House of Lords
Monday, 31 October 2011.
Prayers—read by the Lord Bishop of Bath and Wells.
My Lords, the Government are taking steps to improve the health of the population through reforms to the health and social care systems, and cross-government policies that support health and safety. These will contribute to reducing the costs to society of accidents, including those caused in the home and through leisure activities.
I thank the noble Earl for his reply. Will he acknowledge that in contrast to other priorities in public health, accident prevention is the only topic that still does not have a lead body? Does he accept that that is a massive gap, considering that accident prevention and home and leisure accidents cost the National Health Service £5 billion a year? Will he give an assurance that the Government will treat this as a matter of urgency by directing Public Health England to a programme of national strategic accident prevention as a mandatory feature in all local public health plans?
My Lords, I pay tribute to the noble Lord’s work as president of RoSPA and, indeed, to the work of RoSPA itself. He may recall that the public health White Paper that we issued some months ago—Healthy Lives, Healthy People—as well as the update that we issued, specifically lists accident prevention as one of the key areas of responsibility. That to my mind is par excellence an area where local authorities will be able to make a difference with their new public health responsibilities under the Health and Social Care Bill. They will be able to work with organisations like RoSPA and professional groups such as health visitors to improve safety in their areas. We look forward to working with them on those programmes, should they choose to prioritise them.
My Lords, while declaring an interest as deputy president of the Royal Society for the Prevention of Accidents, I warmly applaud my noble friend’s commitment to the way in which we have restored at long last accident prevention as one of those key objectives. Will he please do a little more by setting the agenda on the right way forward to stop the sort of problem just referred to by the noble Lord?
There is no question but that accidents in the home and in leisure contexts are a serious issue. It so happens that the UK has a very good record compared with some other European countries, but we can never be complacent on this. Some very tragic accidents occur, particularly to children, that we must bear down upon. Again I pay tribute to the work of RoSPA to prevent accidents with looped blind cords, which can often be a hazard to children. NICE has published accident guidelines relevant to home and leisure situations and also guides focusing on home safety and road design. It is that realm of public health that we hope NICE will focus on more and more as the years go by.
My Lords, I declare an interest as the chair of the All-Party Parliamentary Group on Gas Safety inquiry into carbon monoxide poisoning, whose report is being published today. Do the Government recognise that carbon monoxide poisoning currently costs the country about £178 million in total; that the protection of putting up a carbon monoxide alarm in each home in Britain for a year would cost less per home than a cup of coffee at a motorway service station; and that lives would be saved if carbon monoxide alarms were readily available? If the Government considered removing VAT from them, it would give a very strong message that everybody must protect themselves.
My Lords, the noble Baroness has highlighted a very serious and important problem. She will know that in the European Union context the Commission has focused very strongly on products that may prove unsafe if sold wrongly or if manufactured or fitted wrongly. The kinds of safety incidents that she refers to could well fall into that category and work is ongoing in that area. However, I take on board the figures that she has so graphically supplied and will feed them back to my department.
My Lords, the 1968-71 experiment with moving the clocks around produced some evidence about accidents. In the current debate, since we all enjoyed an extra hour in bed yesterday, I wonder whether there is any concrete evidence about the reduction in accidents that moving the clocks around supplied, given that in 1968-71 we were also introducing the drink-driving laws that somehow compounded the evidence that was provided for us.
My noble friend raises a point that we have often debated in this Chamber. He is, of course, right that single/double summer time would put clocks one hour ahead of Greenwich Mean Time in winter and two hours ahead in summer. Any change to the current system of British Summer Time would have wide-ranging implications, and those implications would have to be carefully considered in all parts of the UK, probably, in terms of the costs and benefits associated with them.
My Lords, I welcome the fact that the revised blueprint of Healthy Lives, Healthy People now includes accidental injury prevention. Can the Minister confirm that that would therefore be a new responsibility added to those that public health authorities will be taking up? Has that been costed and will extra funding be available for local authorities and the new public health authorities to deliver on it given that, if they are successful, they will be saving a great deal of money?
As the noble Baroness knows, much will depend on the priorities that individual local authorities set. This is subject to further engagement because it is early days, but accidental injury prevention is listed as one of the areas that local authorities could focus on. To my mind, they should be warmly encouraged to focus on accident prevention as there are so many levers at their disposal to make a difference in this area.
My Lords, the Prime Minister has had discussions with the First Minister of Scotland on a range of issues.
My Lords, I thank the noble Lord the Leader of the House for his Answer—I think. Does he agree with me that one thing is now certain; there will be a referendum in Scotland on the issue of separation at some point in the future? The Government seem lost for a definitive policy on this issue. Does he agree that it is essential that such a referendum on separation be conducted in a fair and impartial manner, with everyone entitled to put their point of view without being attacked for holding a point of view? Finally, does he also agree that it was totally reprehensible for a First Minister of Scotland to use public resources to attempt to undermine an eminent professor who had expressed doubts about the principle of separation?
My Lords, I understand that the First Minister of Scotland had to apologise to the Scottish Parliament last week for making that error. More fully, I totally agree with the noble Lord that if there were to be a referendum it should be fair and impartial. To that I would add another word—clarity. There is no purpose in having a referendum in Scotland unless the question is very clearly understood by the people of Scotland so that the result can equally be interpreted with clarity.
My Lords, could my noble friend confirm that privately the First Minister has been threatening government Ministers that if we constitute a legally conducted referendum campaign in Scotland, he will make it his business to boycott that referendum and to prevent the police and other services from seeing that it is carried out? Is the First Minister not getting a bit too big for his boots?
My Lords, I cannot confirm to my noble friend Lord Forsyth that the First Minister of Scotland has been threatening UK government Minsters. If it were true, however, that he would seek to frustrate a referendum in Scotland that had been legally and rightly established by the Westminster Parliament, it would be the most extraordinary event. Surely the first person who should whoop for joy if there were to be a referendum on the issue of separation in Scotland should be the First Minister.
Can the Government confirm whether they have conducted any research into the year-on-year implications for jobs in Scotland of investment decisions that might be affected by the prospect of a referendum and the prospect of independence? The First Minister talks of an independence referendum perhaps in 2015, with no certain date or timescale. Will the Government consider making representations to ensure that the uncertainty that that creates is minimised by bringing forward the date to as soon as possible?
The noble Lord brings a lot of experience to this whole subject. I am glad to say that my right honourable friend the Secretary of State for Scotland himself has laid six—there could be many more—questions to the First Minister for Scotland on the whole issue of what independence means, so that we can have the clarity that I alluded to in the first Answer.
If a referendum on Scottish independence produced a yes vote, would it not then follow that the size of the House of Commons would be reduced and that the House of Commons would be weakened? What bearing does the noble Lord the Leader of the House think that that would have upon the relationship between these two Houses of Parliament, especially if there were to be an elected second Chamber?
Does my noble friend accept that it is in the interests neither of Scotland nor of the United Kingdom for this issue to drift on unresolved throughout the rest of this Parliament? Is it not now time for the Government to take a decision not only on the future calling of a referendum—their proper role in this union—but on the proper information for the electors about what the consequences would be?
My Lords, I entirely agree with my noble friend on the question of information. As far as timing is concerned, it is true that doubts about Scotland’s future within the United Kingdom create uncertainty not just for the people of Scotland but for those who wish to invest, to trade, to do business and to live in Scotland. All these things need to be taken into account before a decision is taken on a referendum.
My Lords, in the spirit of clarity, will the Leader of the House indicate whether the Government have a view on whether the Scottish Parliament can competently call a referendum on constitutional change in Scotland, and if so, what that view is?
My Lords, certainly one of the questions that will be raised—and is continually raised—with the First Minister of Scotland, is what currency would exist within the British Isles if Scotland were no longer part of the United Kingdom. At this stage is it is very difficult to answer.
My Lords, I am not going to follow my noble friend down that route. However, these are important matters. Ultimately the people of Scotland will need to decide whether to remain part of the United Kingdom or to break up one of the most enduring partnerships and one that has suited the people of Scotland economically and culturally more than anything else I can think of.
My Lords, our intention in bringing in individual electoral registration is that the implications will be entirely beneficial. The Government are funding research to understand the current level of accuracy of the electoral register that will help us to understand better the way in which to move to individual electoral registration and what impact it will have. The Government remain absolutely committed to ensuring that the maximum number of people remain on the electoral register during the transition to individual registration and that the accuracy of the register is improved.
I thank the Minister for that Answer. I am slightly concerned when I read all the academics and psephologists on the subject, who believe that we are going to fall from best in class, from 92 per cent accuracy to the low 60s. Would the Minister be even slightly concerned if that were the outcome? Would our society be becoming bigger or smaller?
I would be extremely concerned if that was the outcome. Let us remember that the party opposite, when it was in government, started to raise the issue of individual registration—and even passed legislation—because, for the first time certainly in my lifetime, the integrity of the voting system was starting to be called into question. That is the origin of the exercise that we are undertaking, on which I hope we will have all-party support.
My Lords, does the Minister accept that it really is necessary to carry out a thorough, door-to-door, face-to-face canvass in order to ensure both the accuracy and the completeness of the electoral register? Does he accept that failure to do so not only threatens the integrity of the democratic process but could also cause problems for people trying to obtain credit? Credit agencies check that people are on the electoral register to ensure that they can have credit, and failure to maintain the register in this way could mean that people are denied credit and businesses are unable to supply goods and services. That would be damaging to the economy and to social mobility.
That is an interesting point. If I may return to the central point of the question, yes, doorstep canvassing plays a vital role in ensuring that registers are complete and accurate. That is why in both 2014 and 2015 door-to-door canvassers will be used by electoral registration officers to ask people to register to vote.
My Lords, last Wednesday the Minister denied that there had been a collapse in electoral registration in Northern Ireland when this system was introduced. Can I change the word from “collapse” to “fall”? Was there a fall, and by what percentage?
It is of no use for the noble Lord to say “Ah!” as if he has found out something wonderful and unknown. I admitted that there had been a fall—yes I did—and what I went on to say is that both we and the Northern Irish had learnt lessons from that exercise and the mistakes made. I went on to say—and I hope my noble friend behind me has an opportunity to say this—that we all used to make the “Vote early, vote often” jokes about Northern Ireland, but people are now going across to Northern Ireland to study their success in getting people on the voting register. That is to their credit and is something that we are trying to learn from.
My Lords, does the Minister agree that bogus registrations are probably the largest avenue for fraudulent voting, that this has been a major problem in England for decades and that it is long past the time that it was cleared up and we got a more honest register—which I am happy to say we now have in Northern Ireland?
I am pleased to have that confirmation from my noble friend. Yes, I make the point again that that is exactly why the Labour Government raised this issue because, perhaps a little complacently, we got used to the idea that this kind of thing did not happen in England. We found out the hard way that that was not true. What we are trying to do—I emphasise this again—is to bring forward a process which is thorough and which will deal with some of the concerns that have been raised, and then move forward to a register that will have full public confidence.
Will the Minister agree that, if the further developments that the Government are considering—including voluntary registration rather than compulsory registration—are brought forward and passed, then all the exchanges about improving the register and getting a more accurate register will be for nothing, because we will get a much smaller register and a much less representative democracy?
This is where I hope that we can call on the experts in all parties to stop those misleading statements. I made clear last Wednesday that we have always had voluntary registration in this country, and that we are not—whichever party is in power, I suspect—going to bring in compulsory registration. But we will bring in a system that will encourage people to complete their civic duties by registering to vote. Rather than throwing barriers in the way, I suggest that all parties, NGOs and others get down to making this system as foolproof as we can, and then get people to register to vote. We can prove by this exercise that some of those fears are groundless. My right honourable friend Nick Clegg and my honourable friend Mark Harper are open to suggestions and are engaged in discussions, and we will do the best that we can.
My Lords, I am grateful to the noble Lord for his Answer about voluntary registration, but I do not entirely understand it. As I understand it, it is compulsory to register at present—if only it also were to vote—and if one does not register to vote, I think that one can be prosecuted. My main question concerns local authorities: I wholeheartedly agree with the position taken by the noble Lord, Lord Rennard, with which the noble Lord agreed. Can he assure me that local authorities will have the requisite amount of resources in order to ensure that they can undertake door-to-door registration?
Population: United Kingdom
My Lords, since 1985, the population of England has increased by an estimated 5.2 million people. In the same period, around 170 square miles of countryside has been used for residential development and around 30 square miles for industrial development.
My Lords, I thank my noble friend for that reply. However, since 1945, the population has increased by about a third and the weekly wage has increased from £3.90 to about £400. In recent times, in each year, nearly four square miles of undeveloped land has been built on for housing and industrial development. Should we not use more of our brownfield land for housing and industrial use?
My Lords, I am sure that the noble Lord will be aware that each Government have attempted to use brownfield sites and brownfield land before anywhere else. A great deal of brownfield land has already been developed. There is consideration as to whether that is better used for housing within central town areas or whether there is a better boost to growth if it is used for industry or commerce. By and large, brownfield land has for the past number of years been used primarily before anything else.
My Lords, can the Minister say whether the figure she gave us just now includes land for which development consent has been given but never implemented? Does she agree that if priority is given to the implementation of such consent to the use of brownfield sites, as she has just said, and to the use of other land which none of us would think has any environmental value, there really is no need for the countryside to feel further threatened?
My Lords, I cannot say whether what I have said includes such land. With regard to the development of land, we have always protected green belt and looked to see that greenfield land is not used before brownfield land is developed. I hope that that answers my noble friend’s question.
My Lords, does the noble Baroness agree that, as Huckleberry Finn might have put it, land is finite? Should not some council of wise men and women now determine exactly how much land should be set aside for non-cultivation, how much should be dedicated to biofuels and how much for the production of food? If such a body were to adjudicate, what would be the Solomonic principles on which it would allow the situation to be determined?
I hope the noble Lord is not expecting a reply to that question in those terms. To some extent, land is divided up just as this country is. There is agricultural land; countryside land, which is not used for housing; and land in cities. It is interesting that at the moment 13 per cent of land—1.6 million hectares—is green belt; 25 per cent of England is in a national park or an area of outstanding national beauty; and the area of England—around 13 million square hectares, just over 50,000 square miles—is divided up into greenfield land, green belt, city development and other uses. Where Solomon comes into this or whether there should be an organisation or group to spread out the land and say what it is used for is not on the radar at the moment.
My Lords, the introduction of a new planning system has not been without controversy. In particular there are concerns that, where local development plans are not up to date, the presumption in favour of sustainable development could lead to largely unfettered development. What assurance can the Minister give us about transitional provisions to cover and protect those situations where local plans are not fully up to date?
My Lords, there has been quite a lot of misinformation in the media about the presumption in favour of sustainable development. That presumption originated in 1947. It was then turned into the plan-led approach in 1991, and the presumption has been there all along.
With regard to the presumption now coming through from the Localism Bill, where plans are not up to date, as the noble Lord knows—we have had plenty of discussions about this—the expectation is that local plans must be brought up to date as quickly as possible in order to make sure that development is carried out within the right parameters. Where those local plans are not up to date, the policies set out in the national planning policy framework will provide a robust framework for making decisions and safeguarding the things that matter to people, such as the green belt and areas of physical flooding.
We have discussed the transition over many weeks, and all I can say at the moment is that the need for some transition is well understood.
Financial Services and Markets Act 2000 (Exemption) (Amendment No. 2) Order 2011
Motion to Approve
My Lords, I beg to move the Motion standing in my name on the Order Paper.
My Lords, I am afraid that this may take a little longer than expected, the order having been considered previously in Grand Committee. Unfortunately, at the time of the Grand Committee consideration, noble Lords did not have available to them the results of the consultation on the order and consequently were not then able to give the order the scrutiny it deserved.
I would be grateful if the Minister could answer a couple of points raised in the consultation that the Government have not addressed. First, given the peculiar importance of credit unions in Northern Ireland, are the Government intending to address the issue raised in the consultation of whether an office of the FSA or a successor organisation should be established in Northern Ireland? This is clearly a sensitive issue in the Province, and it ill behoves the Government simply to ignore it, as they do in this document.
Secondly, I am unclear about the Government’s position on question 2(a) of the consultation on whether the Northern Ireland Assembly would retain legislative control of credit unions in Northern Ireland. As the Government acknowledge, considerable concern was expressed about the loss of Northern Ireland influence over an aspect of financial life that is very important in the Province but less so in the rest of the UK. Could the Minister please clarify the Government’s position? Again, in the consultation document the question was simply ignored. As a corollary to this last point, what are the Government doing to ensure that no adverse effects are felt in Northern Ireland from the legislation on credit unions passed in this House on Thursday, 20 October? That legislation allowed businesses to assume up to 10 per cent of the share of the capital of a credit union and eliminated the role of the common bond as the basis of a credit union.
How will the Government ensure that credit unions in Northern Ireland do not, in some cases, become dominated by local business members, with the potentially unfortunate impact on investment decisions, particularly when the credit union considers investment in the local community? How do the Government intend to monitor the impact of the loss of the common bond in Northern Ireland credit unions, when it is evident that the common bond has played an important role in the unique character of the credit union movement in the Province?
My Lords, for the benefit of noble Lords who did not take part in the discussion in Grand Committee on 17 October, it is perhaps worth explaining that this statutory instrument transfers responsibility for regulation of Northern Ireland credit unions to the Financial Services Authority. It implements a policy decision of the previous Government announced in March 2010—which has the support of all three main parties—the outline of which is the subject of this statutory instrument. There will be further instruments dealing with the detail of the transfer and a number of the consequentials arising from that.
It is unfortunate that the consultation issued by the previous Government in March 2010, having said that the decision had been taken that regulation would transfer to the Financial Services Authority, slipped into a consultation about how this is best achieved and what other associated action should take place. Those matters will be the subject of further statutory instruments in due course and it is unfortunate that there was one somewhat confusing question that could have been taken as touching on the statutory instrument before us today. I regret that. Had I known that that question was there, we could have had the consultation responses out earlier, even though it was not intended that the previous Government’s consultation should have anything to do with the business before us today.
