhold information if social work was to be prejudiced by causing harm to the individual or any third party. This could include those who work for CAFCASS Cymru. CAFCASS in England, which must already adhere to this when replying to subject access requests, has told us that it is not aware of any harm caused to employees. In all cases so far it is only the name of the employee that has been released and it is highly unlikely that the individual making the request will not already know the name of that person—most likely to be a social worker—who has been dealing with their case. As such, it would probably raise more suspicion if the name of the employee in question was redacted and therefore the name is almost always released. Officials in CAFCASS Cymru have said that their approach would be similar to that of CAFCASS in England. Again, this provision would bring CAFCASS Cymru into line with CAFCASS in England to ensure consistency in the two bodies' approach to releasing personal data.
The principles about the need to maintain a strong subject access regime while protecting individuals were agreed by all parties in 2005 and these principles still hold firm. In any case, there is no reason why they should apply in England but not in Wales. Including CAFCASS Cymru in the list of organisations able to apply the exemption will not only protect individuals and ensure that social work can be carried out effectively; it will also ensure coherence and consistency between the organisations in England and Wales, and correct the error made in 2005. I therefore commend this draft order to the Committee.
My Lords, I would not necessarily agree to the principle that something that applies in England must necessarily apply in Wales. That is the whole point of devolution, which I am sure that the noble Lord has foremost in his mind. However, I support this provision.
The noble Lord referred to the call for evidence. He made a statement in July 2010 about the call for evidence, which he said was to be,
“assessed and used to inform the UK’s position in negotiations on a new EU instrument for data protection, which are expected to begin in early 2011”.
He also said that there would be a,
“Post-Implementation Review of the DPA, with a view to publishing a full impact assessment by the end of the year”.
Have those time limits been complied with? I was not able to find anything to indicate that they had. What is the position in relation to the negotiations with the EU for a new instrument in this field?
My Lords, I thank the Minister again for explaining these orders—perhaps not quite as succinctly as in the previous case, but I understand why—and I am grateful to the noble Lord, Lord Thomas of Gresford, for raising the point that he has raised.
Of course, whenever exemptions are made to data protection regarding people’s fundamental right to know what data are held about them, how those data are used and what safeguarding processes there are, it is right that they should be very carefully examined. This order has been examined very carefully in another place and I have read the transcript of those proceedings. On that occasion, the matter was tested by a number of questions, particularly about the frequency of exemption already in place for England. However, Members of the other place were content and satisfied with the answers that were given; in my view, we should also be content with the order and with the way in which the Minister has outlined the order today.
There are occasions when it is not just right but important that exemptions are made to the normal rights under data protection legislation. That is common sense and is appropriate. What makes the exemption satisfactory is that, first, there is a right of appeal, which is very important in our view. Secondly, it is absolutely right that social workers, who are not very well paid but who do a pretty demanding job that is absolutely crucial and much underrated by the rest of society, should get the protection that they deserve, and anything that can make their difficult task easier should be done by Parliament, if possible. I believe that that is what these exemptions have done so far in England and will now do in Wales. Our view is that this order is sensible, reasonable and absolutely appropriate.
My Lords, I am sorry that my explanation of this instrument was succinct. I turned over in my mind whether to adopt the attitude exemplified by my noble friend Lord Sassoon and the noble Lord, Lord Davies, in the earlier debate by reducing the issue to some party barn-storming by announcing that this was the coalition cleaning up a mess left by the previous Government, but I have been around this place long enough to know that we will probably make similar mistakes in legislation.
This just shows how these matters are dealt with in the justice system. I also note that, as one QC eased himself out of the Benches, another QC eased himself in. I deal with these matters with great trepidation.
On our call for evidence, the preliminary result was published in January of this year and I shall ensure that my noble friend receives a copy. We are undertaking an interesting exercise in trying to future-proof as much as we can the whole of data protection. The call for evidence will be extremely useful in making what we hope will be a positive contribution to the review of the European directive. The capacity of data protection of the exchange of data has changed dramatically, even in this still young century. Therefore, the need to take a new look at data protection is extremely timely. We shall be making a contribution to the review going on in Europe and we shall also review exemptions and applications under the Data Protection Act as part of that process.
Perhaps I might associate myself with the points made by the noble Lord, Lord Bach. One was that it is important that there should be a right to access data. Successive Governments have now been committed to greater transparency, but there have to be safeguards along with that. I also therefore associate myself very much with his tribute to social workers—a group sometimes quite outrageously pilloried in our popular press—who carry out extremely difficult responsibilities on behalf of our whole society. If they are to carry out such responsibilities, the kind of protection that this order provides for them is no more than they deserve. Certainly, in this case it should apply both in England and Wales.
Offshore Chemicals (Amendment) Regulations 2011
Considered in Grand Committee
Moved By Lord Marland
That the Grand Committee do report to the House that it has considered the Offshore Chemicals (Amendment) Regulations 2011.
Relevant document: 12th Report from the Joint Committee on Statutory Instruments
My Lords, I beg to move that the Committee considers the amendments proposed by the Offshore Chemicals (Amendment) Regulations 2011 and the Offshore Petroleum Activities (Oil Pollution Prevention and Control) (Amendment) Regulations 2011. There is only one major change required, which concerns the 2002 chemicals regulations. These regulations implement an international Ospar Convention commitment, which requires operational uses and discharges of chemicals to be the subject of an application and assessment process. Under the system established in those regulations, the use and discharge of chemicals during operational activities relating to oil and gas exploration, production and decommissioning is only allowed in accordance with the terms of a permit. The types of chemicals for which permits might be granted include, for example, detergents used to clean rigs and hydraulic fluids used to control well-heads and subsea valves.
At the time of bringing them into force, the 2002 chemicals regulations were considered to contain powers relevant to all chemicals emissions. It has since become clear, through discussing an escape of chemicals with an operator, that the regulations do not cover unintentional events such as chemical spills or leaks that occur through accidents or faulty items of equipment that are not functioning within their intended design.
My Lords, a Division has been called in the House. We will resume in 10 minutes.
Sitting suspended for a Division in the House.
My Lords, I am grateful we can continue.
Consequently, unintentional spills or leaks cannot be subject to enforcement action. The purpose, therefore, of the main amendment is to extend the scope of the 2002 chemicals regulations by creating a new distinction between a discharge and a release. Put simply, a discharge will be an intentional emission of an offshore chemical. Such an emission will be lawful if it is made in line with the terms of a permit, which will be granted only if the planned emission does not pose an environmental threat. Any unintentional emission of an offshore chemical will be treated as a release and will be unlawful. This will ensure that unauthorised emissions can be liable to enforcement action, including prosecution. This creates a new offence.
Nevertheless, the creation of a new offence does not mean that there will be a large number of extra prosecutions. Indeed, it is expected that there will be very few as the regulations allow other enforcement actions to be taken before prosecution. Our focus remains on preventing incidents through our robust environmental assessment and inspection regime. Oil spills and leaks are already covered by the 2005 oil regulations, so I should stress that the concept of release is being introduced by the oil regulations 2011 solely to ensure conformity with the chemicals regulations 2011.
The draft regulations also make a number of other changes to the regulatory framework. For example, the 2011 oil regulations include a new definition of offshore installation that encompasses all pipelines, some of which were not previously covered. The chemicals regulations already covered pipelines but, for the sake of conformity, the 2011 chemicals regulations contain the same revised definition.
In addition, the enforcement provisions of the existing chemicals and oil regulations have been strengthened by the amending regulations to allow DECC inspectors to require preventive action to stop spills occurring in the first place. Another change is to the information-gathering powers so that information can now be obtained from a wider range of persons and in respect of a wider range of incidents that might affect the marine environment. Other minor changes are being made by the 2011 chemicals and oil regulations, which will, for example, simplify the process for renewing and varying permits or transferring them to a new permit holder. These changes create even more consistency between the two regimes making them easier to administer and for operators to comply with.
We all hope that the new prosecution powers will never have to be used. Nonetheless, I believe that extending the scope of the offences is essential to provide strengthened enforcement and pollution prevention measures to my department. These regulations will benefit the marine environment through improved enforcement powers. They also introduce more consistency to the existing regulatory regimes which will assist industry compliance. I commend these instruments to the Committee.