On the issues raised by the noble Lord, Lord Eatwell, the question of the FSA and the allocation of its resources to offices is a matter for it. The responses on this point were linked to concerns about what the regulatory regime was going to entail and the FSA has worked hard to address those concerns by carrying out visits to Northern Ireland and answering questions from the credit unions.
As to the common bond and possible domination of local businesses, as we discussed in Grand Committee, the credit unions do not feel that this issue will be a threat. Of course, along with seeing how the credit unions sector generally across the United Kingdom develops—it is prospering and the Government wish to see it do so—it is one of the many factors that the Government will continue to have in view. The matter does not touch directly on this instrument, but it is relevant to the whole of the credit unions sector across the United Kingdom.
The other points will be the subject of ongoing work by the FSA following another consultation that the FSA and the Treasury had issued, which closed last week and which will be the subject of further statutory instruments in due course.
This instrument deals with the basic decision, announced jointly by the noble Lord’s Government and the Department of Enterprise, Trade and Investment in Northern Ireland, that regulation, which is the subject of this instrument, should pass from the DETI to the FSA. That is what this does. It does not relate to any matters other than that. The decision had already been taken in advance of the consultation the noble Lord is questioning.
My Lords, the Minister used the word “discussion” to describe Grand Committee on 17 October. That is rather stretching the definition of that word. It was a tetchy performance by the Minister, who was clearly deeply embarrassed that a consultation which had been initiated in March 2010 and completed several months ago—indeed, before the summer break—was actually published only on the morning of Grand Committee, and no efforts were made at all to ensure that those noble Lords who take an interest in Treasury Affairs were aware of the existence of this document before we discussed the order.
In those circumstances, the Minister assured the Grand Committee that when we looked at the consultation we would find that it was supportive. The Minister then said there was considerable risk that if we did not approve the instrument, these changes, which he rightly points out have widespread agreement across all political parties, could be delayed by as much as six months. I am seeking to establish through a freedom of information inquiry whether the FSA agrees with the statement. We approved this order in Grand Committee because of the urging of the Minister. He pointed out that if we did not do so, we would be delaying a number of other orders which would be forthcoming fairly soon. Those orders come under a negative resolution procedure. In view of the lamentable performance by the Treasury in not publishing the consultation response until the morning of the Grand Committee, will the Minister honour the House by ensuring that those subsequent changes go through an affirmative procedure, notwithstanding they could, at the Minister’s discretion, go through a negative procedure? That is the least the Minister can do to address correctly a failure to treat the House with respect by holding back the publication of this report until the morning of discussion.
My Lords, I really do not accept the construction of the noble Lord, Lord Myners, over this. If the previous Government had not published a rather confused consultation in March 2010, which slipped in a question that they said in the introduction to that consultation was already decided policy, none of this confusion and this opportunity to create some great mountain out of a procedural molehill would have arisen. We had a vigorous debate. We looked at all the key matters in Grand Committee in the proper way—all the matters I expected to be raised were properly covered in the discussion. A sequence of statutory instruments is due to come forward in the coming month. We needed this one out of the way. There is another consultation, as I have already explained, which closed last week that will inform the other statutory instruments. They will come forward under the normal procedure that is appropriate to them. An enormous amount is being made of next to nothing. If I had been aware of the confusion that had been laid in the previous Government’s consultation on this, of course I would have ensured that the responses were out. I regret they were not. Nothing was held back.
Motion on Amendment 1
1: Clause 1 Page 2, leave out lines 12 to 16 and insert—
“6th January 1954 to 5th February 1954 : 6th May 2019
6th February 1954 to 5th March 1954 : 6th July 2019
6th March 1954 to 5th April 1954 : 6th September 2019
6th April 1954 to 5th May 1954 : 6th November 2019
6th May 1954 to 5th June 1954 : 6th January 2020
6th June 1954 to 5th July 1954 : 6th March 2020
6th July 1954 to 5th August 1954 : 6th May 2020
6th August 1954 to 5th September 1954 : 6th July 2020
6th September 1954 to 5th October 1954 : 6th September 2020””
My Lords, I beg to move that this House do agree with the Commons in their Amendment 1. I shall speak also to Amendments 2, 1B, 1C and 1D.
However, before I discuss the amendments, I wish to place on the record my appreciation for one of the department’s officials, Evelyn Arnold, who is retiring after 36 years in the department. In fact today, by some coincidence, we are here on her final day. I am sure that with many an ex-DWP Minister present today noble Lords will share my thanks as we bid farewell to Evelyn and, I hope, to this Bill.
Today we have a further opportunity to discuss what has proved to be the most contentious aspect of this Bill. I hope on this occasion we may emerge with something like consensus. All sides of the House accept that projected average life expectancy has increased significantly since we agreed in 2007 to raise the pension age to 66 by 2026. The latest projections published only last week confirm that with no change to the 2007 timetable, men retiring at 66 in 2026 would receive their pension for an additional 18 months and women for an additional 19 months.
This demonstrates the very challenge we are facing, for we have been on quite a journey with this clause. That we have this opportunity further to debate the Government’s transitional arrangements is to no small extent due to the considered and thoughtful arguments made during our debates on Clause 1. I thank the noble Lord, Lord McKenzie, and the noble Baroness, Lady Drake, for tabling the alternative timetable, which has continued to reappear both here and in another place. However, it is £11 billion—and this fact will remain irrespective of the number of times that the proposition is tabled, since £11 billion is simply too much, even in terms of the inflated figures that we quite often bandy around when debating the heady world of pensions.
I pay sincere tribute to the noble Baroness, Lady Greengross, who recognised that this sum of money is too great a burden for the system to bear and sought to propose an alternative timetable at a fraction of the cost. Her suggestion provided a more reasonable financial cost while assisting those most affected by the original Bill timetable. Our amendment takes her amendment as the starting point and provides the same notice for the first women affected by a one-year rise, five years and four months from Royal Assent. Our amendment smooths the rise from 65 to 66, taking six months longer than we originally proposed, and provides a revised pension age for men and women born between 6 January 1954 and 5 October 1954. It benefits a similar number of people—about half a million, under the noble Baroness’s amendment, and around 485,000 under ours, although in the case of our amendment nearly half of those are men. That is because we equalised the pension ages first before starting the rise to 66. We have found that there was no alternative to equalising first that would not risk breaching the European equal treatment directive by delaying equalisation beyond the date that we set ourselves in 1995. That is why men will also benefit—but that is, of course, incidental to our primary goal, which is to mitigate the impact on those women who would otherwise face an increase of more than 18 months.
We have listened, we did reconsider, and we have done what is right for these women and the country—and it has not gone unnoticed. Michelle Mitchell, the director of Age UK, welcomed the Government’s amendment, saying that Age UK appreciated that,
“it is a significant financial commitment from the Government at a difficult time. This will give a much needed six-month respite to all the women who would have had to work an extra two years”.
Although Age UK would have liked the changes to go further, it has none the less acknowledged that the Government have listened to concerns. In its briefing sent to noble Lords for this debate, it said:
“We ask all Members of the House of Lords to support the government amendment to Clause 1 of the Pensions Bill”.
These are not my words but those of Age UK.
The issue has never been whether the original timetable is to be brought forward. The issue is about the precise timing and whether it is appropriate to rewrite the timetable, set more than 15 years ago, for levelling the pension ages at 65, to bring about 66 in 2020. We have always been clear on the matter. My right honourable friend the Secretary of State said in another place that,
“we are committed to the state pension age being equalised in 2018 and rising to 66 in 2020”.—[Official Report, Commons, 20/6/11; col. 51.]
These amendments do not alter our timetable for pension age equalisation and maintain our original intention to implement the rise to 66 in 2020, but we have reduced the impact of our original plans by up to six months for those facing the biggest increase. This is what we call a compromise.
This transitional arrangement has a significant price tag attached. Net spending on pensions and benefits will increase by £1.1 billion compared to our original proposals over the two years 2019-20 and 2020-21. Under our amended proposals, we will therefore deliver £30.6 billion of savings. This is not small change that falls down the back of the sofa, but vital savings for the long-term fiscal sustainability of our economy. We must not forget the bigger picture. Savings are not just important but necessary. The independent Office for Budget Responsibility has some very helpful forecasts. They show that by 2060—50 years’ time—age-related public expenditure is set to increase by more than 2.5 percentage points of GDP, with the largest proportion of spend on older people being on health and state pensions. This 2.5 per cent is the equivalent in today’s economy of £40 billion.
The point I am making is that it is tough to save money and this country faces a significant near-term challenge to do so. It was suggested by some Members in another place that the public sector net debt of £1.4 trillion in 2015-16 forecast by the Office for Budget Responsibility is so monumental that £10 billion or so here or there will not make much difference. I would like to think that in this House we take a more realistic view. With figures like this, even £1 billion is an important sum of money to spend, and this is only one-tenth of the cost of the proposals advanced by noble Lords opposite.
The fact is that the fiscal impact of their amendment falls on six years not 10 and within that period—2016-17 to 2021-22—nearly £2 billion would need to be found in 2018-19 and nearly £3 billion in each of the years 2019-20 and 2020-2021. In the context of the Office for Budget Responsibility figures, ours is the fiscally responsible approach.
I accept that some will continue to argue that our amendment does not go far enough. However, I would urge noble Lords to reflect upon the process that has got us to this point. Noble Lords scrutinised the Bill many months ago and the Government listened to concerns. The elected House has had its turn, as is the process, and has responded with these amendments, which balance the concerns of those women most affected with longer-term fiscal responsibility. I beg to move.
Amendment to the Motion
As an amendment to the Motion that the House do agree with the Commons in their Amendment 1, leave out from “House” to the end and insert, “do disagree with the Commons in their Amendment 1 and do propose Amendment 1B as an amendment in lieu and Amendments 1C and 1D as consequential amendments”.
1B: Page 2, leave out lines 10 to 16 and insert—
““6th April 1955 to 5th May 1955 : 6th May 2020
6th May 1955 to 5th June 1955 : 6th July 2020
6th June 1955 to 5th July 1955 : 6th September 2020
6th July 1955 to 5th August 1955 : 6th November 2020
6th August 1955 to 5th September 1955 : 6th January 2021
6th September 1955 to 5th October 1955 : 6th March 2021
6th October 1955 to 5th November 1955 : 6th May 2021
6th November 1955 to 5th December 1955 : 6th July 2021
6th December 1955 to 5th January 1956 : 6th September 2021
6th January 1956 to 5th February 1956 : 6th November 2021
6th February 1956 to 5th March 1956 : 6th January 2022
6th March 1956 to 5th April 1956 : 6th March 2022””
1C: Page 1, line 6, leave out “December 1953” and insert “April 1955”
1D: Page 1, line 8, leave out subsections (3) and (4)
My Lords, I join the Minister and start by sending best wishes to Evelyn Arnold. We worked together, on and off, on pensions for at least a couple of years through some very interesting and challenging times. I thoroughly respect the expertise that she brought to that process and I wish her well in retirement.
The amendment gives us an opportunity, as the Minister identified, to revisit the changes to the state pension age, which we debated when considering the Bill. We can do this in the light of the Government’s amendments, which made some modest changes to what they originally proposed. Modest they may be, but it would be churlish not to give them at least a modest welcome and in doing so to pay tribute to all those who campaigned to press for changes to the original measures.
The position is as follows. Prior to the Bill, the state pension age for women was due to rise from 60 to 65 over the decade to 2020, so that it equalised with the state pension age for men. This was provided for by legislation in 1995 under the previous Government. The Pensions Act 2007 increased the state pension age for both men and women to 66 between 2024-26, to 67 between 2034-36, and to 68 between 2044-2046. There was political consensus around these measures. The Bill changed all this by equalising the state pension age earlier, in November 2018, and by completing the increase to age 66 for men and women by March 2020. As we discussed previously, these changes will have caused some 500,000 women to have their state pension age increased by more than one year, with approximately 300,000 experiencing an increase of 18 months or over.
As the government fact-sheet provided to us shows, the government amendment reduces the increase in the state pension age for women to 18 months for all those for whom it was more than that. For men, it reduces the transition to the state pension age so that none has to wait as much as 12 months, with varying changes so that the maximum additional time is 11 months—although for some, it is reduced to four months. This still means that 500,000 women would have their state pension age increased by more than one year and for up to 18 months. We hold fast to the view that it would be wrong to disturb the timescale to equalisation of the state pension age, of which women have had some 15 years’ notice and time to plan. However, we consider that accelerating the move to 66 for men and women by four years is justified, given the changes to longevity that the Minister referred to, although commencing this move now is in our view on the cusp of what would seem a reasonable period of notice.
Our proposals would affect 1.2 million fewer people and equal numbers of men and women, with no one having to wait more than 12 months extra for their state pension. There is of course a difference in the level of savings that the proposals reduce; we accept that. Our position generates just two-thirds of the £31 billion savings that the Government’s proposals generate, although those savings would begin to accrue in 2016-17, after the end of the current spending review and the deficit reduction plan. The greater savings from the Government’s announcements would accrue over a five-year period, and then align with our proposal. Of course we are not dealing with small sums of money, although there is a multiplicity of policy decisions that have yet to be made for that far out, well into the next Parliament. Bearing in mind that GDP at that time would be some £1.5-plus trillion, with total managed government expenditure heading for £800 billion and spending on pensions and benefits at £100 billion a year, these sums have to be seen in that context.
However, the other side of the issue is: why is it fair for those additional savings to be disproportionately visited on some 500,000 women, who will still have to wait for longer than a year—and 300,000 up to 18 months longer—to receive their state pension? Why should they shoulder the burden? It is of course right that we share the extra costs of rising longevity fairly, but this is not fair. A balance must be struck between dealing with rising longevity by having a plan to increase the state pension age over time, including revisiting the increases to age 67 and 68, and offering short-term security to women who need to be able to plan their personal finances. There must be due notice of changes.
We know that 40 per cent of women have no private pension savings. Those who do invariably have smaller pension pots, since many work part-time and were excluded from occupational pension schemes until the 1990s. A delay in reaching the state pension age also means missing out on pension credit and could mean missing out on passported benefits as well. This is not just a timing matter; it represents a real cash loss to those individuals. The responsibility for caring falls disproportionately on women. Some will have organised a move away from the labour market, perhaps taking part-time work with the prospect of receiving a state pension at a known date. Putting all this in reverse simply may not be possible. All the matters are made more difficult by rising unemployment and the growing scarcity of part-time jobs, with women again bearing the brunt. If individuals are to be able to respond to changes in their economic circumstances caused by a deferral of their pension, they need to know before they make irrevocable decisions about their employment.
Sadly, these measures sit alongside a raft of other policies that have particularly adverse effects on women. For example, we have seen the abolition of the health in pregnancy grant, a three-year freeze on child benefit, cuts in childcare costs supported through tax credits, caps on housing benefit—which are likely to act disproportionately adversely on women—and the closure of Sure Start centres. We know that women are likely to be the biggest losers from public sector pay freezes and job cuts, and we know that women are more reliant than men on the services that the public sector provides. We know that rising longevity must be addressed, but it must be addressed fairly. The Government are in the wrong place on this. I beg to move.
My Lords, I should like to speak briefly in support of the amendments offered to us by the House of Commons and against any further amendment thereto. In doing so, I speak as one of the instigators of the initial expressions of concern in this House, which were taken up so well by the noble Baroness, Lady Greengross, and others, and have led to the kind of compromise that the Minister has offered us today. It is a compromise; it is not perfect and certainly not what everyone wanted. However, the alternative would be unconscionable and unachievable.
The Minister has had to labour in devising this scheme with the aid of tremendous care and iteration. He has had to operate under two major constraints. The first, which he has set out more clearly than anyone else could have, is that of cost. I shall turn back to that in a moment. The second is the equal treatment directive. Although the measure of generosity or beneficence that he has been able to offer is welcomed by members of the male gender, the directive has attenuated some of the things that he would have done—if he had not been constrained by it—for persons of the female gender, who initiated the element of concern. He has had to live with that.
I say that as the author of an amendment that the Minister briskly dismissed in Grand Committee by pointing out that it would, somewhat beyond my intention, have been likely to incur an Exchequer cost of some £6 billion, which would have been out of court to the expenditure that he has been able to undertake on it. However, the Minister has done the right thing. In particular, I emphasise the importance of having a sound and viable medium-term strategy. It is quite easy for us, even those who are more expert in the public finances than I currently am, to look at issues in the deficit reduction programme without realising or acknowledging that it is equally important that we should have a credible medium-term financial stance; and that we should show that we are prepared to keep a rein on rising expenditure. The Minister has been able to soften that slightly but he has not been able to take away the constraints.
The Minister also had a third area to think about: how we should deal with this. I am very glad that the Government have not come back with a compromise that was a kind of lash-up—another set of discretionary concessions for a limited number. That would have been better than nothing, I am sure. However, as I advocated in Committee, he has come back with what I call an architectural solution: delaying the full impact of these changes, rather than just a series of slightly unfortunate and perhaps awkward-in-precedent changes.
I have one final point for the Minister. In praising him for his measure of controlled beneficence, I also remind him that it will be equally important for long-term assurance—given the longevity factors that are not really in dispute across this Chamber; we understand how people’s longevity is rocketing—that it may be necessary to return to some of the long-term milestones and a further increase in the pension ages. When that happens, future Ministers will not be constrained by the equal treatment directive because we will have got to parity before we start. However, I would not like anyone here to feel that that issue will have to go away unattended indefinitely.
My Lords, I thank the Minister, particularly for his amendment. However, I want to emphasise that the real winners here are the half million or so men and women who are going to get their pensions earlier than they would have done without this amendment. I was not the only Member of your Lordships’ House who felt that this was very unjust, but I congratulate the noble Lord because he recognised this with great sensitivity. I agree with the noble Lord, Lord Boswell, that this is a compromise and that there were various constraints. It is not what we all wanted; it has not gone as far as we would have liked, but there were constraints that made that very difficult.