My Lords, I thank the Minister for his robust explanation of these regulations which are clearly important in terms of environmental sustainability in the north-east Atlantic area. I want to explore the Ospar agreement a little. It is very important to us and will be critical in carbon capture and storage, which I shall not go into this afternoon. I am interested to understand how we are doing this to comply with a decision by Ospar. Do decisions by contracting parties to Ospar have to be unanimous or are they by qualified majority voting? What incident brought to the attention of the Government the fact that the previous legislation was defective in some way? Listening to the Minister’s explanation, I was surprised that there has to be this difference between a discharge, and I have already forgotten what the other noun was, but never mind. Will the Minister confirm that other contracting parties to the Ospar agreement—the Explanatory Notes mention the harmonised mandatory control system—are fully complying with that decision, as we are attempting to do?
I thank the Minister for introducing these offshore activities regulations. It is obviously eminently sensible that the pollution prevention and control regulations be updated to correct a deficiency, simplify and create more consistency across the two regimes and make compliance with regulatory requirements easier to understand. In addition, information-gathering powers have been strengthened so that information can be obtained from a wider range of persons in relation to a wider range of incidents capable of affecting the environment.
It must be correct that all unauthorised emissions—discharges and releases—are liable to enforcement action, including prosecution. It must also be correct to allow inspectors to require preventive action to stop spills occurring in the first place. When these regulations were debated in the other place on 1 March, the Minister gave the context of spills recorded over recent years. Between 2005 and 2009, chemical spills averaged 157 notifications per year, totalling 735 tonnes, none of which posed an environmental threat, with chemicals being defined in their broadest sense and including substances such as brine. Between 2005 and 2009, oil spills averaged 283 notifications per year, totalling 51 tonnes, 6 tonnes of which were crude oil, with the remainder being diesel and hydraulic fluid, none of which posed an environmental threat. The Minister added that if the chemical releases deficiency had not existed, another three incidents would have been liable to enforcement action, although it is tempting to ask whether the department can be sure that that is all there would have been if by the new definition a release was not then notifiable. Is the department confident that its knowledge of operations is exhaustive in this respect?
What does this figure of spills mean? Does it include only unauthorised emissions, or does it also include permit releases by agreement, which therefore do not result in an offence? If it is only the former, will the Minister give us the comparable figures on emissions that have occurred through permits? This will allow us to appreciate the balance between authorised discharges and unintended releases and the totality of all emissions. I also understand that permit applications are not granted where it is thought that operators should be able to operate without an emission. In other words, permits should not be applied for to cover possible discharges. Have there been such occasions? If a permit application was refused, has there subsequently been a release?
Will the Minister give us an understanding of how the enforcement agency—presumably the Environment Agency, but perhaps also the Health and Safety Executive—goes about its enforcement role? With the number of notifications of spills of chemicals and from the oil industry, not all spills would have resulted in a prosecution. In notification, what is the typical response? The numbers seem to suggest that this is a frequent, almost daily, occurrence. Does this lead to an element of complacency? Are these spills analysed to see whether action could be taken to reduce the amount? I am sure the industry is tireless in its pursuit of perfection, but an understanding of the interplay between the regulators and the relevant industries might be enlightening.
These regulations are brought forward with the recent events in the Gulf of Mexico fresh in our minds. We debated this situation on 16 December when the differences between the two regulatory regimes were explored and noted. The Minister rightly praised the UK industry for its high safety standards. In response to the gulf disaster, the industry set up the oil spill prevention and response advisory group, OSPRAG. Will the Minister update us on any developments that have occurred in its deliberations following various reports on the disaster by the congressional inquiries?
These regulations will come into force the day after they are laid. This is justified by the high level of awareness of the proposed change following extensive consultations. Will the Minister confirm that it can be confidently expected that operators have taken the regulations on board already and therefore do not require a period in which to comply? Will he further confirm that these regulations have been drawn up with future developments in mind? In that regard, will they be sufficient to apply to LNG as well as to developments on carbon capture and storage where it is to be expected that the flow will be reversed?
Finally, we are aware of the regulatory burden whereby the Government are committed to balance the introduction of new regulations with the withdrawal of others. Am I able to tempt the Minister to say how these regulations will be assessed? Do they count as replacements of the 2002 and 2005 regulations or should they be assessed as extending their jurisdiction? From these Benches, these questions seek only further clarity on the workings and the background to the regulations. We are in agreement with the regulations.
My Lords, I, too, would be interested to understand what would be the prosecuting authority. Under the Marine and Coastal Access Act, I would have thought that it would not be the Environment Agency but the Marine Management Organisation. I would be interested in that clarification.
My Lords, I thank noble Lords for their comments. I did not realise that such an SI would have so many incisive questions associated with it. I shall do my best to plough through them in the technical scope that they require. I will not take them in any particular order, but I shall immediately turn to the Gulf of Mexico. It is not a subject for discussion under these regulations. Clearly, a lot of future consideration needs to be taken into account as a result of the event. We are not at that point yet, but in various debates we have readily established that the UK has a safety record which is second to none.
Moving on to who is responsible for overseeing these regulations, in DECC we have our offshore environmental inspectorate which reviews and assesses all spills and reports to ensure that the operators take action where appropriate to respond to any spill. It is very much within our own department and we work closely with Oil & Gas UK and the various trade associations.
The point behind these regulations is that there obviously have been discharges. They were provoked by a modest discharge in the north North Sea from a chemical pipeline where an element of leakage and spillage was found that was not technically covered by the regulations. We have acted accordingly to embrace that sort of incident to ensure that the excellent environmental safety record that we maintain continues.
Perhaps I may provide the statistics that the noble Lord, Lord Grantchester, wants in writing rather than go through them now. I think that they are a slight sideshow to the real effect here, which is to make sure that we have got all the areas of concern covered. I apologise for jumping around the questions a bit. The noble Lord also asked whether these regulations refer to carbon capture and storage, for example. I can confirm that they do. Now that I am in the middle of negotiating the demonstration project, it is very important that this is taken into account as, indeed, are gas storage and pipelines.
The noble Lord, Lord Teverson, rightly asked about Ospar’s decision. It must be unanimous. North Atlantic states are involved in that decision, and it is then transposed into UK law. He also asked whether these regulations extend previous ones. They do because we are broadening the scope. In answer to the question on the Marine Management Organisation, it is DECC inspectors, as I mentioned earlier.
This is a very technical clause—as you can imagine it is far too technical for me—but I hope we have dealt with a number of the questions, but because of the technical nature there might be one or two areas I have not covered. I am sure that the noble Lord, Lord Grantchester, is a great technician in this area. I am happy to answer in writing—actually I prefer my officials to do so because I do not have a clue what I am writing about—and I hope noble Lords will support the two sets of draft regulations. I commend these two instruments to the Committee.
Offshore Petroleum Activities (Oil Pollution Prevention and Control) (Amendment) Regulations 2011
Considered in Grand Committee
Renewables Obligation (Amendment) Order 2011
Considered in Grand Committee
My Lords, this is a slightly more inspiring subject than the last one, I must admit. The changes brought about by this order are essential to ensure that the mechanism continues to operate effectively and efficiently. We have committed to being the “greenest Government ever”. A key part of this is our drive to meeting our EU target of generating 15 per cent of all our energy from renewables by 2020. I appreciate that this target is challenging and ambitious. It will require a fivefold increase from the 2009 levels in overall renewable electricity across electricity, heat and transport. Specifically for the electricity sector, which the renewables obligation is designed to support, we will need 25 per cent to 30 per cent of our electricity to come from renewables by 2020—a significant increase from the 6.7 per cent generated in 2009.
We are making good progress, however. We are on track to meet the first interim target of generating 4 per cent of our energy from renewables by 2011-12 and we currently have 25 gigawatts in the renewable electricity pipeline. A strong spending review settlement reaffirmed our commitment to achieving the target with the £200 million provided for developing low-carbon technologies, including £60 million for offshore wind manufacturing infrastructure at coastal sites. That is just one example of the investment we are making to ensure we reach our goal. Since 2002, the renewables obligation has been the Government’s main mechanism for incentivising investment in large-scale renewables. In that time it has succeeded—and I pay credit to the previous Government—in more than tripling the level of renewable electricity in the UK, and it currently supports around 6.3 gigawatts of accredited capacity.