I tried in the amendment that I put forward to do something about what those of us who tried to change things we saw as a tremendous injustice to 300,000 older women—those who found they had to wait an extra 18 months or even more to get their pensions and 33,000 who had to wait an extra two years. Now, because of this amendment, 245,000 of those women, and a similar number of men, will see their pension age reduced between one and six months. It was not all that some of us, including Age UK, would have liked, but I am pleased to support the amendment as a victory for common sense and I thank the Minister for his sensitive approach.
With regard to going further, at this stage I just hope that no further changes will occur without due notice to everybody concerned and appropriate time for people to prepare for a huge change in their circumstances. That is very difficult to cope with at that stage in one’s life—particularly for women, who find it hard to get into the job market at all at that age or even to remain in the job market. I very much support what the Government have done, and thank the Minister again.
My Lords, I also add my congratulations to the Minister and the Government for recognising what was the most important part of this Bill—certainly the most controversial part. When it left this House it left it unamended but, if one had taken the temperature of your Lordships’ House, it would have been quite clear that the Government had to do something to ameliorate the problem which was so well put in very many amendments. The Government have listened, and taken on board that message. They went away and came up with a compromise for which we have to be grateful. I pay tribute to the noble Baroness, Lady Greengross, who put down the amendment that paved a way, in a sense, for the sort of direction that the Government have adopted; it might have cost another £1 billion, but, as they say in musical terms, it was close enough for jazz.
The key issue here is that we have to recognise that, though the Government have taken this on board, it will mean a substantial improvement for women who might otherwise have been expected to work for an additional two years. As we have heard, these changes will cost £1.1 billion and affect 250,000 men and just under 250,000 women. I do not regard that as a sticking-plaster solution. It has not been put in place simply to hold the breach in the dam. Another part of the Age UK statement says that it is a big step forward. It states:
“We can’t emphasise enough the great achievement”—
the great achievement—
“that this change represents as it will cost the government £1 billion in lost cuts to expenditure”.
In fact, it will be just over £1 billion.
I want to say a few words about political consensus because it can often occur around facts, information, data and reports as they are at a particular point in time, when it is easy for people to come together. However, as your Lordships will know, this has in fact been a changing, not stationary, landscape as people get older. The source of the then political consensus, Adair Turner, in his work on pensions reform, accepted that this was not a static process. Since he wrote his report, he has stated in unequivocal terms that if he had known then what he now knows about life expectancy, he would have gone further and faster in his recommendations. He said:
“If I was redoing my report I would be more radical, arguing for an even faster increase in the state pension age”.
The facts are straightforward, are they not? Someone who reached the age of 60 in 1970 could expect to live until they were 78. I am averaging out men and women just to provide the feel for change. However, someone who reached 60 last year can now expect to live to the age of 88. We have already moved on 10 years since 1970. In an ideal world, all noble Lords would have liked the Government to go further, but we cannot do that without regard to the fiscal constraints that are with us, and are likely to be with us for some considerable time to come. We have record debt and must do all we can to reduce the burden that that debt will put upon our children and our children’s children. I do not know whether noble Lords have looked in the face of their children—as I have looked at mine, although my grandchildren are a little too young yet—and told them what the burden of older people would be upon them, and asked whether they thought it was right that we should pass it on to their children.
My reading of what happened in the other place was that the Labour Party accepted that longevity changes had occurred and that changes had to be made to the current legislation. Therefore, the opposition amendment is fundamentally about affordability. What we are faced with is an unfunded promise of £11 billion of expenditure, as if it were small change. I do not regard the Government’s proposed £1.1 billion as small change; it is a very significant expenditure difference. I read the reports of the other place and was at first confused about what was being said—that it was a modest change representing only a thousandth of the national debt. I carried out two bits of investigation—the first was to find out what amount the national debt was, and we know that it is between £1.3 trillion and £1.4 trillion; and the second was to consult the Oxford University Press because I needed to know how many noughts there were in a trillion and in a billion, and I divided one by the other. I have that figure in front of me, because I worked it out. In fact, the proposal before us would add 1 per cent—I repeat, 1 per cent—to the national debt. That is a huge amount of money with which to expect to burden our children and our children’s children.
The group of women about whom we are most concerned will be precisely those who will benefit most from the state pension reform that the Government recently outlined. It will particularly benefit women who have taken career breaks to bring up children, and who did not have the protection of state second pension credits or any home responsibility protection. I hope that the Minister in his reply will say a little more on this, particularly on the Government’s timetable for implementation.
Already we have seen the value of existing pensions maintained in a way that the previous Government were unable to achieve. The triple-locked state pension will rise in line with earnings, by 2.5 per cent, or by inflation. Over time, this move should guarantee a more generous annual increase for the 12.4 million people who are paid a basic state pension.
I urge your Lordships to resist the amendment because of its unaffordability and to recognise that we are making a very expensive change. We have taken forward the view of this House, and I urge noble Lords to resist the amendment from the Opposition and to support the Government’s amendment.
My Lords, I, too, express my appreciation to the Minister for the work that he has done in regard to this very complex matter. At the same time, I belong to the generation that has benefited extraordinarily from the provisions that have been made by the state and I have no worries about my pension. I am very conscious that this is an issue if not of gender justice then certainly of fairness. I recognise how difficult it is when that has to be balanced against finance, but many decisions that we make in government often demonstrate that money is spent on things that do not have quite the same moral imperative as this issue.
Noble Lords will be aware of the public pressure in respect of this matter—some will have seen the advertisements in Westminster Tube station. Perhaps we should remember that the Prime Minister himself has said that he is uncomfortable with these proposals. I recognise that there can be no universal panacea but I genuinely believe that, this being an issue of fairness, we must consider whether the amendment in the name of the noble Lord, Lord McKenzie of Luton, can be supported.
My Lords, I, too, thank the Minister for the efforts that he has clearly been making and I am grateful for the changes that have been brought forward in the other place. As the right reverend Prelate said, the Prime Minister was made somewhat uncomfortable by all these protests and has perhaps looked rather deeper into the effects on the generation with which we are concerned.
I, too, am still very concerned about the age group which is most severely affected. The people in that group entered employment as far as they were able with their caring responsibilities. We should not forget the cost to the public purse of bringing up children—in an orphanage, say—if their parents do not look after them. We all know that it is mainly mothers who carry that responsibility, and that has definitely had an effect on the amount of time that they have been able to devote to whatever employment has been within their reach. Therefore, we still have a duty towards this group of women.
I accept that £11 billion is a lot of money, but there have been complications over equality and I would still like to see more done for this group. I would regard it as fair, just and proportionate if this group were given a full year. Although I should have liked to go along wholeheartedly with what the Government have achieved, I am sad to say that, with my background knowledge from many years of fighting for equality of opportunity and much greater equal treatment for women, I do not think that what the Government are proposing has gone far enough.
My Lords, I recognise that amendments have been made by the Government but I support the amendment tabled by my noble friend Lord McKenzie. This is not an argument against raising the state pension age. It is not even an argument against accelerating the increase in the state pension age in the face of rising life expectancy to achieve the long-term sustainability that was articulated by the noble Lord, Lord Boswell. I frequently heard the quote from the noble Lord, Lord Turner, but if one gives it in its totality, he went on to say that he would also have been more radical on state pension.
As for my own situation, in 2004 I travelled the country attending public events and platforms telling people at a time when it was most unpopular to do so that the state pension age would have to rise not once but consistently. I have no difficulty in articulating the case for the need to respond to rising longevity. However, this is an argument about the manner and timing of this particular increase, which fails to take account of the need to give people sufficient time to adjust their lives and their planning for the increase. It means that a particular group of older women will disproportionately bear the burden of achieving these savings. That will happen for five simple reasons.
First, they will have lower state pensions for legacy reasons on the treatment of carers. Secondly, they will have lower private pension savings because of their economic and social position and the past incidence of gender discrimination. Thirdly, they are more likely to be undertaking caring responsibilities and less likely to be in the workforce. Fourthly, they will have lower incomes. Fifthly, they are less able to mitigate the loss of the income in the limited time available. The debate is about this particular increase, its manner and its disproportionate impact. It is not a challenge to the intellectual analysis of what you need to do to respond to rising longevity over the long term.
Those five reasons provide the essence of why the policy on this increase upsets people. It is seen as unfair. Consistently surveys show that women believe that coalition policies are seen as particularly harmful or harsh to women. We hear organisations such as the Women’s Institute articulating these concerns. At the weekend the Daily Mail highlighted the results of a Harris Poll survey showing that government support among women is slipping away. These proposals are an example of why that is so. They are very real in their impact on ordinary women. There are others, such as the change to the tax credit system, child benefit and childcare to name but a few. Yes, tough decisions have to be made. I do not disagree with that at all. But that mantra cannot be used to justify policies that consistently and disproportionately impact on women, particularly those who are carers and on low or moderate incomes. Until that is recognised there will be many more surveys revealing views of women similar to those reported by the Daily Mail at the weekend.
To get back to the point that I made in opening, the amendment of my noble friend Lord McKenzie—I know him well and we discuss these things frequently—is not a challenge to the need to respond to increasing longevity or the fact that accelerating the increase in the state pension age is part of that. In fact, the amendment does accelerate the increase in the state pension age compared with the existing proposals, and no doubt we will come on to look at ages 67 and 68. The amendment concerns the unfairness of the manner of this increase on a particular group of women for the reasons that I have laid out.
Like the noble Lord, Lord Freud, and my noble friend Lord McKenzie, I, too, pay a very warm and genuine tribute to Evelyn Arnold. When, back in 1997, I was trying to put women’s pensions on the political agenda, I remember being told by one Minister in the then Government—we were preparing a Green Paper on pensions and I wanted a chapter on women’s pensions—that they did not think there was anything to write about, so they did not want the chapter, but Evelyn was always a wise, staunch and fair support in ensuring that whenever we considered pensions, we ensured that the gender filter was put up in ways that were appropriate to the pension issues we faced. All of us who have been at the receiving end of her guidance are warmly appreciative of it.
We all appreciate the moves the Government have made so far. We all absolutely understand the dilemma that the Minister believes he faces: that he cannot go any further because in his view the equality directive, requiring equal treatment between men and women, takes precedence over the need to be fair to this group of women in particular. He is seeing the one against the other and believes that protecting women, as my noble friend Lord McKenzie argued in his eloquent opening speech, would mean that the rise in men’s pension age would be delayed and therefore that the cost is unaffordable. Also, goes his legal advice, we should treat men and women equally on pension age, even though through most of their working lives they have had very unequal treatment and experiences.
One of the things that struck me going into government after being in local government was that whereas local government lawyers sought to enable you to deliver your policy objectives, central government lawyers were charming, but conservative and often unhelpful, and the more unhelpful they were, the more charming they were. Discussing the equal treatment directive over the weekend with a solicitor friend who specialises in the equality directive, his immediate response was that this is “gold-plated conservativism”. The Minister said that if we tried to follow the principle in the original amendment tabled by my noble friend Lady Greengross—to separate the timetable for women from that for men, which would deliver an objective we could all share and produce most of the savings that the Government want—it would risk breaching the European directive. He did not say that it would do so, but that there would be a risk. My solicitor friend told me that, on the contrary, it is for member states, not the EU or any other body, to determine the timetable for equalisation. The advice I was given was that there is no good reason why we should not pursue this detachment of women’s equalisation from men’s in the way that my noble friend’s amendment would allow as a fallback if we cannot defer men’s pension age along with that of women.
I think the Minister still has time to be brave. I think he has gone some way, and we understand the pressures he is under and appreciate what he has done so far, but what is the risk? If the advice I have received does not hold up, then women will be no worse off than they are now, but the Government, this House and women out there will know that the Government have made their best endeavours to deliver a fairer deal for women. If it does hold up, and I think there is a reasonable case that it could, some of the poorest women will have been treated fairly and decently. We know that at the moment women are carrying the burden, as my noble friend so rightly said, of benefit cuts, job cuts and public service cuts and many will now face extra conditionality—which appals me, actually—under universal credit. We have to come back to that because too many women will not have the resilience or the capacity to cope with the new burdens that the Government are putting on them at the time that they face the cuts agenda that the Government are also introducing. That is unfair. It is about political choices. I need only remind the House of the up to £8 billion that goes on the additional cost of higher rate tax relief for pensions to realise that there are still plenty of choices if the Government choose to make them or seek them.
I support my noble friend’s amendment warmly. I hope that, at the very least, the Government will consider the original purport of the compromise amendment of the noble Baroness, Lady Greengross. I understand where the Minister is coming from and am grateful for even that which he has done, but we should go further, and could go further, at reasonable cost, by deferring the equalisation issues until after we have protected women who are at the receiving end of most of this Government’s most savage cuts.
My Lords, I thank noble Lords for speaking with the expertise and knowledge that we have grown accustomed to in this Chamber. I am particularly grateful for the mathematical expertise of my noble friend Lord German.
As I have already mentioned, the Government have acknowledged that the original timetable was too harsh on some women and have amended this. We have listened. We have amended. This is the very point of the legislative process. The elected Chamber brought forward and agreed Amendments 1 and 2 after significant and lengthy debate. Due consideration has been paid to the issue and I believe that we have reached an agreeable and responsible conclusion.
Indeed, I confess that I am slightly perplexed. We find ourselves considering a timetable that has already been proposed and defeated in a vote by both Houses. We appear to be back at square one. This should not be the case. The Government have reconsidered their original proposal and brought forward a reasonable amendment. Yet, the noble Lord opposite has still reinserted his familiar friend. I feel that we have offered a hand here and the noble Lord, like Beowulf, treats me like Grendel and tries to rip my arm off.
We have heard many of the issues today, but we have been here before and the facts have not changed. We are still talking about an £11 billion reduction in savings that the Opposition are proposing. In terms of fiscal sustainability, I hope that noble Lords can agree that this is simply not feasible.
Several issues have been raised and I want to touch on some of them. One that is of great concern was raised by the noble Lord, Lord McKenzie, and by the noble Baronesses, Lady Howe and Lady Drake, in respect of the burden on women who are carers. Only around 3 per cent of women in the 55 to 59 age group are currently entitled to carers’ allowance.
There are 6 million carers and only about 500,000 of those qualify for carers’ allowance because of the very high hurdles: you have to care for at least 30 hours per week for one person in order to receive the carers’ allowance for somebody who is on middle or higher rate DLA. Those are very tough hurdles. Very many other women—hundreds of thousands—are, I know, actively caring in ways that do not permit them to be full time in the labour market or build a pension, but they do not meet those very high hurdles.
My Lords, we do not have the figures on more informal care; we do not know how many are in this age group. That is not broken down—I certainly do not have the figures to hand. I am providing the figures for the women most affected with full-time caring responsibilities.
Could the Minister answer the point that I was trying to make concerning the earlier period in women’s lives, when they were caring? That also will have had a huge effect on their capacity to find employment; certainly these days it is not an easy task.
My Lords, I am plucking the figures slightly from my memory, but I am fairly confident that the number of women in this cohort who have already retired is 4 per cent. I know that there are arguments about how many are part time or full time and adjusting their lives, but that gives you a context for that particular issue. Of course, our concerns for the women that the noble Baroness has just described have driven us to make this amendment. That is our concern as a Government, to take away what we regarded as too harsh a provision and to offer up this amendment.
I would like to spend a little time on the point raised by the noble Baroness, Lady Hollis, about the charm of our lawyers, which she has obviously experienced rather more than I have. We have spent a lot of time with the lawyers on this issue and we have not just accepted the first or even the second proposition from them. As noble Lords will acknowledge and realise, we have spent a lot of time—many months—on this particular amendment and we are confident that there are significant levels of risk in doing it the way proposed by the original amendment tabled by the noble Baroness, Lady Greengross, which was to try to concentrate on the group of women alone. Trying to tough it out would expose us to the risk of the European Commission bringing infraction proceedings, which clearly would be unwise. If we were found in breach, we would at a minimum have to rectify the pension position for those already affected and leave the pension position for many people in limbo for several years as proceedings made their way through court. Clearly we could also be fined; the fine could be substantial and it is very difficult to put any kind of estimate on it.
My noble friend Lord German asked about future changes to the pension system. We are still considering responses to our consultation paper, which were in general very favourable to making a major reform along the lines of the single tier. We are aiming to bring forward our proposals in due course. A number of noble Lords raised the issue of the future. I am grateful for the questions asked by my noble friend Lord Boswell and the noble Baronesses, Lady Greengross and Lady Drake, about what is to happen in future. There was broad agreement in this House that increasing life expectancy needs to be reflected in the state pension age. I think this House acknowledges that the state pension age needs to rise so that we have a sustainable state pension system which fulfils its primary purpose—to provide a decent threshold income in retirement. Following our recent consultation, A State Pension for the 21st Century, we are currently considering how best to achieve this. Therefore, I urge noble Lords to agree with the Commons in their Amendments 1 and 2.
My Lords, I thank noble Lords who have contributed to the debate on my amendment. I will comment first on the Minister’s response.
I agree that there is broad agreement on the need to have changes to the state pension age that reflect changes to longevity, and that they must be sustainable. However, part of that judgment surely has to be the notice periods that people are given—that must be part of the equation. But otherwise, even taking account of that, we have a consensus on that issue.
The noble Lord responded to the noble Lord, Lord German, in respect of future changes to the pension system, and we still await that. The noble Lord, Lord German, tends to hide behind the prospects that come from that in defence of everything that the Government do. The noble Lord said that he was perplexed because this proposition has been defeated twice; he is absolutely right, it was defeated, and quite narrowly last time, but there is more joy in heaven and earth over a sinner who repents. Here is the Minister’s opportunity to do that.
My noble friend Lady Hollis made a telling point about the equality directive, if one listens to what the Minister said. She also made a point, for example, about higher rate tax relief. The noble Lord, Lord Boswell, I think, said that we wanted a medium-term strategy as well as a short-term deficit reduction strategy. I absolutely agree with that. Our proposition is that these issues of whether it is £30 billion or £20 billion should be very much part of that consideration of the medium-term strategy, together with issues such as the costs of tax relief, rather than to isolate and look at a juxtaposition of two propositions, to see if one has greater savings than the other, and therefore to condemn the one with the lesser savings.
I very much agree with my noble friend Lady Drake; we are not against raising the state pension age, nor against accelerating the time when that happens, but there are issues around the manner and timing of any change. The noble Baroness, Lady Howe, said that there was more to be done for the group of women we are considering here, particularly in view of their caring responsibilities, and I very much agree with that. The right reverend Prelate the Bishop of Bath and Wells said that this was an issue of fairness and a moral imperative, and that is absolutely the issue here. The noble Lord, Lord German, has argued that this is an issue of affordability—and of course, affordability is part of it—but does affordability always have to trump fairness? I would contend not, by this amendment.
The noble Lord, Lord German, referred to intergenerational issues. If we look at the impact assessment and the difference of the intergenerational factors between our proposition and the Government’s, there is very little difference between the two. The noble Lord referred to the noble Lord, Lord Turner, going “further and faster”; yes, but one of the propositions of the noble Lord, Lord Turner, was that proper notice should be given to people.
The noble Lord, Lord German, and the noble Baroness, Lady Greengross, acknowledged that the Government had moved—the term “compromise” was sprinkled around the debate. It does not seem an incredibly big compromise to remove just the period between 18 months and two years for those affected, and shift those people into the “up to 18 months” category. It is some movement, and I am sure that it will be welcomed by the beneficiaries, but it does not address the fundamental problem.
I do not think that we will not have a meeting of minds on this issue—the Minister has made his position clear—and I would like to test the opinion of the House on this matter.
Motion on Amendment 2
Motion on Amendments 3 to 17
That the House do agree with the Commons in their Amendments 3 to 17.
Lord Freud: My Lords, with Amendment 3 it will be convenient to consider Amendments 4 to 17.
Today we enter the final stages of an ambitious programme of legislation to transform the saving habits of working people in this country. Before we begin the debate, I pay tribute to the noble Lord, Lord McKenzie, and the noble Baronesses, Lady Drake and Lady Hollis, who throughout this detailed process have brought such value, wisdom and breadth of experience of proceedings to get us this far. Governments have benefited from a significant degree of consensus during the passage of this legislation. Our consensus has sometimes been stretched, but I hope that during this debate we will retain that consensual approach and a common goal to reshape retirement provisions fit for the next decades.
Many of my contributions to our pension debates have started with the words “Automatic enrolment”, and today is no exception. However, I stress one core feature. Automatic enrolment into a workplace pension scheme is an enduring duty: employers must put workers who satisfy age and earnings tests into a pension savings scheme and keep them in a scheme unless the individual chooses to leave. Employers may, of course, choose to close or change a scheme but, if they do, or the scheme ceases to qualify, there is a clear duty in the Bill to maintain scheme membership for all the jobholders affected by providing a replacement qualifying scheme if necessary. Employers may not induce someone to leave a scheme so that it can be closed unless they put them into another one. This is the core enduring duty.
Amendments 3 to 8 and Amendment 10 are technical amendments to make those continuity of membership provisions work as intended and make some minor technical corrections. They ensure that the automatic re-enrolment duty applies straightaway in situations where an employer, or any other third party, causes an individual to lose their membership. It also aligns this obligation to all active members irrespective of age. As a consequence we need to realign the key compliance provision in the Act that prescribes inducement with the automatic re-enrolment duty.
We also take the opportunity, with Amendments 5 and 6, to remove a redundant reference to the old style postponement provisions in the Pensions Act 2008 and amend a cross-reference in the uprating clauses which had inadvertently linked uprating to the jobholder age test rather than the automatic re-enrolment trigger. I remain grateful to the noble Baroness, Lady Drake, ably assisted by the noble Lord, Lord McKenzie, whose eagle eyes identified this mistake in Committee.
Noble Lords will recall that self-certification for defined contribution schemes was subjected to detailed consideration in this House. I am pleased that we were eventually able to reach agreement. Amendment 14 extends self-certification to employers using defined contribution schemes that have their main administration in another European Economic Area member state. EEA schemes are subject to the same European directives as UK schemes so members’ benefits should be similarly protected. We believe that putting EEA schemes on a comparable footing with UK schemes complies with our European Union treaty obligations.
Amendment 13 is minor, purely technical and consequential. It amends the title of Section 28 of the Pensions Act 2008 to reflect changes to the certification requirements introduced by Amendment 14, which extends the facility to EEA schemes.
Amendment 12 is a technical amendment which provides for a new test scheme standard for defined benefit schemes. This has been wrongly categorised as hybrid in the original clause. The new test standard does not alter the quality requirements for schemes but provides for them through the legislation relating to defined benefit schemes.
Amendments 15 and 16 are technical amendments to clarify the duty for employers with an existing defined benefit scheme to protect individuals. They align the rules on back payment of contributions when an employer moves a jobholder from a defined benefit scheme to a money purchase or personal pension scheme. Employers who have an open defined benefit or hybrid scheme may defer the automatic enrolment date for up to four years provided that the scheme remains open and the jobholder is still entitled to join it. Where this changes, the employer must enrol the jobholder into an alternative scheme and pay up to four years of back contributions. As drafted, the Act does not allow the employer to use a workplace personal pension as an alternative. These amendments fix that omission and ensure that the jobholder is not charged for the back payments.
Amendment 11 extends the reserve power in the Pensions Act 2008 to regulate to cap charges for deferred members in qualifying schemes. The current power to cap charges, should the need arise, applies only to active members who are paying contributions into the scheme; it does not apply to deferred members who have a dormant pension pot administered by the pension provider. It would not be fair to deferred members to be charged inappropriately high charges simply because they have moved jobs. Evidence suggests that the vast majority of schemes currently have low fund charges. However, savers may not understand the full impact that charges can have on their retirement pot. The risk that high charges could erode pension savings and bring pension saving itself into disrepute could increase as we make saving the default decision. The amendment provides a safety net for both active and deferred members in qualifying pension schemes. If we see charges creeping up after automatic enrolment, we will be able to intervene to set a cap to ensure that people’s savings are not eaten up by unreasonable charges. If such an intervention becomes necessary we will of course look at the impact across the pensions industry.
It is critical to the success of the workplace pension reforms that possible barriers to employer compliance are addressed before automatic enrolment starts. There is a potential overlap between the cross-border regulations, which deal with the provision of services by a pension scheme based in the UK with respect to an employee who is subject to the social and labour laws of another EEA state, and the automatic enrolment duty. This overlap could compromise the employer’s ability to comply with the duty. It can be complex and costly for schemes to accommodate pension rights acquired by individuals working in another EEA state and there is no obligation for schemes to do so. Amendment 17 provides for regulations that would exclude individuals who fall under the cross-border regulations from automatic enrolment. Without such a power we may find, when it is too late to address, that some employers will be unable to comply with the employer duties. Draft regulations would of course be subject to formal consultation and we would provide detail on the application of the exemption.
Additionally, the Pensions Regulator already provides guidance for employers and schemes covering the circumstances in which employees may be subject to the social and labour laws of other EEA member states and how this may make the employer a “European employer”. Should the Government make regulations, in practice the employer would need to take a view as to whether or not he is a “European employer” in relation to the employment of an individual and accordingly as to whether he should enrol that individual. I beg to move.
My Lords, in the consensual approach that we are invited to take by the Minister, I rise to support government Amendment 11. I am absolutely delighted and welcome the opportunity to return the compliment to the Minister in acknowledging that the Government are extending the powers in Section 16 of the Pensions Act 2008 to allow the Secretary of State to set a cap on charges to deferred members. That is significant progress, to my mind. I see that the Minister, Steve Webb, is here today, and I take the opportunity to say, “Well done”. I am taking this opportunity, too, to press him further.
As we know, with the advent of the new employer duty in October 2012, we will see millions of new savers being auto-enrolled into pension schemes. These workers will change their jobs on average 11 times over their lifetime and, in some occupations, that will be even higher. This means that, when workers leaves their job and their employer’s pension scheme, they are likely to leave a pot of pension saving that is still being administered by the pension provider but is not under the employer’s scheme. The pension pots of these deferred members, which are often modest in size, can be complex, costly and difficult to transfer and will be vulnerable to higher charges and poor governance over investment decisions.
I urge the Government, when they take the power to cap charges to deferred members, which Amendment 11 will allow them to do, not to wait to see what happens, because this is already an area that needs to be addressed. The capping or controlling of charges on deferred members by the Secretary of State should be undertaken through the microscope of the saver. If a provider cannot look after a deferred member’s pot of savings at low charges, it is for the Government to impose protection and, ideally, to facilitate the transfer of modest pension pots to NEST, where they will be looked after at a 0.3 per cent annual management charge, with very high standards of governance. Using the stakeholder cap on charges—the 1.5 to 1 per cent formula—is far too high a charge level for moderate to low income earners and should not be seen as an acceptable level for deferred members. That level of charges eats up far too much of the pension savings of low to moderate income earners. When millions of workers are automatically enrolled, the majority are unlikely actively to engage with their pension arrangements. Therefore, it is important that the Government have a very clear view of what a good pension scheme should look like and important that the Secretary of State uses the powers given under the Pensions Act 2008 to ensure that quality standards are set and met.
As to charges on pension savings, there are few barriers to entry to the market of private pension provision, and the Government need to make clear their expectations to monitor the situation to see whether those expectations are met and be prepared to respond quickly to address adverse developments. When a worker leaving a job leaves a pot of pension saving to be administered by the contract provider and is no longer in that employer’s scheme, who will exercise a duty of care in managing the worker’s investment? Who has the duty of care to ensure that the worker is not subject to high or excessive charges? This is territory within the framework of pensions reform that is much in need of further attention.
Another important area is the ability of workers who are deferred members to aggregate their different pension pots through a simple transfer process and that any charges for doing so are low or negligible. The administrative process of transfer must be made as simple as possible without significant charges being levied, and the ban on transfers to the National Employment Savings Trust should be lifted. I cannot see any gain for workers with moderate pots from that ban on transfers; I struggle to find any suggestion that it does—it can support only the industry, not the employee. I am not contradicted in that view by Paul Johnson, who was appointed by the Government to undertake the review of auto-enrolment policy. As for employers dealing with the issue of charges, transfers and the restrictions on NEST, it is not putting a burden on them. On the contrary, it will reduce the complexity they face when they are trying to do the best by their workers.
I would also encourage the Government to act to remove short-service refunds, which are designed for a defined benefit world but are now being used in a manner that undermines public policy outcomes. The rules on short-service refunds can result in up to two years of contributions being lost to long-term pension savings when employees leave their job or the employer’s scheme. If that is repeated over several jobs, the impact can be exponential.
In setting quality standards, the Secretary of State should also indentify what considerations should influence the design of the default investment fund—a matter of importance to deferred members as well as active members. The Pensions Regulator has limited influence over contract provision. These are matters of some significance under the influence of the Secretary of State.
On the issues of charges, aggregation and transfer of small pots, and governance in the management of investment funds, the Secretary of State should utilise the powers under Section 16 of the 2008 Act to protect the interests of workers as pension savers. If unaddressed, these issues will detract from the whole of the reformed pensions system.
In conclusion, I repeat—in case it was lost first time around—that I am absolutely delighted that the Government are taking powers to cut charges to deferred members. I am equally delighted that the Bill means the Government are pressing ahead with auto-enrolment for millions of workers. As the Bill has returned to this House, would the Minister repeat the assurance that the new employer duty for all employers will start to be phased in from October 2012, according to the published timetable?
My Lords, I support my noble friend, particularly on the issue of orphan assets and the situation of deferred pensioners. As the noble Baroness explained, most men will have up to eight job changes and women will have something like 11 job changes in their lifetime, particularly when they are younger. For example, women in modest jobs, such as hairdressing or in the service industry, may at some points be self-employed and at other times be employed by different employers. They could very well end up with a pot in NEST, or its equivalent, of some £20,000 to £25,000, and several small pots of £2,000 or £2,500 from previous employments. Those little pots are too small to be annuitised, but there is no way to transfer them into the larger pot of NEST, and they cannot be trivially commuted because the NEST pot is over the £18,000 ceiling. Could the noble Lord share with the House his thinking about what women, particularly, on very modest earnings with very modest savings but with a possible multiplicity of small pots so that they can neither annuitise nor aggregate not trivially commute, are expected to do? Can the Minister assure us that he is making arrangements so that, at least at the point of retirement, they will be able to bring those miscellaneous small pots with orphan assets into the NEST pot to ensure that they get the best possible outcome in retirement?
My Lords, I thank the Minister for his explanation of this group of amendments, the helpful background he has given us and his kind words. As the Minister said, the amendments focus on the auto-enrolment provisions, and we put on record our support for the Government’s commitment to take these forward. My noble friend Lady Drake asked the question that I was going to ask, about timing. Could the Minister confirm that it is on track? I do not know whether the Minister can update us on issues around self-certification arrangements, and whether any progress has been made, but maybe that is a matter for correspondence outside the debate.
We remain unhappy with some of the changes to the scheme introduced by the Bill, particularly the hike in the earnings threshold, but now, frankly, is the time to make progress. Turning to the specific amendments, there are just a few points. Amendment 3 deals with continuity of scheme membership and achieves this by requiring automatic re-enrolment to take effect from the day after the day on which the jobholder ceases to be an active member of a qualifying scheme. However, the alternative of allowing a period of time for re-enrolment is preserved whereby the Secretary of State can allow for that period. Given the “day after” requirement, when is the alternative approach likely to be invoked? A similar point arises in connection with Amendment 7.
We support the extended protections dealt with by Amendments 4 and 8. My noble friend Lady Drake has given her welcome to Amendment 11, which has my welcome as well. She talked authoritatively about how important this issue is and about the changes happening in the marketplace. That is therefore a particularly important amendment.
We have no problems with Amendment 12, which deals with a test scheme for certain types of defined benefit schemes, or with Amendments 13 and 14, which deal with certification of schemes where the main administration is within the EEA.
A clarification on protections of back payments for jobholders enrolled into workplace personal pension schemes obviously has our support, but perhaps the Minister could provide us with a little more detail about the scope of Amendment 17, which provides a regulation-making power to exempt employers from auto-enrolment duties where a person is a European employer. What assurances do we have that employers would not be able to organise in such a way as to bring themselves within those “European employer” provisions and therefore be outwith auto-enrolment? An assurance on that point would be helpful but, subject to anything arising from these points, we are content and will support these amendments.
First, I thank noble Lords for their stamina in listening to this debate on a very technical set of amendments indeed. They are about making sure that the legislation works, as the devil is in the detail. I repeat my thanks for all the help and support that I have had across the House on some of that detail. The important principle underpinning these refinements to automatic enrolment is that we ensure that individuals are preparing and saving for their retirement. Automatic enrolment will mean that 5 million to 8 million people will start newly saving, or saving more. This is a positive move, on which I know there is consensus across the House.
Turning to the specific questions, I will start with timing, which was raised by the noble Baroness, Lady Drake. She asked when the new duty for employers will come in. I am happy to confirm that automatic enrolment will begin, as planned, next year. On self-certification, which was raised by the noble Lord, Lord McKenzie, we recently finished a formal consultation on draft regulations, which are on track to be in place for next year.
On the issue raised by the noble Baroness, Lady Drake, of the deferred member charge cap, we are extending a reserve power which we have to set a charge cap for pension schemes used for automatic enrolment. This reserve power is intended to be a safety net and to allow the Government to step in and protect all members of automatic enrolment schemes from inappropriate high charges. I am sure noble Lords will agree that it is not right that members are charged higher fees just because they move jobs. We remain vigilant about charges in the pensions industry. We see the market as broadly competitive at the moment, with the majority of workplace pension schemes having annual management charges of less than 1 per cent. We expect NEST and competitive forces to keep the downward pressure on charges but this power will enable us to intervene if necessary and make sure that members are not charged excessive fees. The stakeholder group Which? has strongly supported this amendment. I thank the noble Baroness for her support on this important issue and am confident that it will gain support across the House.
The noble Baronesses, Lady Drake and Lady Hollis, raised the issue of small pension pots, which perhaps goes slightly wider than this set of amendments and on which we spent a lot of time in Committee. On average, individuals will change employers 11 times during their working lives. DWP modelling suggests that after 2017 this will lead to in excess of 200,000 small pension pots of less than £2,000 being created each year. We want to ensure that people can get control of their pensions, build up a single substantive pot and be able to purchase a good annuity. In the interim government response to the call for evidence on regulatory differences that we have published, we have committed to setting out a decision on short-service refunds and addressing small pension pots. We know that this will be difficult, which is why need to work with employers, the pensions industry and consumer organisations on tackling this. For this reason, we intend to publish the full set of proposals in the autumn and to consult widely on possible options. These will include considering whether an individual’s pension pot could follow them from job to job as they move employers. The action for this would be behind the scenes and would require little action from the individual. Perhaps it is too early to say whether this will be possible, but this is an important issue, as the noble Baronesses pointed out, and one that we need to get right.
I turn to some of the more technical issues on which the noble Lord, Lord McKenzie, sought assurances. Continuity in automatic enrolment is covered by Amendments 3 and 7 to Clause 4. They create the default position that, in continuity of scheme membership cases—where an individual ceases to be a member of a qualifying scheme through no fault of their own—an employer must automatically re-enrol the jobholder from the day after the day on which they ceased to be a member of a qualifying scheme. The clause, as amended, still allows for a period to be prescribed during which the enrolment must occur. We do not intend to prescribe a period. This is purely a precaution in case it becomes clear that circumstances exist in which it is not possible for an employer to comply within the one-day timescale.