This order introduces three main changes to the RO: offshore wind phasing, the extension of biomass sustainability reporting and implementation of mandatory sustainability criteria for bioliquids. These amendments will ensure that the RO mechanism can continue to build on what it has already achieved. Offshore wind phasing has the potential to play a highly significant role in achieving our renewables targets. In a November 2010 Ernst & Young report, the UK was rated number one in the world for its attractiveness to the offshore wind industry and we want to ensure we capitalise on that potential.
The order will therefore allow offshore wind developers accrediting after 31 March 2011 to phase the support they receive under the RO, with each phase receiving the full 20 years of RO support. This will ensure that offshore wind developers are not adversely affected by the long construction periods of such projects and the issues of seasonality involved with building in a marine environment. Developers will be able to register up to five phases of turbines, over a maximum of five years, with a requirement to register a minimum of turbines equivalent to at least 20 per cent of the accredited installed capacity of the station in the first phase to ensure that maximum deployment is brought forward as quickly as possible.
Biomass, too, has a key role to play in enabling us to achieve our targets with the potential for around 30 per cent of our overall target coming from biomass power and heat. However, we need to ensure that in meeting our targets we do so in a way that protects our environment and is sustainable. We are therefore introducing mandatory sustainability criteria for generators using solid biomass and biogas. This will require a minimum 60 per cent greenhouse gas emission saving for electricity generation using solid biomass and biogas. In addition, the criteria will place general restrictions on using materials sourced from land with a high biodiversity value or high carbon stock.
However, we want to limit the burden these criteria place on generators and, as such, a two-year transition phase will apply. Mandatory reporting against the criteria will be required from April this year, with eligibility for biomass and biogas to receive support under the RO being linked to meeting the criteria from April 2013. This will allow generators time to familiarise themselves with the criteria and reporting process before the criteria are explicitly linked to ROCs.
We are also conscious of not unfairly burdening small generators. Therefore, while generators over 50 kilowatts will still be required to report against the criteria, all generators below 1 megawatt will be excluded from the full scope of the scheme and will not need to comply with the criteria to qualify for ROCs from 2013. In addition, the sustainability criteria will not apply to the use of biomass and biogas made from waste, landfill gas or sewage gas.
Concerns about sustainability are not present just here in the UK but have similarly been reflected at European level. Therefore, the final amendment brought about by this order is the introduction of sustainability criteria for generators using bioliquids, in line with our requirement to transpose mandatory sustainability standards for bioliquids in the 2009 European renewable energy directive. From 1 April this year, we will require electricity generated using bioliquids to meet the criteria set out in the directive in order to be eligible for ROCs. To demonstrate compliance, generators will need to provide Ofgem with evidence that the bioliquid meets the sustainability criteria, and there is a requirement for this evidence to be independently audited. We will open the RO to bioliquids partially derived from fossil fuel, such as biodiesel, given that it is eligible under the directive, providing those bioliquids can meet the sustainability criteria. However, ROCs will be awarded on the biomass portion of its energy content only.
Concerning the devolved Administrations, the changes we are introducing apply to England and Wales. Scotland and Northern Ireland are bringing in separate but complementary orders that will work together to create a UK renewables obligation. I can confirm that the changes I have set out before you today have been subject to the European state aid approval process, for which, I am pleased to announce, clearance was granted in early February.
This Government are, of course, committed to supporting renewables investment. We will therefore maintain the RO by protecting investments made under it and are also consulting on the best means to transition from the RO to the new support mechanism introduced through electricity market reform, on which we have just finished our consultation. We will be advising about it later. The changes being introduced to the RO by way of the order being debated will therefore ensure that it continues to operate in an effective manner for those protected investments. I commend the order to the Committee.
I shall say a word or two about this order. In itself, it is not very significant or pernicious and, given that these subsidies for offshore wind-generating stations are going to be paid in any case, I have no objection to them being paid in phases as the order provides. However, I strongly object to the underlying policy requiring these subsidies to be paid in the first place. Mostly, I find myself in opposition to onshore wind farms, which are of course ferociously opposed from one end of the country to the other—not by the noble Lord, Lord Teverson, but by many others. Besides ruining the lives of some who live in close proximity to them, they do irreparable damage to our wonderful rural landscapes.