The noble Lord, Lord McKenzie, was also looking for an assurance on cross-border provision around Amendment 17. The amendment provides for a power to make regulations. It does not change our policy on automatic enrolment. If the power is exercised, the regulations will exclude a jobholder from automatic enrolment only if they are an individual in relation to whom their employer is a European employer, as set out in regulations under the 2004 Act. An employer is a European employer only if he has worker who, by virtue of his contract of employment, is sufficiently located in another EEA state for the social and labour laws relevant to the occupational pensions of that state to apply. The risk of a jobholder being in this position is relatively small. The definition does not cover workers who are posted to another EEA state for a limited period to work in that state for their UK-based employer.
Motion on Amendments 18 to 28
My Lords, in discussing Amendment 18, it is convenient also to discuss Amendments 19 to 28. These amendments are about the revaluation and indexation of pensions—that is, revaluing deferred pensions at the point at which they are put into payment and indexing pensions once they are in payment. The first five amendments relate to the change to using the consumer prices index as a measure of inflation and the others are about the indexation of cash balance schemes. The changes to Clause 15 are a positive response to the consultation on the change to using the CPI as the measure of inflation. The consultation ended in March and we published the Government’s response on 16 June. There were more than 150 responses, many of which were technical and detailed.
The areas that attracted the most comments were the CPI underpin and revaluation. There were also concerns about the CPI underpin provision already there for indexation. Respondents suggested that this was too restrictive and unhelpful for corporate restructuring. Removing the CPI underpin for the revaluation of deferred pensions was not originally covered because the different ways indexation and revaluation work means that the likelihood of the CPI acting as underpin for revaluation is small. However, we have listened to the consultation responses, which indicated that even a small risk has consequences for administration and investment costs. The amendment adds a new method of calculating a revaluating addition to Schedule 3 to the Pension Schemes Act 1993. Some schemes will be able to continue calculating revaluation additions using the retail prices index. They will not be obliged to undertake additional calculations using the CPI as well.
We also made easier the application of the CPI underpin exception for pensions in payment. The test now targets whether RPI-based increases have actually been paid rather than whether the rules require RPI-based increases. The amendments also make sure that the application of the CPI underpin exception survives transfers. We do not want the possibility of a CPI underpin to become a barrier to scheme restructuring. The amendment ensures that the provision to address the underpin problem survives a transfer if the result is that the member has received RPI-based increases since the start of 2011 and will continue to do so.
I turn to Amendments 24 to 28 to Clause 17, which removes the requirements for cash balance scheme annuities to have a limited price index. Amendment 24 does not represent any change in policy; it simply makes a technical change to clarify that schemes that are or were contracted out on a defined benefit basis are still subject to indexation requirements. Amendments 25 to 28 remove the potential for confusion. They ensure that schemes that pay a pension commencement lump sum, or allow a survivor’s benefit of a set percentage of the member’s benefit, can be included in the definition of cash balance schemes and can benefit from this easement. They also ensure that the existing indexation requirements continue to apply to career average schemes or schemes that guarantee a member a pension calculated as a percentage of the lump sum. It was never the intention to exclude these types of scheme from the indexation requirement. I beg to move.
My Lords, I can see the purpose of Amendments 18 to 23, particularly the need to address the consequences of the Government’s decision to use the CPI for the statutory revaluation of pension benefits, yet not proceeding to introduce a statutory override to pension schemes whose rules explicitly provide for the revaluation additions to be calculated by reference to the RPI. I recognise that where the statutory method uses the CPI, there is an inconsistency for schemes that apply the RPI in the very infrequent event that the CPI exceeds the RPI in a particular year. In such a situation, schemes paying the RPI would, without these amendments, be faced with a statutory underpin of CPI. In effect, the rules of schemes that apply RPI would be interpreted to mean that revaluation is calculated by reference to the CPI or the RPI, whichever is the greater.
This amendment would remove that underpin requirement and allow schemes to continue to revalue by reference to the RPI, which would seem sensible and reasonable. While the Government are to be congratulated on not imposing a statutory override on pension scheme rules to apply the CPI rather than the RPI, where the rules so explicitly provide, the need for these amendments occur in part because of the open-ended decision by the Government to substitute the CPI for the RPI in the uprating of most benefits. It is with some regret that the Government did not put a time limit on that switch from RPI to CPI. There is scope for a review because I am sure that over the long term, when the economy returns to strong growth and earnings outstrip prices, and the price of key items is excluded from the indexation, the Government will need to revisit this matter.
That is particularly so for pensions, although I doubt that the Government will revisit this now. The change to the CPI from the RPI for evaluation effects a switch of assets and benefits from scheme members to scheme sponsors and does not directly impact the public deficit. None the less, it is clear that these amendments are a necessary flow-through from the Government’s decision, and I can see no reason to oppose them.
Amendments 24 to 28 are technical in nature and address matters relating to the indexing of the guaranteed minimum pension. Again, I see no reason to disagree with them.
My Lords, during our discussions on the Bill, one of the issues that raised a lot of controversy was the report that the Government intended to tell occupational pension schemes that in future they must apply the CPI rather than the retail prices index. That certainly led to a lot of opposition from people in occupational schemes. It also led to a lot of opposition from people in public sector schemes, because I gather that the Government are applying the CPI to public sector schemes instead of the retail prices index, which of course produces—currently, anyway—much larger increases than the CPI. I should therefore be grateful for confirmation from the Government that if an occupational scheme desires to continue with the RPI it will not be forced to apply the CPI, and that if it wishes to apply the retail prices index it will be able to do so, even though that is likely to produce—and will continue to be likely to produce—larger increases than the CPI.
My Lords, this group of amendments cover Part 3 of the Bill. I am most grateful to the noble Baroness, Lady Drake, for her remark that the amendments are technical in nature and that she has no problem with them.
Perhaps I may pick up the point made by the noble Baroness, Lady Turner, on private occupational pension schemes. I can confirm that these underpin arrangements are about the ability of such schemes to maintain their own arrangements. There is no legislative pressure on them in that way.
Motion on Amendment 29
29: After Clause 24, Insert the following new Clause—“Definition of money purchase benefits(1) In section 181 of the Pension Schemes Act 1993 (interpretation), in the definition of “money purchase benefits” in subsection (1), for “which are not average salary benefits” substitute “which fall within section 181B”.
(2) After section 181A of that Act insert—
Money purchase benefits: supplementary (1) This section applies for the purposes of the definition of “money purchase benefits” in section 181(1).(2) A benefit other than a pension in payment falls within this section if its rate or amount is calculated solely by reference to assets which (because of the nature of the calculation) must necessarily suffice for the purposes of its provision to or in respect of the member.(3) A benefit which is a pension in payment falls within this section if—(a) its provision to or in respect of the member is secured by an annuity contract or insurance policy made or taken out with an insurer, and (b) at all times before coming into payment the pension was a benefit falling within this section by virtue of subsection (2).(4) For the purposes of subsection (2) it is immaterial if the calculation of the rate or amount of the benefit includes deductions for administrative expenses or commission.(5) In this section references to a pension do not include income withdrawal or dependants’ income withdrawal (within the meaning of paragraphs 7 and 21 of Schedule 28 to the Finance Act 2004).”(3) In section 99 of the Pensions Act 2008 (interpretation) in the definition of “money purchase benefits” for “which are not average salary benefits” substitute “which fall within section 99A”.
(4) After that section insert—
Money purchase benefits: supplementary(1) This section applies for the purposes of the definition of “money purchase benefits” in section 99.(2) A benefit other than a pension in payment falls within this section if its rate or amount is calculated solely by reference to assets which (because of the nature of the calculation) must necessarily suffice for the purposes of its provision to or in respect of the member.(3) A benefit which is a pension in payment falls within this section if—(a) its provision to or in respect of the member is secured by an annuity contract or insurance policy made or taken out with an insurer, and (b) at all times before coming into payment the pension was a benefit falling within this section by virtue of subsection (2).(4) For the purposes of subsection (2) it is immaterial if the calculation of the rate or amount of the benefit includes deductions for administrative expenses or commission.(5) In this section references to a pension do not include income withdrawal or dependants’ income withdrawal (within the meaning of paragraphs 7 and 21 of Schedule 28 to the Finance Act 2004).”(5) In paragraph 1(2) of Schedule 10A to the Building Societies Act 1986 (disclosures about directors etc), in the definition of “money purchase benefits”, for “which are not average salary benefits” substitute “which fall within paragraph 1A”.
(6) In that Schedule, after paragraph 1 insert—
“1A (1) This paragraph applies for the purposes of the definition of “money purchase benefits” in paragraph 1(2).(2) A benefit other than a pension in payment falls within this paragraph if its rate or amount is calculated solely by reference to assets which (because of the nature of the calculation) must necessarily suffice for the purposes of its provision to or in respect of the director.(3) A benefit which is a pension in payment falls within this paragraph if—(a) its provision to or in respect of the director is secured by an annuity contract or insurance policy made or taken out with an insurer, and (b) at all times before coming into payment the pension was a benefit falling within this paragraph by virtue of sub-paragraph (2).(4) For the purposes of sub-paragraph (2) it is immaterial if the calculation of the rate or amount of the benefit includes deductions for administrative expenses or commission.(5) In this paragraph references to a pension do not include income withdrawal or dependants’ income withdrawal (within the meaning of paragraphs 7 and 21 of Schedule 28 to the Finance Act 2004).”(7) The amendments made by subsections (1) and (2) are to be regarded as having come into force on 1 January 1997.
(8) The amendments made by subsections (3) and (4) are to be regarded as having come into force at the same time as section 99 of the Pensions Act 2008.”
My Lords, on 27 July 2011, the Supreme Court handed down judgment in Bridge Trustees v Houldsworth and another. This was the first occupational pension scheme case considered at the Supreme Court and dealt with the meaning of “money purchase benefit” in pensions law. This definition is a fundamental concept underpinning the design of the regulatory framework for pensions, and it is vital that trustees, employers and members are all clear about the meaning of the term.
Despite accepting that Parliament and Ministers had legislated over a number of years on the assumption that a money purchase benefit could not develop a funding deficit or surplus, the Supreme Court decided that certain benefits that could develop funding deficits or surpluses could still fall within the definition of money purchase benefit. This means that the judgment will result in some schemes being regarded as money purchase benefits under the current legislation, even if it is possible for funding deficits to arise in respect of those benefits. For example, under the judgment, even when benefits are subject to a guarantee in the build-up phase, they should be considered to be money purchase benefits, or where schemes use money purchase rights to provide a pension from the scheme itself, rather than to purchase annuities from an insurer, the pensions should be considered to be money purchase.
The judgment will place some benefits outside the scope of a wide range of legislation that was put in place to safeguard members’ benefits. Money purchase benefits are not covered by scheme funding or employer debt requirements; nor do they have access to the Pension Protection Fund or the financial assistance scheme. If the judgment stands, the members will not be protected for certain sorts of benefits in the event of the scheme not being able to pay out; yet these workers thought that their rights were protected. For example, if you get a pension from the scheme rather than from an annuity provider, you expect to continue to get that pension, irrespective of what happens to your former employer. This position has been put in doubt by the judgment and it is important to act quickly to provide clarity and certainty for those workers.
Following the judgment, the Government announced the intention to legislate as soon as possible to provide clarity for trustees, employers and members. I appreciate that noble Lords may consider it unusual for the Government to bring forward such amendments at this stage in the Bill, but we consider it necessary that we legislate to protect members immediately. The pensions industry expected this amendment, and it wants certainty so as to be able to operate and advise schemes. Indeed, the Society of Pension Consultants urged us to make an amendment to this Bill. It said:
“We can understand the government's decision to legislate in the way it intends. However, we would ask that the government passes the necessary legislation as soon as practicable, perhaps as an addition to the Pensions Bill”.
These amendments clarify the definition of “money purchase benefit”. They also take associated regulation-making powers. I take this opportunity to assure noble Lords that these powers will be subject to public consultation and the affirmative procedure—both stakeholders and Parliament will have the opportunity to scrutinise the regulations.
Law is based on words, and having a common understanding of what the law means is essential not just for law-makers but for society as a whole. If trustees, employers and members are unclear about what sort of benefits their scheme is providing, that simply produces uncertainty and confusion.
Section 181 of the Pension Schemes Act 1993 defines money purchase for the purpose of that Act. This is the core definition of money purchase benefit on which subsequent law builds. Amendment 29 amends Section 181 to restore the definition of money purchase benefit to the meaning that it was widely believed to bear before the Bridge litigation. The revised definition makes it clear that only a benefit that is calculated solely by reference to the relevant assets—or, where the benefit is a pension in payment, that is backed by a matching annuity contract or insurance policy—is a money purchase benefit.
If there is any additional form of “promise” in relation to a benefit, it cannot be a money purchase benefit. For example, if there is a guaranteed investment return in the build-up phase, that is not a money purchase benefit; or if a scheme has promised to pay a set rate of annuity that is not backed by a matching asset such as an insurance policy, that is not a money purchase benefit. It is simple; if there is a promise, there needs to be something to back it up.
A money purchase benefit is one derived solely from the relevant assets. In other words, the member gets the value of the contributions, plus the real investment return, less any administrative expenses. The previous definition stated that average salary benefits were not a money purchase benefit. This reference has been removed because, following these amendments, it is not necessary explicitly to exclude one type of non-money purchase benefit from the definition.
The proposed new clause also amends similar definitions of money purchase benefit at Section 99 of the Pensions Act 2008 and in Schedule 10A to the Building Societies Act 1986. Amendment 30 enables the Secretary of State to make transitional arrangements for specified types of schemes.
It is an established principle that people who go to court and win should see the benefit of that judgment. Therefore, we need to consider how members of the pension scheme in the judgment see the benefit of that judgment. This is a complex exercise. We will need to work through the various classes of members of the pension scheme and consider whether and how to modify the definition of money purchase benefit in respect of each class. Transitional protection may also be needed where trustees have taken decisions in the past that are inconsistent with the clarified definition and those decisions cannot practically be reopened. Our starting point is that trustees should not have to unpick decisions that have already been made in good faith. It would not be practical for trustees to have to unpick decisions that could have been made up to 14 years ago and which could have involved purchasing annuity contracts.
Furthermore, some schemes might have been wound up on the understanding of the wider definition of money purchase. It would be impractical to unpick those decisions and we propose to take powers to make transitional provisions for that group. However, we do not want to leave an opportunity for an employer to wind up a scheme today that would fall within the wider definition of money purchase benefit reached by the Supreme Court and avoid paying an employer debt in respect of that scheme. That would mean that members of the scheme would lose out. So it is important that we carefully consider the need to have transitional protection and do not have a blanket approval. The Government will consult before exercising these powers, and any instrument made using the powers would be subject to affirmative resolution.
Amendment 31 allows consequential amendments to other legislation to be made by regulations. There are numerous references to money purchase benefit within existing pensions legislation and it is important that the new definition accurately flows through to all of them. We do not think that substantial changes will be needed to other legislation but want to ensure that there are not any unintended consequences as a result of the clarified definition of money purchase benefit. I can assure noble Lords that the Government will consult on any regulations under this power and that they will be subject to the affirmative procedure.
Amendment 32 allows the Secretary of State to exclude other benefits from the definition of money purchase benefits. This is an enabling power to ensure that if new benefit structures are designed that could result in there being a deficit they can be excluded from the definition of money purchase benefit. This provides future flexibility to respond to the ever-evolving pensions market. However, to be clear, the core principle remains. If a benefit can develop a deficit, it is not a money purchase benefit.
Amendment 33 is a procedural provision which sets out that regulations under Amendments 30, 31 and 32 will be subject to affirmative procedure. The regulations may apply to specific groups or may amend primary legislation. Therefore, it is appropriate that Parliament considers these regulations. Amendment 34 allows for Amendments 30 to 33—for the purpose of making regulations—to come into effect on Royal Assent of the Bill. Amendment 29 will be brought into force by order and we intend to bring regulations made under Amendments 30 to 33 into force at the same time.
These amendments are all retrospective to 1 January 1997. However, the amendment to the definition in Section 99 of the Pensions Act 2008 will come into force at the same time as that section. Otherwise, in this particular case the amendment would be in force before the original provision. The department announced the intention to legislate to correct the effects of the judgment with retrospective effect on the day of the Supreme Court’s judgment. This was done to prevent some trustees or employers triggering a winding-up of schemes in the window of opportunity between the date of the judgment and legislation being brought into force, thereby avoiding scheme funding and employer debt obligations at the expense of members and the PPF or the financial assistance scheme.
The clarified definition of money purchase benefit restores the law to the long-standing government understanding of the term. If the amendment were not retrospective, employers and trustees who had made sensible decisions based on an understanding that a money purchase scheme could not develop a deficit would potentially be in breach of the law as it stands now as a result of the judgment. The definition of money purchase benefit is a fundamental building block of pensions law. It is important that members, employers and trustees understand what the definitions mean and have clarity about how their schemes should operate. This clarified definition and the power to allow transitional protection aim to provide that clarity. I beg to move.
Amendment 29A, as an amendment to Commons Amendment 29
Moved by Baroness Drake
29A: Line 17, after “insurer” insert “in the name of the member”
My Lords, I shall speak also to Amendment 32. The purpose of Amendment 29A is to give absolute clarity to the legal meaning of a money purchase benefit in so far as it relates to pensions in payment. As the Minister said, the Government’s Amendment 29 is addressing the consequences of the Supreme Court’s decision in Bridge and restoring the legal meaning of money purchase benefits to that narrower meaning it was understood by most observers to have before the litigation. In doing this, it is restoring what was understood to be the extent of protection to scheme members and beneficiaries when their pension benefits could face funding deficits and preserving their potential access to the Pension Protection Fund. It is the Government’s intention that a pension in payment is a money purchase benefit if its provision is secured by an annuity contract or insurance policy. I do not disagree with that intention.