Offshore wind is obviously less offensive in both those respects, although I sometimes feel that Turner, for example, would not be too pleased to see how some of the estuaries and wild foreshores he lovingly painted have been desecrated and had their romance and natural appeal, as in the Solway Firth, systematically degraded by this industrial intrusion. However, the factors I wish to emphasise are their uselessness and expense.
As a result of the harsh weather we have experienced in recent winters, it has been brought home to virtually everyone in the country that when the demand for electricity is at its very highest, the contribution from wind power is at its lowest. In fact, it may be close to zero for days at a time. Therefore, we must always be able to supply all the electricity we might ever require—it is required at the moment—by other means. Nor is the contribution from offshore wind produced more efficiently than that from onshore wind; far from it.
Last year, the load factor for offshore wind—the percentage of installed capacity that is generating over the year—fell, at 26 per cent, just below that for onshore wind. So much for the fatuous claim, which is sometimes made by Ministers when attempting to justify their scheme of surrounding these islands with a ring of turbines, that wind is one of our great natural assets. I calculate from the Digest of United Kingdom Energy Statistics that wind power contributed somewhat less than 3 per cent of the electricity generated last year in the UK. I should think not much more than 1 per cent was from offshore wind. Perhaps my noble friend the Minister could confirm or correct that figure, as it does not seem to be separated off in that digest of statistics.
Moreover, that miserable achievement is only possible thanks to the subsidies for offshore wind, which have now been raised to twice the level paid for onshore wind. That requirement is hardly surprising, given the obviously far greater difficulties in constructing and maintaining turbines in deep salt water rather than on land. The effect of the subsidy, paid for ultimately by the electricity consumer, is that the offshore electricity producer receives no less than three times the market rate for all the electricity he produces, and is guaranteed that rate for 20 years. What is the installed capacity of all existing commissioned and/or accredited wind turbines today, and what amount of subsidy are they guaranteed for the rest of their lives, in aggregate, assuming that current load factors continue? If my noble friend is not able to answer that question this afternoon, I shall table it as a Written Question.
I have recently read the renewables obligation annual report for 2009-10. It is an interesting document, but I can hardly recommend it to noble Lords for light reading. The ROC system is one of the most sublimely complex and opaque subsidy systems ever devised by the bureaucratic mind. No doubt that very fact gives it a certain political value. From it and from ministerial answers to Written Questions, I think I have gleaned that the cost of the ROC system last year was approximately £1.4 billion and that the share in that of offshore wind amounted to approaching £200 million. Could my noble friend confirm those figures? If so, could he say what he expects them to be this year?
One thing is for sure, that the intention of Her Majesty’s Government—hell-bent as they are on achieving their impossible renewable energy targets—is that these figures should expand massively in the years to come. In answer to a Written Question in this House in January, the Minister gave his department's estimate that by 2020 the subsidy cost for the ROC scheme would be more than £5 billion a year. I believe that the Government should do what the Dutch Government have announced they intend to do, which is to remove all subsidies from offshore wind and, in so doing, abandon their previous renewable energy target. By contrast, our Government still pursue a policy which will ensure that more of our industry departs overseas, that ever more people sadly plunge into fuel poverty and that the return to the age of freezing in the dark is brought closer. For those reasons, it is with a heavy heart that I witness the adoption of this ostensibly harmless amendment order.
My Lords, I do not think I will reply to the noble Lord, Lord Reay, but I agree with him profoundly that wind turbines are fantastic and are a great asset to much of the countryside for visitors to Cornwall. However, there are issues for those who live near them which we must recognise, although once they are there I do not think people notice them too much.
I want to concentrate on something completely different. I welcome the efforts by the Government and by the Minister to ensure that the issue of sustainability of biomass fuels is taken on board and is concentrated on. Two or three years ago, we found that biofuels in the transport area were the great salvation for decarbonising our economy but because of the many valid issues around food security and rising food prices, the substitution of fuels for food became a lot more contentious. Although I believe that biofuels are an important part of the future, they have to be seen to be sustainable, otherwise what is the point?