My concern is that the legislation should make it absolutely clear that any annuity purchase for a pension in payment must explicitly be in the name of that member and ring-fenced for them. I am not confident that the wording of subsection 3(a) of the new Section 181B inserted by the Government’s Amendment 29, which is before us, does that. My amendment simply adds the words,
“in the name of the member”,
to make crystal clear that the annuity must be ring-fenced for that member. The Government’s view, with which I have no disagreement, is that normally pensions in payment within a scheme are not money purchase benefits as the amount of the liability of that pension is unlikely to be matched exactly by assets held by the scheme. That being the case, there will always be scope for a deficit or a surplus in the funding of those pensions in payment. The exception, which the Government’s amendment allows for and which they propose to include within the definition of money purchase benefit is pensions in payment secured by annuity. Again, I have no disagreement with that proposal.
I repeat that my concern is that, in purchasing those annuities and insurance policies, schemes might not necessarily have ring-fenced such policies for the members concerned. They may have been secured as assets of the scheme as a whole and not for the named pensioner in receipt of a pension, which would not be unusual. Should that be the case, it would mean that those with a pension in payment would not have an automatic right to those assets in the event that there was an employer default on an underfunded scheme. Members could lose out if the scheme was wound up or underfunded.
I know that the Government’s intention is that the definition of money purchase is such that members should have the benefits of these annuities ring-fenced to them, but I am concerned that the Government’s amendment still leaves room for ambiguity because it does not, to use layman’s words, nail the point that the annuity must be held in the name of the member. My amendment simply seeks to provide that nail and so adds the phrase,
“in the name of the member”.
Current legislation has allowed the Supreme Court decision to arise notwithstanding the intention of policymakers, so if we are to avoid Lady Bracknell’s descriptive distinction between two comparable events, I believe it is appropriate to tighten the wording of the definition of money purchase benefits to reduce the likelihood of a similar problem in the future.
My amendment does not question the intention of the Government’s Amendment 29. I agree with them. All I am trying to do by the deployment of a few words is to make absolutely clear that a pension in payment is a money purchase benefit only if it is secured by an annuity or insurance policy in the name of that member.
Amendment 32 confers upon the Government the power to change the definition of money purchase benefit in the future, and one can see the common sense reason for this. Having been faced with a Supreme Court decision which ran contrary to what most observers thought was the definition, it is better to reserve powers to address a simple or comparable problem should it arise in the future—and other complexities may arise. The definition of a money purchase benefit is important because money purchase benefits are not subject to the regulation designed to mitigate deficits in a pension fund and to extend particular protections to pension scheme members.
What I am concerned about is the breadth of the power conferred on the Government or the Secretary of State by Amendment 32. I am particularly concerned that it could be used retrospectively to remove access to Pension Protection Fund protection from scheme members and beneficiaries by broadening the definition of money purchase benefit. I have similar concerns in respect of people having access to the financial assistance scheme.
The Pension Protection Fund exists to offer a level of protection to members of occupational pension schemes, unless they are excluded for certain reasons, the main ones being the existence of a crown guarantee; the trustees having compromised a fund debt; and that it is a money purchase scheme.
I am sure that the Government have no intention to use the power conferred by their Amendment 32 to remove Pension Protection Fund protection from schemes or members as currently defined. None the less, it would appear that the powers extended to the Government in Amendment 32 would allow such a possibility in the future. It is not clear to me what other existing statutory provisions, if any, would overlay the Government’s ability to use these powers. Put simply: what would limit a Government’s freedom to use the power conferred by Amendment 32 in a way that meant pension scheme members and beneficiaries would lose out?
I ask the Minister, if this amendment is made to the Bill, what, if any, limits would there be on the Government’s power retrospectively to remove protections from members and beneficiaries of funded pension schemes facing deficit and/or default. In respect of the other amendments in this group, they are largely technical in nature and I see no reason to disagree or query them. I beg to move.
My Lords, I pay tribute to the noble Baroness, Lady Drake, for her precision analysis in this area, which—I say this as a compliment—has had the team seriously thinking about the issues involved. I also pay tribute to the noble Baroness, Lady Thomas, and the Delegated Powers and Regulatory Reform Committee, for applying such scrutiny to the powers contained within the Bill. I trust that noble Lords are as content with the Government’s amendments, even though they have some broad powers within them, as the committee was after its consideration.
Let me turn now to Amendment 29A. The noble Baroness, Lady Drake, highlights a key question. How do we ensure that those people whose benefits are classified as money purchase benefits in payment, because their scheme has bought an annuity to match the liability, actually benefit from that annuity? The Government share the noble Baroness’s aim in laying this amendment, but the issue is how one ensures the right outcome. I have concerns that the way this amendment is designed could have desirable consequences and place an unnecessary regulatory burden on schemes.
Let me just home in on the issue. Trustees could buy a separate annuity for each member. However, in practice, trustees frequently buy one insurance policy or annuity covering the benefits for a number of members. Under this arrangement, there should be no risk to members provided that the policy covers all the benefits due under the scheme. If we were to make this proposed amendment, trustees of such schemes could find that they would have to comply with the scheme funding, employer debt and PPF legislation in respect of such benefits, which would impose additional costs without any benefit to members. Indeed, it would be diverting scheme assets from their primary purpose of providing pensions.
It is our view that where a member has accrued rights on a money purchase basis, and then the scheme has bought an annuity exactly matching its liability to the member, those benefits should remain money purchase in character. Importantly, the benefit of that annuity should be ring-fenced for that member. We will be considering whether schemes are, in practice, ring-fencing the benefit of such annuities appropriately. If not, it would be appropriate to legislate to clarify the position. I can reassure the noble Baroness that the powers that would be conferred by Amendment 31 would enable the Government to make regulations in this area as necessary. With that assurance, I hope the noble Baroness will feel able to withdraw her amendment.
The noble Baroness also asked about the breadth of the power conferred by Amendment 32 and was concerned that it could be used to remove PPF protection retrospectively by broadening the definition of “money purchase benefit”. It may be helpful if I set out the Government’s overall view of this issue. In general, the PPF offers protection to members of occupational pension schemes unless it is not needed, either because the scheme is a money purchase scheme and hence cannot be in deficit and needing the protection of the PPF, or because the benefits are secured in some other way; for example, if the scheme benefits from a Crown guarantee. If the Government do not intend to use the power conferred by Amendment 32 to remove PPF protection from schemes or members who may need it—sorry, the Government do not intend to use the power. Perhaps I need to read more carefully!
It is conceivable that pensions professionals could develop benefit structures that would be outside the definition of “money purchase benefit” as it would be after these amendments come into effect, but which do not need to be covered by the protections of the statutory scheme funding regime, employer debt legislation and the Pension Protection Fund. It might therefore be appropriate to amend the definition of “money purchase benefit” further in order to respond to these market developments while maintaining suitable protection for members. However, the Government have no current intention of using these powers to either broaden or restrict the meaning of “money purchase benefit”. The proposed amendments would also permit regulations to be made with retrospective effect but would not require that any regulations had retrospective effect. If the Government were responding to an innovative benefit design it would seem unlikely that any retrospection would be needed.
Finally, I note that the UK is bound by the provisions of the 1980 insolvency directive, and that it therefore needs to ensure that pension scheme members are protected in the event of the insolvency of the employer sponsoring their pension scheme. This would limit any Government’s freedom to use the power conferred by Amendment 32—or, indeed, the power at Section 126 of the Pensions Act 2004, which permits Ministers to prescribe that certain schemes are not eligible for PPF protection—to prevent members losing out. I hope that the noble Baroness is reassured about the breadth of these powers.
I thank the noble Lord for his detailed reply. I appreciate that trustees may not purchase individual annuities for individual members and can take out insurance policies for a number of members, but it is important to catch that issue of the policy or the annuity identifying the members covered so that it is clearly ring-fenced. One cannot leave an ambiguity at the purchase of the policy or annuity stage and then hope that somehow there will be clarity around ring-fencing if and when a legal challenge comes. I am very concerned that there are no ambiguities left, because either we will see another Bridge case or we will leave unprotected a group of members that the Government intend to protect. I note the Minister’s reference to making regulation and urge him to ensure that those regulations, when applied to this amendment in this clause, extend the protection with as much clarity as is possible to do under regulation.
With regard to the new powers, I appreciate that evolution can occur in the area of money purchase benefits. It is important to have on the record the Government’s recognition that the insolvency directive will limit the way in which the Government can exercise those powers in Amendment 32 and that the protection of people in funded occupational schemes is not diminished by this amendment. On that basis, I beg leave to withdraw Amendment 29A.
Amendment 29A withdrawn.
Motion on Amendments 30 to 35
Energy: Feed-in Tariffs
My Lords, with the leave of the House, I shall now repeat as a Statement an Urgent Question made in the other place by my honourable friend the Minister of State for Climate Change.
“Since the feed-in tariffs scheme started it has been successful in encouraging people up and down the country to get involved in local, clean, green energy generation. Solar PV has led the way and over 100,000 homes now generate their own electricity. But let us be clear: the current returns now available on solar PV investments, funded by consumers through their energy bills, are unsustainable. Falling PV costs mean returns are double those originally envisaged under the scheme. This does not provide value for money for the consumer.
If we do not act now, the entire £877 million FITs budget for the current spending review period will be fully committed within the next few months. That would limit the number of people able to benefit from feed-in tariffs in general. We are therefore urgently consulting on new tariffs for solar PV installations. Because of the urgency, we propose that these new tariffs apply to all new installations that become eligible for FITs on or after a reference date, which we propose should be 12 December. We are also seeking views on other proposals, including one to strengthen the link between feed-in tariffs and energy efficiency. It cannot be right, and it is a fault of the system we inherited, that we currently subsidise renewable energy generation for inefficient buildings.
We are determined to secure successful feed-in tariffs through sustainable growth rather than through boom and bust. That is why we are consulting today on new tariffs for solar PV: to save the FITs budget in the interests of all eligible technologies and to bring much greater coherence to this Government’s ambitious policy to green Britain’s homes”.
My Lords, I thank the Minister for repeating the Statement in your Lordships’ House today. It is not the first time that we have discussed feed-in tariffs in your Lordships’ House. I have to say to the Minister that I was surprised to receive an e-mail this morning announcing that a Written Statement was due to be issued. Given the public interest, I was surprised that the Government wanted to issue a Written Statement rather than an Oral Statement. I appreciate this, and I am grateful to the Minister for repeating it. With thousands of jobs and businesses at risk, he will understand the concern that this could have been slipped out as a Written Statement without the opportunity to seek answers to some very important questions in your Lordships’ House.
The Minister will recall that we discussed this issue in your Lordships’ House just before the Summer Recess. Given that the order we debated then made significant changes to the feed-in tariff system following a previous consultation, can the Minister tell us why, so very soon after one consultation and legislative change, the Government have now initiated another?
When I asked the department about this previously I was informed that the consultation was required because of a loophole in the law. I found this quite surprising, because I was concerned about whether the issues addressed in this consultation that seek to plug that loophole were evident or should have been evident at the time of the last consultation. When did the Government become aware of this loophole, and would it have been reasonable for them to have been aware of it sooner, prior to this consultation—indeed at the time of the previous consultation?
Does the Minister really understand—I am sure he does—how difficult it is for investors to have any confidence in the Government if the goalposts on feed-in tariffs keep moving, making it more and more difficult for them? Are they supposed to guess what the next so-called loophole will be that the Government will try to plug? This is the second significant change in a matter of months. I have to say to the Minister that it seems to be a bit of a shambles. I am sure he is aware that investors need certainty, and this merry-go-round of consultations and changes provides exactly the opposite for investors and for the industry. What message will the Minister give to current and potential investors, and will he offer an apology to them for the chopping and changing that we have witnessed over the past two months?
As I said in our previous debate on this issue, to say that only the Government wanted to see any changes in the feed-in tariffs and that everybody else wanted to leave the feed-in tariffs as they were creates a false dividing line. Investors and others are aware that installation costs have fallen by around 30 per cent, and it was recognised that feed-in tariffs would change in line with that. Many preferred a tapered change.
What is not understood is why the Government have reduced the tariffs by more than 50 per cent, which is a significantly larger amount than the reduction in costs. With a new rate of 21p per kilowatt hour, less than half the previous rate, has any assessment been made of the impact on jobs and businesses? Last year the solar industry employed 3,000 people in 450 businesses. Today it employs 25,000 people in 3,000 businesses. Has any impact assessment been undertaken of the impact on jobs and investment in business?
In the previous consultation just a few months ago, over 80 per cent of those who responded opposed the Government’s plans. What level of support do the Government expect for the plans they have issued in this current consultation? What notice will be taken of the consultation this time? Although the consultation does not finish until 23 December, the cut-off date for eligibility under the current scheme ends before that on 12 December, in just six weeks’ time. Will the Minister take any note of the responses to the consultation, or is this a pronouncement of government policy rather than a consultation on possible or intended changes to government policy?
I listened with interest to the Statement in the other place earlier today, and I thought I heard the Minister, Greg Barker, say, if I understood him correctly, that there could be individual exceptions to the cut-off date. Does the Minister know what these are, or what the process will be for those individual exceptions? Can any advice be given to those who have already commissioned domestic solar power systems and paid a deposit but who will not have been able to manage the installation, certification and official registration by 12 December?
Has any assessment been made of the impact on community projects, and are the Government worried that the changes being made will mean that those on lower incomes are now far less likely to benefit, while those on higher incomes are more likely to be able to do so? It might be helpful if I quote to your Lordships’ House a gentleman called Nigel Farren from Energise Barnet, who says: “Churches, synagogues, mosques, schools, sports clubs and other community organisations across the country are getting together to establish energy saving initiatives so they can lower energy bills, reduce carbon emissions, and eradicate fuel poverty among their members. Unless community-owned projects and community-buying group initiatives are ring-fenced from the feed-in tariff cuts, the trust of these organisations and thousands of volunteers will be lost, setting back the whole green agenda in keeping secure their help in delivering the Green Deal”.
Finally, the Secretary of State Chris Huhne said to the Corporate Leaders Group on Climate Change earlier this year,
“The next time someone asks where the growth is coming from, you can tell them. Green energy”.
It is a sad irony that on the very day the Deputy Prime Minister Nick Clegg announces funding for 35,000 new jobs, a successful industry that has created 20,000 jobs in the last year seems to have had the rug pulled from right underneath it.
At the beginning of the Minister’s comments he said that this was a successful scheme. It is, and we want it to remain so—we take great pride in the capacity that it has built up and those who benefit from the current scheme. We know that there have to be some changes, but these are very serious issues that I have raised today, and I hope the Minister will be able to answer my questions.
My Lords, I am grateful to the noble Baroness for her questions—quite a lot of them—which I will deal with. I will, I hope, cover the canvas of this particular issue.
The motive for the Government here is putting consumers first. That is absolutely fundamental in these difficult times. I was delighted that Consumer Focus should say that the Government are,
“taking a sensible approach to protect energy bill-payers with the proposed changes to Feed-in Tariffs. Incentives to overcome the high set-up cost of solar panels and help make our energy supply greener are necessary. But the cost for this is passed onto bills of energy customers and we need to strike a balance”.
I do not think you can say it more clearly than that. That is at the very heart of the difficult decision that we have had to take in changing these rules.
Why was this initiated? It was initiated simply because if we carried on at the current rate at which people are taking up this thing, we would have run out of money by March. Therefore there would have been no money available to pay for other excellent initiatives that have the benefit of feed-in tariffs such as anaerobic digesters and other projects that we have out there.
We read in the St Albans & Harpenden Review that a solar panel company is advertising panels at £3,995, which is down enormously from the original cost—not by 30 per cent but by nearly 60 per cent. There is also a guaranteed IRR of 14 per cent, backed by the Government through an incentive scheme that frankly has become overheated and bloated and is in danger of ripping off consumers and those who invest in it. So of course the goalposts have been moved for the investors who the noble Baroness wants to have a clear path. Of course, they brought it upon themselves to a large extent by advertising schemes that show that government-backed schemes have outstanding benefit beyond the normal rate of investment return. It is reasonable in the current world that we have an investment return of 4.5 per cent or 5 per cent, which is what the new tariff would offer.
The impact on jobs is regrettable, given that an industry has developed. I am sure the employers will look very closely at that and will hopefully look to the export market, where, as we all know, the sun shines more often than it does in this country. I have just been on a visit to China, and I offer to support any solar panel manufacturer in their export endeavours. As we all know, one of the unfortunate things about this country is that the sun does not always shine when we need energy most, and we have the shortest days of the year.
The Government are left with a choice. Does the tariff represent value for money for the customer? Does it represent value for the taxpayer? Does it have a real impact on the supply of electricity to homes, which is currently 0.1 per cent and could go up to 0.3 per cent? Do we have the climatic environment that is necessary or beneficial for this type of product? The answer is that we believe it could be used better elsewhere.
The noble Baroness asked further questions on cut-off dates, the response to the consultation and community things. Of course, the whole point of consultation is that we are consulting. This is not an edict but a consultation period. We want to listen to views before we go ahead with our proposals and we will look at exceptions, which is the point. On community projects, it is important that we maintain community buy-in. That is why we have agreed to keep 80 per cent of this tariff for aggregated schemes, which will still provide a return on investment of around 4 per cent. Because the purchasing power of these solar panels can drive greater economies of scale, they should be able to benefit more from IRR. Therefore, it is wholly in tune with this Government’s policy, which is to be the greenest Government ever and to deliver a benefit for consumers. That is at the heart of these proposals.
My Lords, it is clear that one of the challenges, as mentioned by the Minister and the noble Baroness, is the sustainability of this industry. One area in which I would give sympathy to the Minister is that if we have an industry that steams ahead until next April but then there is no money and everything stops, we will be in the situation that Spain and Germany have been in in the past whereby we have built up an industry that then completely disappears. We need to make sure that that does not happen and that we have a sustainable industry. We want a sustainable environment that works over a number of years and builds up, which is why I am sympathetic to trying to achieve that in these measures.
Having said that, one of the most unfortunate things is that we are moving to the second review on FIT rates in a short period. Where we have a global investment market in energy—in the United Kingdom we have a requirement, estimated by Ofgem, which is often quoted, of £200 billion of investment over the next 10 years—how can we make sure that the investing community remains confident in government schemes and that investment in our energy systems, energy plants and energy distribution systems can be sustained? One change to FIT rates is unfortunate, two might be careless, but another one would mean that we could destroy confidence in investment in this industry. It is not perhaps so much of a problem for manufacturing industries, but the installation industry in this country is far less mobile.
Although I applaud the Government’s efforts to make sure that this business and this industry stay sustainable over a number of years, how will the Minister ensure that that confidence, not just of households but of other larger investors, remains in the UK energy market?
As always, my noble friend Lord Teverson is well informed about these matters and I am grateful for his broadly supportive comments. I totally agree and accept that the confidence of the investor is paramount. However, put yourself in the position of the Government. We inherited a scheme of feed-in tariffs that did not consider the fact that the more solar panels that are bought, the cheaper they become, as illustrated by this argument; and that a pot of money is available to support this scheme, which becomes a scheme for which the IRR is way beyond most people’s dreams and beyond what is reasonable for consumers. At some point, a decision has to be made to say stop or pause or to take action. That is broadly the step that we have taken on this.
I wholly agree that getting future investment and the infrastructure of this country right is fundamental, but we have to get that right against the backcloth of heavy lifters in the game changes for the electricity supply. As I have already indicated, I do not believe that the 0.1 per cent, or the £3.2 billion that we will have saved the consumer, is the right change of game plan for electricity in this country.
My Lords, I am grateful for the Minister’s comments. My concern is that this is merely about the Government’s priorities, which are being set by a modelling of the energy system that is proving to be utterly incapable of modelling what happens in the real world. This is now the second set of changes whereby a successful industry is essentially being cut off at the knees because of an unexpected success rate, when this is something that we should be championing and backing. The Government must accept that if their modelling is incorrect, they must go back to first principles and work out which technologies are going to deliver the step change that they describe. No matter how much money is thrown at some technologies, they may not succeed—I am thinking of CCS and the current generation of nuclear.
The Government saying, “This is just too successful, we cannot afford it”, is not a good answer. We must go back to first principles and ensure that our successes continue to be successes. If they are having trouble now with feed-in tariffs, they will have even more trouble when they look at energy market reforms and try to fix prices for the long term on the big generators. That should be settled by the market. I am very concerned that the modelling is incorrect and that trying to fix prices is just the beginning. We should probably look at market-based solutions.
The noble Baroness is completely right. The modelling was incorrect. We inherited it and we have sought to get it right. As I asked earlier when I talked about government priorities, do we think that this is a game changer in electricity supply and that it is in the best interests of the consumer? The answer from Consumer Focus is no. As regards the game change in the electricity supply of 0.1 per cent, even if every house had them the figure would get to only 0.3 per cent. Therefore, this goes down the list of priorities. I am afraid that it is not a government priority, given the massive problem that we will have for electricity in the 2020s.
My Lords, first, I declare my interest: I chair a very small community interest company, a social enterprise, that was set up in order to get cheaper, more sustainable fuel into poor and deprived communities. It has had a good success rate in doing that and the next phase was to seek to introduce solar PV. I am interested that the Minister thinks that it is not very successful. I could take him to some elderly residents in my previous constituency who have solar and which works remarkably well for them. They were looking forward to solar PV to deal with electricity. The reality is that the Government are taking a huge risk with the market. I want to be sure that they are watching that they do not kill off the market altogether with these actions.
The other issue is that nationally—not just in the north-east and Yorkshire from where the company to which I referred operates—the work on due diligence, tenant consultation and so forth has meant that very little work has been done in terms of installing solar PV on social housing. I want to be sure that in the changes the Government will not penalise tenants in social housing. I confess that I have not read all of this very thick document, although I have tried to do so, but I am not convinced that the Government have really thought their way through getting to social housing. Will the Minister tell us what his thinking is? Would he also meet people and a delegation from those organisations concerned to tackle fuel poverty and to use solar PV as one of the means of enabling social housing tenants to avoid paying the high end of energy costs, as they often seem to do at the moment?
Obviously, the whole point of the consultation is that we have representation from the noble Baroness and those communities that she represents. I would be delighted to meet them and pursue this issue in greater detail.
The scheme has been successful—too successful—and that is why we are taking these steps. As I referenced earlier, there is a continuation for aggregated schemes. From the communities’ point of view, surely the most important thing that we can do to support them is to have a retrofit programme. If we start from that end, solar PV makes sense. That is why the Green Deal is so important and is a banner product for this new Government.
My Lords, I apologise that I was not here for the start of my noble friend’s Statement, but I had already read it. I welcome what he said about the importance of protecting consumers. I am not sure the noble Baroness, Lady Armstrong, recognised the fact that the cost of this is actually borne by the consumers of electricity; it is not paid for by the Government. The Government put an envelope around the maximum sum. In fact, the figures show that it will increase by nearly three-and-a-half times over three years. Nobody could accuse anybody of being stingy on that one. The fact is that any of these subsidies for special help to different forms of electricity generation goes straight through the companies on to electricity bills. I do not know whether the noble Baroness studies her own electricity bill; mine shows the amount that is being paid towards government subsidies—at the moment. What is it going to be in 2020? Ask Ofgem and it will tell you.
Why is it that not until paragraph 19 is there is a reference to the,
“placing a financial obligation onto energy companies, which is then passed onto the consumer through energy bills”?
If this consultation document had paid as much attention to that factor as my noble friend did in his Statement, I think it would be a great deal easier to understand.
As always, I am very grateful to my noble friend Lord Jenkin of Roding for his intervention. It sets up the fundamental question: what is going to be the cost of FITs on the consumer’s energy bill by 2020? It is going to be £26. Bringing in these steps will reduce it to £3, which some people might not want to spend, but it is a considerable reduction. My noble friend is quite right about putting the consumer first, and I apologise that those in my department are masters of disguising that fundamental point.
My Lords, given that the coalition agreement includes a strong commitment to encouraging community ownership of renewable energy projects, what advice can the Minister give to the community energy co-operatives around the country? I am aware of three in my area that have live share offers at this moment. It is now unclear whether their proposed projects remain viable. Should they continue to solicit funds? Does the Minister recognise, as I do, that further reductions of the feed-in tariffs for installations at more than one site—which, I understand, were put in in order to get rid of the “rent a roof” schemes—actually threaten community projects that cover more than one site, such as local hospitals in Warwickshire or local schools in my area in Wey Valley?
I am very grateful to my noble friend. The fact is that if we did not act now, there would be nothing in the pot for those schemes to which she is referring because it would be empty by March for the next spending review period. We have taken this action to allow community schemes, among others, to carry on. This is not retroactive. If you are in the scheme already, you are still benefiting from it. It is new regulation that we are bring in. I hope that gives her a degree of comfort. I am, of course, happy to explore it during the consultation process and, as always, I am delighted to hear my noble friend’s views.
My Lords, I welcome the Statement, which I hope will be one of a series aiming to reduce the subsidies available for renewable energy, as the Government seek to limit their cost to the consumer and to the economy.
The Written Statement issued today in the name of Mr Gregory Barker stated:
“Over 100,000 homes now generate their own electricity”.
Will the Minister say whether he meant all their own electricity or just some of it, perhaps including those who generate only a very small part of their own electricity? Will he give any figures to indicate how much electricity is being generated or has been generated to date by solar PV, and how much do the Government hope or expect will be generated in the future?
My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Localism Bill, have consented to place their prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Clause 10 : Fire and rescue authorities: charging
1: Clause 10, page 19, line 9, after “misinstalled” insert “or not properly maintained”
My Lords, I shall speak also to Amendment 2. I have tabled these probing amendments in order to request clarity from my noble friend the Minister. This is an amendment to allow fire and rescue services to charge for calls regarding persistent false fire calls. False fire calls from faulty alarms in non-domestic premises are a significant burden for fire and rescue authorities. Around a third of all fire brigade attendances are to false or faulty alarms. In London alone, there are 30,000 attendances each year as a result of calls from automated fire alarms. Of those, only 3 per cent of the calls were to actual fires and in just 1 per cent to fires was a hose needed to put them out. Clause 10 is intended to allow fire authorities to charge those building owners who persistently generate such calls, thereby giving them an additional power to reduce the number of calls and the associated disruption, cost and increased risk to the public.
However, there is an established consensus from the sector that the current wording of the Bill, which addresses only malfunctioning and “misinstalled” alarms, covers less than one-fifth of the total issue. For example, of the 6,002 recorded calls from these alarms in Lancashire in 2009 and 2010, only 16 per cent were recorded as having been set off by faulty alarm systems.
I understand that organisations from across the sector, including those representing the businesses that install and monitor these alarms, have appealed to the department to look again at this drafting, but without success. For clarity, when I say “the sector”, I am referring to the Local Government Association, of which I am a former chairman, the Chief Fire Officers Association, the London Fire Brigade, the Fire Industry Association, the British Security Industry Association, and fire services across the country. All these bodies and authorities have, I understand, appealed that the current wording does not address the issue and have warned the department that the legislation as it stands could mean much confusion and many arguments over the definitions currently in the Bill, and that clarity will probably only be reached following decisions from the courts.
I do not pretend to be an expert on this issue but I am sure that few of us would say the same about the bodies I have just cited. I would welcome clarity from the Minister on this subject. I beg to move.
My Lords, I have a great deal of sympathy with the amendment of the noble Baroness, Lady Eaton. I declare an interest as a vice-president of the Local Government Association.
Before this legislation, I had never come across or heard the word “misinstalled”—it is a curious turn of phrase—but clearly if an alarm is misinstalled the idea of it being maintained at relatively regular intervals is of course the responsibility of the business holder in that company. That has to be undertaken. That is why this is a reasonable amendment.
The only question I have on that concerns the evidential burden. If the business owners had taken all reasonable steps to ensure that the alarm system was properly maintained, would any action be taken against the company which had failed to do so or would it be a matter for the business? There is a slight legal quagmire here, and although I am in no haste to make extra work for lawyers, I broadly support the amendment. It is entirely reasonable.
My Lords, I thank the noble Baroness, Lady Eaton, for tabling this amendment and I hope that she will not be too offended when I say that I am not going to accept it.
The fire and rescue services often raise the issue of the number of mobilisations to faulty fire alarms, perfectly reasonably, at non-domestic properties. We agree that this is a significant issue and we have addressed it in the Bill by proposing that, following local consultation, fire and rescue authorities will be able to recover their costs in cases of persistent false alarms in non-domestic premises where fire alarms have malfunctioned or have been misinstalled—I believe that is the word.
It is certainly true that some fire representatives support the amendment—indeed, the noble Baroness, Lady Eaton, laid out who they were—and want to widen the scope of the clause to cover a wider range of incidents. However, on the other side of the coin, there are others who do not agree with the amendment and are concerned that it is confusing and will lead to additional burdens.
It is vital that we keep charging provisions as straightforward as possible and do not create uncertainty for businesses or fire and rescue authorities which seek to recover their costs. If we were to widen the scope of the clause in this way, it would mean that the fire and rescue authority would have to provide evidence that a business had not properly maintained a piece of equipment. Going down this route could only open up a significant potential for challenge that would benefit neither businesses nor the fire and rescue sector. The Bill already allows for authorities to charge under a wide range of scenarios that can lead to malfunctions and the amendment would not add anything to that.
On that basis, I am not persuaded the amendment helps. It would not achieve its intended purpose in significantly widening the number of scenarios under which an authority could charge. Instead, it could unhelpfully complicate the Bill’s provisions as drafted and leave those extra provisions open to legal challenge. I hope with that explanation the noble Baroness will be willing to withdraw her amendment.
Amendment 1 withdrawn.
Amendment 2 not moved.
Clause 25 : Prior indications of view of a matter not to amount to predetermination etc
3: Clause 25, page 36, line 37, leave out subsection (2) and insert—
“(2) In deciding whether a decision-maker had, or appeared to have had, a closed mind to any extent when making the decision—
(a) the relevant time at which that issue is to be assessed is when the decision of the relevant authority was formally taken;(b) an earlier statement or conduct by the decision-maker that amounts to predisposition is irrelevant; and(c) an earlier statement or conduct by the decision-maker that amounts to predetermination shall be taken into account and given such weight as is appropriate in the circumstances of the case.”
My Lords, Clause 25 is directed at the concern that local councillors must be able to express views on controversial local issues such as, for example, whether to give planning permission for a bail hostel without being accused of bias when the issue comes up for a vote at the council meeting. There are two main objections to the drafting of Clause 25 which the amendment seeks to rectify. The courts have adopted a sensible approach in this context and a local councillor can express strong views on an issue prior to the council meeting as long as he maintains an open mind in the sense that he is willing to listen to the competing arguments and the advice of officials at the council meeting before casting his vote. The courts have explained that the common law allows strong predisposition and the holding of strong prior opinions; it prohibits only predetermination, the closing of the mind and the unwillingness to listen to the debate before casting a vote. It is extremely unclear whether this distinction between predisposition and unlawful predetermination is being maintained by Clause 25 or whether it is, in some respects, being amended. It is so unclear that it will inevitably lead to protracted and expensive litigation, a process that will undermine rather than advance the Government’s objective. That is the first objection.
The second objection to Clause 25 which the amendment seeks to rectify is that it appears—I say “appears” because the clause is very difficult to interpret—to provide that as long as the local councillor says or does nothing at the council meeting to indicate a closed mind it is legally irrelevant what he or she may have said or done before the meeting to demonstrate a closed mind—that is, predetermination. For example, if at the council meeting the councillor says nothing during the debate but votes against the bail hostel, under Clause 25 there could be no legal complaint of predetermination. That would be so even though, on the way into the council meeting, he announces to the television news cameras outside that he is not interested in what is going to be said at the debate. That would be a substantial change in the law and one very much to be regretted.
The two concerns that I have outlined are exacerbated because Clause 25 will apply not only to controversial political decisions in local government but to all functions, including, for example, employment and contracting decisions. In those other areas, in particular, it is of great importance that local councillors have an open mind; that they hear the arguments at the council meeting and listen to the advice of officials before they make up their mind.
I have received a letter from Mr Clive Lewis QC, who is the chairman of the Constitutional and Administrative Law Bar Association, a copy of which I sent to the Minister, expressing concerns very similar to those I have set out. I have also been informed by the Association of Council Secretaries and Solicitors that it, too, is very concerned that Clause 25 as currently drafted will lead to uncertainty and run the risk that serious cases of alleged bias could not be challenged in the courts.
I am very grateful to the Minister’s officials for taking time to seek to explain to me the reasoning behind Clause 25 at a meeting last month. However, my concerns remain. This amendment would set out—I hope clearly—the principles stated by the courts so that local councillors and their advisers would be in no doubt that the prior expression of strong opinions is not prohibited by law. Even at this late stage of consideration of the Bill I hope the Minister will think again on this subject. I beg to move.
My Lords, my name is associated with this amendment and I support it for the following reasons. I believe it is common ground that councillors should not be prevented from or penalised for speaking their minds on the hustings. I do not accept the anecdotal evidence that if councillors speak out on an issue then they are banned from voting at a committee. If they are being given that advice then it is bad advice and it should be clarified. You do not need a statutory provision to do that.
A predisposition has always been permitted but not a predetermination. I think it is also common ground that decision-makers must approach their task with an open mind. They must listen and consider all the arguments and then reach a conclusion. It is self-evident, for example, that a Secretary of State who as a local MP has crusaded passionately against wind farms saying there are no arguments in their favour cannot decide an appeal against the refusal of a wind farm planning application. He must—and I am sure he would—recuse himself.
In the present case, in a much less exalted position but important nonetheless, a councillor who declares himself opposed to an application and states he is determined to vote it down ought not to pursue such a course up to and including the planning meeting. However, the Bill appears to provide a loophole for this by affording an opportunity for a councillor to state wholesale opposition right up to the door of the planning meeting and then to remain silent at the meeting itself nevertheless casting his vote. In such a case the provisions of the clause mean that clear evidence of bias, which that is, is impermissible evidence. That cannot be right. At worst this clause could, I fear, become a bigot’s charter, which cannot be in the public interest.
The amendment offers a solution. It confirms the present position of predisposition but provides a potential sanction for predetermination if the circumstances permit. I emphasise that this does not prevent the crusader councillor from crusading. He can attend usbthe council meeting to represent his views but he must not, if his mind is made up before the meeting, participate in the voting on the decision itself. That must be left to those who come with an open mind to listen to all the arguments before finally coming to a decision. That is the law and it is in the public interest that it be upheld.
The current wording of the Bill does not do so. It could well be used as shield or a licence for bias and is bad policy because the clause applies not just to planning but to all functions of authorities, some even more sensitive, where greater restraint on strong expressions of view is called for. Cases of bias are extremely difficult to get on their feet. This clause makes it almost impossible because those who are biased will now remain silent during the committee’s deliberations.
My Lords, first, I must declare my role as an elected councillor. Councillors have long walked a difficult line; trying to engage in an open and rigorous debate with their communities ahead of key local decisions, without falling foul of the complex common law principles of predetermination. The Government’s proposals in the Localism Bill offer welcome clarity by removing any presumption that a councillor has made a decision with a closed mind simply because they had previously explicitly offered a view, or inferred a view through their actions, about a decision they would subsequently make.
It is essential that councillors have the freedom to express their thoughts and views on an issue to the communities they represent. This is an important part of the dialogue between local people and their local democratically elected representatives, helping councillors to gauge levels of support for or against a view and to encourage communities to come forward with further evidence to inform decisions that matter to them. This is surely a key part of the big society we are striving to create.
This amendment would reintroduce confusion over where predisposition ends and predetermination begins when prior indications of a view have been made. Therefore it would continue to make it difficult for councillors to have those absolutely full and frank debates with local people on the merits of any decision.