The importance of the order is that we get in front of the curve in this area and assure the public that, with the increasing use of biomass, they are sustainable. I have two wood-burning stoves in my house which I hope are sustainable; they appear to be and I am told they are, although they come from Somerset and are trucked down to Cornwall rather than produced locally. We have to be careful as the public perception of what is sustainable in regard to biomass, particularly wood, is not always what it should be. Strange as it may seem, sometimes it can make sense to bulk-ship wood in the right condition across oceans rather than cut down local forests. In terms of transport solutions to carbon production, that can sometimes be best. I am sure that that is taken into account but I welcome this order.
Once again, I thank the Minister for introducing the renewables obligation order today. It is an extremely important order as the renewables obligation is crucial in driving forward the development of renewable electricity generation through various support mechanisms. We are in broad agreement with the order. The provisions concerning the phased development of offshore wind generation are sensible and build on Labour’s legacy in laying the foundations and ensuring that the ROCs cover the whole lifespan of a project.
The situation at Dogger Bank, where there may be some 2,000 turbines, requires phasing so that the early capacity can be rewarded while the later development can still qualify for the full 20-year payment period permitted to receive ROCs. As wind power is at the vanguard of renewable technologies, will we need similar orders to encourage investment in other technologies, such as wave and tidal generation?
This part of the order is to be welcomed. Set against wider electricity market reform, signals to facilitate cost-effective investment in all forms of low-carbon generation must be supported. It is a complex balance reviewing the roles that a carbon price, an emissions performance standard, a revised renewables obligation, feed-in tariffs, capacity mechanisms and other interventions should play in achieving our goals.
The challenge in the order today relates to the sustainability criteria for biomass and bioliquids. Deliberations between Defra and DECC will have been informative in assessing whether we have the balance right in defining the sustainability criteria. We must ensure that we do not produce negative adverse implications for land use management or for the transfer from food production into biofuels or biomass oil, and that must be the case both domestically in the UK and internationally. There are several options for the Minister to consider when looking at how to achieve that balance, and the question for the Committee to consider is whether we have that balance right.
The issue of cost efficiency is key and the provisions will not satisfy everybody. Some organisations will say that we must go much further and put sustainability criteria at a higher level. Of course, that will have implications, and not only for the UK. If all we do is transfer the problem to other EU nations, that will simply drive our greenhouse gas problems abroad. I hope that the Minister will elaborate a little on the representations that he has heard during the 12-week consultation both within DECC and in discussions with Defra Ministers and other organisations. Will he tell us who is broadly content with the proposals, who thinks that they should go further and who thinks they have gone too far? Who thinks that the burdens are too great? That will help us to decide whether we have the balance right.
The Minister said that this order will be subject to endorsement by the devolved Administrations. Will he illuminate the Committee about whether there have been any differences of opinion among the devolved Ministers in terms of input into the formulation of the sustainability criteria? Were the Welsh, Scottish or Northern Ireland departments in a different position? What was the nature of the discussions that have brought us to this point today, or was there broad consensus from the outset that the right balance was achieved between avoiding the imposition of undue burdens on businesses, the regulatory framework and delivering legally sourced, sustainable biomass and bioliquid crops?
Earlier, I mentioned marine and tidal power and asked whether a similar approach can be adopted. Paragraph 7.6 of the Explanatory Memorandum states how that could work. I can see the sense in that. The 50 kilowatt exemption is eminently sensible. We do not want to drive new or smaller investors from this potential market. It is right to exempt essentially domestic installations. However, in the intervening time, will the Minister also consult with those industries which are not directly involved in biomass generation and so on, and which have an interest in what happens with the ROCs regime and the development of this industry?
The drive towards biomass is not only about sustainability about where we source our biomass product from internationally but about domestic sustainability. The established timber industry and the wood panel industry in this country are concerned that their products, including some good quality wood that should not be burnt for biomass but should be used for other purposes, might be squeezed or priced out of the markets, and that there might be genuine job implications that do not appear in the impact assessment.
The impact assessment focuses exclusively on sustainability in land use and the sourcing of timber. It does not consider the other externalities of the possible impacts on the wider timber production sector in the UK. Will the Minister say whether there have been discussions, especially in the light of the forestry proposals recently brought forward? Will he also expand on the rationale for including fossil-fuel derivatives in the bioliquids in the eligibility for ROCs? Why would one include fossil-fuel derived products in biofuels and reward them with ROCs?
Finally, perhaps I may ask the Minister to reassure the Committee that when he looks at the various options for biomass, in particular, as well as bioliquids, the preferred option will be the one that delivers certainty around sustainability criteria, which people have been seeking for some time and on which the previous Government were working. The preferred option should also have the right balance between the burdens on industry and the light touch, and ensuring that our expansion in biomass generation, to which we all subscribe, will not be at the cost of the environment in this country or elsewhere.
My Lords, we have heard two very eloquent extremes of attitude. The noble Lord, Lord Reay, as always, comes from a standpoint of his concern about onshore wind, which obviously we respect. It is very much for the local communities themselves to establish whether this is the right option for them. Clearly, in Cornwall, the noble Lord, Lord Teverson, with two stoves in his home—I think he will be known as “two-stoves Teverson” from now on—would obviously welcome onshore wind in the neighbourhood. I can only imagine that up on the Solway Firth, that glorious Turner landscape, the noble Lord, Lord Reay, would not.
The principle point here in terms of wind and alternative energy sources is that we have to deliver energy security for this country. I do not think anyone would doubt that, given the fluctuation in oil prices at the moment and the reduction in our North Sea capability. Renewables have to play a fundamental part if we are to achieve our 2050 pathway, which shows that, for more than double the amount of electricity required, we need energy and electricity from all sources. That is what the Government are setting out to do. The ROC programme pump-primes the renewable generation which is so important.
The noble Lord, Lord Reay, asked some extremely valuable questions: for example, what is the present installed capacity for accredited offshore wind turbines? I can confirm to him that it is 1.32 gigawatts of offshore, which is the amount accredited under the RO. ROCs are eligible on generation only when the turbine is generating, which is when they are paid. We hope that that is good news and that we are not just throwing money at them, particularly, as the noble Lord points out, when they are not generating.
In terms of the aggregate subsidy that is guaranteed over the next 20 years, that requires quite a lot of predictive analysis which we are working on as a department, as the noble Lord would expect. I would like to provide him with that information later, if he does not mind, but the current cost of the ROC system of subsidy for 2009-10 was in fact £1.1 billion—I think that the noble Lord said £1.4 billion—of which £142 million rather than £200 million was provided for offshore. The figures are not readily available for future years.
Another question asked by the noble Lord, Lord Reay, was: what percentage of electricity was generated at present by offshore wind? I cannot tell him what it is at present, but in 2009 it was 0.5 per cent and that is going up exponentially as a number of offshore wind turbines are installed. As an aside to the excellent defensive points made by the noble Lord, Lord Teverson, it is quite interesting that in our manifesto document, for example, we were against the importation of wood for these purposes but were told by the World Trade Organisation that we could not possibly do that. I know that the Liberal Democrat manifesto differed from ours, so we can see immediately the benefits of this great coalition.
I am grateful that the noble Lord, Lord Grantchester, supports this order. He asked whether we should be extending it to wave and other forms of marine activity. We should of course be reviewing that and I am grateful that he pointed that out. A lot of the work we are doing here is building on some of the activity that the previous Government carried out. He asked about the devolved Administrations and, as noble Lords would expect, we are on a very similar footing with them. As I pointed out, they make independent decisions but we have very good relationships across the piece, for which I am grateful to our officials. There is very little that can be put between us.
The noble Lord also asked who was in favour and who wanted us to go further, or not as far. It would be wrong to go through the list of people on one side or the other, so suffice to say that, as with most of us in this Room, broad agreement was achieved in getting to this. Clearly, some would have wanted us to go much further and others would not but that is what is done in consultation. We are permanently consulting in our department on the activity that goes on. We seem to be doing it every day. The certainty of the sustainability criteria is absolutely fundamental and I am so grateful to the noble Lord for bringing up that point. I hope that that deals with the substance of the questions and that this statutory instrument finds favour with the Committee.
Committee adjourned at 6.08 pm.