There are a number of safeguards in place to uphold good decision-making in local government, from overview and scrutiny functions through to opportunities judicially to review irrational decisions. At the same time, this Bill is strengthening the requirements around registering and declaring interests to deter biased decision-making, and the local electorate will ultimately retain the power at the ballot box not to re-elect any councillor. I therefore cannot support this amendment.
My Lords, during my period in your Lordships’ House, which now goes back far too many years, I hope I have been the personification of reasonableness, rationalism and light. Unfortunately, on the debit side, I have to confess that I was a local government leader before I came here.
Missing from this debate so far is the fact that local government in the United Kingdom is significantly influenced by party groups and party group meetings. Something may be discussed in committee. Before the council meeting the various party groups meet and reach a collective decision. That decision is then whipped at the council meeting. That is the reality of day-to-day local government in the United Kingdom. I would like to know from both the noble Lord, Lord Pannick, when he sums up, and the Minister the extent to which both the clause as it is now and the amendment strike at that practice.
Unfortunately when irony appears in Hansard it appears to be totally serious.
I realise I am being bold tangling with the expertise that has been brought to bear both by the two noble Lords who have spoken and have their names to the amendment and the authorities they have cited. I do not see in the clause the problem they describe—the possible extension from predetermination to predisposition. The word “etc” in the clause heading I can see might be a little confusing and possibly in Clause 25(1)(a):
“an allegation of bias or predetermination, or otherwise”.
But I regard the “otherwise” as meaning “or not”, not as a different attitude.
I start by not being able to follow the noble Lords down that route. Are the important words not the ones that we debated at a previous stage, in Clause 25(2), “just because”? That subsection is not exclusive. It does not describe the only circumstances that might amount to predetermination but approaches from the other side. It says that if a decision-maker demonstrates or has done these two things—or has done the first thing and the matter is relevant to the decision—that does not of itself mean that he has predetermined; nor does it mean that he has not. That approach is much more effective than the one provided in the amendment, which seems to spell out all the circumstances that would amount to predetermination. I am sure that noble Lords have great imaginations, but I doubt whether any of us could imagine all the circumstances that need to be covered. I am afraid that I cannot support the amendment.
My Lords, I am reluctant to intervene in the debate but do so having listened to the arguments for the amendment put forward so ably by my noble friend Lord Hart. Like my noble friend Lord Sewel the noble Baroness, Lady Hamwee, I had the honour—I will not do irony, either—to serve on a local authority before being elected to the other place. Not being a lawyer, I would like the Minister to tell me what predetermination actually means. Like my noble friend Lord Sewel, I confess that the Labour group on the local authority of which I was a member, eventually becoming leader, met before council meetings and decided the group view on various issues. Is that predetermination, or not? If it is, is it caught by the provisions of the Bill?
I take the view that both Houses of Parliament interfere far too much in local authority matters. I well understand the view that where planning matters are concerned the letter of the law should be laid down and followed. The previous Labour Government created a standards authority for local government, which quickly became bogged down. If you traded insults in a council chamber, a complaint was made to that body and all sorts of trivia were discussed at that level. I do not wish to tie the hands of local authority members more than successive governments have done over the years, but I am concerned about both the clause and my noble friend’s amendment.
My noble friend is not just a lawyer—he advises lawyers, as well. He is doubly damned in my eyes, I have to tell him. But he did not define predetermination in speaking to the amendment. Like my noble friend Lord Sewel, I think that the Minister really ought to do so. I end as I began: tying the hands of local authority members is something that both Houses of Parliament have done over the years, in my view quite unnecessarily.
The noble Lord, Lord Pannick, always moves his amendments superbly, and I am fascinated by them, although I heard it elsewhere than in the Chamber this evening, and I apologise for that. But I think that he does not look at this matter from the point of view of people being elected. Ever so many people are elected simply because they have always had some pet subject that was very much of local interest, and that is what got them elected. Any of those people, under this amendment, will find themselves being accused or blamed for the fact that they fought in that way. I am thinking of the Member of the House of Commons, who was elected on the single issue about the hospital in Worcestershire, and elected not once but twice on that issue. Would we have all condemned him if he had shown a particular interest in the hospital in Worcestershire? It is unrealistic to believe that people could be completely opposed to something that they had fought for for years.
The other side of that is that anyone sitting on any planning committee should do so with an open mind. If they do not have one, they have no right to sit on that committee and they should declare it as such. That should deal with the matter, rather than this amendment.
I declare an interest, since it is Third Reading, or redeclare an interest as a member of Pendle Borough Council, which has a local planning authority on whose planning committee I sit.
I smiled when the noble Lord, Lord Sewel, got into a little bit of trouble for trying to use his native Bradfordian flat irony in your Lordships' House, which is something that I also get into trouble about for the same reasons. I sometimes think that we should run a campaign so that we have a means of telling Hansard to insert a smiley at appropriate places, but I suspect that that is a campaign that I will not win in my lifetime.
I regret the fact that I did not get involved more in this issue in Clause 25, as it now is, earlier in the passage of the Bill. It is not completely satisfactory as it stands, but I think that the amendment from the noble Lord, Lord Pannick, would make things worse. I shall explain why in a minute. I do so not from his position as an eminent lawyer who knows about things like predetermination, predisposition and perhaps predestination as well, I do not know—or perhaps not. I come from the point of view of how these things are now looked at in local government. What people have not really been talking about is that within local government there is a general belief at the moment that there are two types of issue. There are those that people say are in some way quasi-judicial, or involve things like appointments and disciplinary hearings, as well as planning and licensing, whereby the approach of councillors has to be less predisposed than on other matters. When I got back on the council eight years ago, I spent the whole election campaign speaking about the number of empty, boarded-up houses in my ward. I thought that the position had deteriorated appallingly in the six years I had not been a councillor. The electors actually agreed with me, for once. I have spent a lot of the eight years since then working hard on the council to do something about that problem. I am totally biased on this matter; I think that it is an appalling problem, and I campaign on the council and outside the council to try to solve it and make no bones whatever about that. But if a planning application came up in relation to one of those houses, I would step back and regard it and treat it as a planning application. That is quite well known within local government, although perhaps not as well known in some councils as it should be—but it is the case. Therefore, there is a problem here in that both the Bill and the amendment are broad-brush and do not make that distinction between different types of issue, which are certainly well understood within local government.
I have problems with the words predisposition and predetermination. It may be that in the courts of this land they are well understood, but I do not believe that most councillors would understand those words if you put them to them. The word that is more used in local authority government in relation to that kind of problem is fettering. Councillors are told that they must not fetter their discretion when it comes to things like licensing and planning applications. That is the word that is used—but fettering includes both predisposition and predetermination. The attempt to pull back from the straitjacket that councillors are in at the moment is well done.
I do not think that the position is well understood, as the noble Lord, Lord Pannick, said on Report and said again today, but one problem is that different councils apply different rules. In some cases, when planning applications are submitted—that is probably what we are talking about most here—councillors are banned absolutely from speaking to anybody, including residents, applicants, objectors or the local press. Some councils are absolutely draconian in doing this: one is not allowed to talk to anybody unless one is in the presence of a planning officer. That is totally unrealistic on many councils that do not have lots of spare planning officers to wander around with councillors who are talking to people on their patch.
All this did not originally come from the courts. I particularly noticed it because I was not a councillor for six years and during that time, between 14 and eight years ago, the whole regime changed. It came from decisions of the Local Government Ombudsman, where there were complaints that councillors had made up their mind on planning applications before the applications were dealt with. It also came from references to the standards authorities, particularly the Standards Board for England. That is where this whole regime within local government has come from.
The noble Baroness, Lady Gardner of Parkes, made the point that councillors are different because they are elected. Therefore, the regime that has to apply to councillors as opposed to other public officials and people serving on tribunals and so on is different because they are elected. Very often they have fought election campaigns and taken part in local campaigning. We have examples from around the country. A market town provides one classic example. A particular political party had campaigned vigorously against the redevelopment of a town centre that involved a big supermarket as the core of that redevelopment. All its councillors—the party had swept the board—were banned from taking part in the part in the decisions once they were elected because it was said they had fettered their discretion because they were part of a party which had won elections on that basis. Clearly there is a huge conflict here between local democracy and fair decision-making. Electors cannot be expected to understand that.
Regarding the amendment moved by the noble Lord, Lord Pannick, I would say that there is a lot of talk of bail hostels. As long as a bail hostel is small and is confined to an existing house, I do not think it needs planning permission. It is not a good example in that sense, but I understand the point made by the noble Lord. We have all had to deal with a very difficult application where a lot of residents have been strongly opposed to it, yet it has actually been right. That is when councillors have to gird their loins and do what is right. They do not always do it, but that is democracy.
The amendment of the noble Lord is an admirable attempt to clarify the position. Subsection (2)(c) of the amendment states that,
“an earlier statement or conduct by the decision-maker that amounts to predetermination shall be taken into account and given such weight as is appropriate in the circumstances of the case”,
I do not believe that even local authority lawyers will understand that sufficiently to give clear advice to their councillors, and councillors certainly will not understand it because they will not understand what amounts to predetermination. The words,
“given such weight as is appropriate in the circumstances of the case”,
are a recipe for a lot of lawyers to earn a lot of money when matters come to court to determine what they mean in the circumstances of a particular case. I do not believe it is a useful check on what one does in a particular circumstance that happens locally. Therefore, I do not think the amendment of the noble Lord provides clarity. In a practical sense, at a local level, it will make matters a lot worse, with no clarity.
The problem is that council lawyers are well known for being top of the league of people who err on the side of caution on pretty well everything. If the House were to pass this, it would result in no change to the present position, in which it is the councillors who are totally fettered from doing the job that people elect them to do.
The noble Lord, Lord Hart of Chilton, said that if councillors are given the advice that they cannot say or do anything or take part in any discussions before it goes to a planning committee, it is bad advice. All I can say is that if it is bad advice, it is universal bad advice. Given the choice of two not wholly satisfactory wordings, I very much prefer that of the Government.
My Lords, if I might intervene, slightly more briefly, because I agree with so much that has been said by the noble Lord. I did not have the opportunity to take part in the debates on these clauses, although I have taken part in a lot of the proceedings on the Bill. I strongly agree with the objections that have been raised to the amendment. Perhaps it is not surprising, declaring again my interests as a local councillor and leader of a local authority, that it tends to be that some of us with experience of local government find ourselves ranged against the exacting purity of those who practise at the Bar.
Some may feel this is a function of the imperfection of local councillors. Imperfect, of course, we are. The point was made by the noble Lord, Lord Sewel, and others, that councillors are biased. They are elected to be biased. My electors would be extremely surprised if I were not, as the noble Lord, Lord Greaves, said, seeking to implement the policies on which I was elected. That reality has to be understood and respected.
The current situation is having a chilling effect on a lot that goes on in local government, a point referred to by the noble Lords, Lord Sewel and Lord Greaves, and others. Councillors are nervous about expressing opinions on a whole range of matters where there is no question of predetermination or predisposition and so forth. It is having a bad effect on local democracy because local councillors are representative—they are not very highly-paid volunteers to try and put the public’s will into effect. They try their best.
I fear there is a growing inhibition on being able to speak out and speak frankly on questions. As the noble Lord, Lord Greaves, said, there is a clearly understood distinction between issues of planning and other issues. The trouble with the amendment of the noble Lord, Lord Pannick—the noble Lord, Lord Greaves, began to say this in reading out the first part of it and my concern was reinforced by the remarks of the noble Lord, Lord Hart of Chilton—is that subsection (2)(c), in stating that an earlier statement or conduct shall be,
“given such weight as is appropriate in the circumstances of the case”,
refers to a decision as defined in the clause, which is any decision of the council. We are not just talking about planning applications; we are talking about committee meetings, sub-committee meetings, functions of the authority’s executive and council meetings. The noble Lord, Lord Hart, conjured up in my mind the spectre of lawyers standing outside the council meeting saying, “You cannot go in and cast your vote because you said this on that a few weeks ago”. It may sound humorous but that kind of thing could well happen. People are trawling the opinions of local councillors, seeing who is biased and seeing whether they can get people struck off. It is rather like one of those American films where they try to strike off members of the jury to make sure that the right result is achieved in a murder trial.
I am worried about the link between subsection (2)(c) of the amendment and its application to every possible decision that might be taken by a councillor. We do need severe protection of the law on planning, but in other areas please let councillors be biased; please let them respond to the wishes of their electors; please let them be like MPs and Members of your Lordships’ House—people who are entitled to strong opinions. Let us not proceed with the chilling effect of this process of litigation and quasi-litigation that has actually occurred or may be threatened. I support the Government’s attempt to set things right and to improve things. It may not be perfect, but I certainly prefer it to the amendment. I hope that your Lordships will not support the amendment.
My Lords, we have added our names to this amendment, for reasons which I will try to explain. As I understand the Government's position, this provision is meant not to change the current position—they may confirm or deny this—but to clarify it, as the noble Lord, Lord Greaves, said. The problem in seeking to clarify it, for some of us at least, is that they have unbalanced it and made it difficult. The noble Baroness, Lady Hamwee, advanced the point that, as drafted, the “just because” was the get-out but I contend that if you have to ignore anything that the decision-maker has previously done with a view to a matter, directly or indirectly, there is not much else that that decision-maker could have done which could then be the subject of a challenge on predetermination.
My Lords, I was not intending to describe it as a get-out but to say that “just because” could also be read as “only because”. Although those are not words that one would normally find in legislation, they are very helpful and descriptive in this context.
I take that point but, even if it is “only because”, what else might a decision-maker do that you have to take account of if you can ignore all of the things that are described in this provision? That seems to be the fundamental problem.
My noble friend Lord Snape asked: what is predetermination? As I understand it, predetermination is having a closed mind at the point when you make a decision. Is that not important, because if people are coming to local councils seeking decisions which they expect to be rationally made—whether on planning, licensing or anything else—are they not entitled to have a case that is properly made and not fettered by somebody ignoring all of that process at the point when the decision is made? That seems to be the key difference between predetermination and predisposition.
The noble Baroness, Lady Gardner of Parkes, said that people will always have their pet subjects, and there is absolutely nothing wrong with that. Predisposition means having a view that, other things being equal, this is what you support and this is what you do not, and it does not preclude you from having, for example, manifesto commitments. That is reflective of the current position. The problem with the clause, for some of us at least, is that it unbalances that decision. It may give clearer protections or guidance to councillors in respect of what they can and cannot do but it does not address the other side of that equation: the circumstances where somebody has a closed mind and would seek to exercise judgment on something when they should not. That seems very important to me.
Things are not helped by the demise of the Standards Board for England, which set out guidance on all of this, but I understand that there is also legal precedent and case law around all of this. My noble friend Lord Sewel raised the point about collective decisions. There is nothing wrong with a party group sitting around and having discussion on an issue. The key is that when you come to the point of making that decision—whether it is in the council chamber, the committee chamber or elsewhere—the mind is at least ajar. I think that was the terminology that was used.
The noble Baroness, Lady Eaton, said that councillors have long walked this difficult line, and she is absolutely right. I agree and, in our view, the line does not need to be changed. Yet the terms of this clause are potentially changing it and that is the problem we are seeking to address by this provision. Our position is as follows: we support the proposition that those who have a closed mind on an issue should not participate in decision-making and could invalidate it if they did. We understand that this is also the Government's position, from debates on previous stages of the Bill where we have had amendments around this. It may be particularly relevant to planning and to other decisions as well.
We differentiate predetermination from predisposition and understand that the Government also do that. Having clarity on the scope and protections that this gives to councillors is to be encouraged but issues of a closed mind or otherwise are properly to be assessed when formal decisions are to be taken. We understand that this is also the Government’s position. The problem is that, in framing the scope and protections for local councillors, there must not be opportunities for those with closed minds to have their actions and utterances ignored in evaluating whether they had already predetermined the matter when making decisions. These are matters of probity.
If it is right that we agree on those propositions about the difference between predisposition and predetermination—determined at the point when the decision is made—we should be focused on how we achieve the legal construct that deals with that. That is the real matter before us and the matter in this amendment. In this regard, we consider that the amendment moved by the noble Lord, Lord Pannick, which is also in the name of my noble friend Lord Hart, achieves those objectives. However, we are very clear that the clause as it stands makes things worse and muddies the waters on principles and issues that I think we are not apart on.
My Lords, I am grateful to the noble Lords who have skilfully proposed this amendment, as it has given me the opportunity to research the issue for myself—with an open mind—and to provide further elucidation to the House. I hope that I can prevail upon the noble Lord, Lord Pannick, with his open mind.
I think that there is general agreement on the mischief that Clause 25 seeks to address: that councillors and candidates are receiving overly cautious advice from a variety of sources. All noble Lords accept the need to engage with the electorate, and I agree entirely with the comment by the noble Lord, Lord Pannick, about the courts. The courts do not have a problem at all; it is the advice being given that is the mischief.
I will give an example to show how far this culture has spread, not from local government but rather from advice issued by Friends of the Earth about the planning process. One would imagine that that organisation would be keen for the public to engage with councillors, not just to put their views to the councillor but to seek the councillor’s view. Yet the advice states that,
“councillors on the planning committee are not allowed to express their view until the decision is made”.
When advice from expert campaigning groups such as Friends of the Earth is risk-averse, it is clearly time to act. My noble friend Lord Greaves also told us about different councils having different rules and the problems that that causes.
In the light of the debate during previous stages, most noble Lords clearly have no difficulty with the difference between predisposition and predetermination but it may be helpful if I remind the House what predetermination is. Predetermination, which can be actual or apparent, is where a councillor’s mind is closed to the merits of any arguments which differ from their own about an issue on which they are making a decision, such as an application for planning permission. The councillor makes a decision on the issues without taking them all into account.
I am obliged to the noble Lord, Lord Hart, for the time he has taken to explain carefully the problem to me in private. He described a situation where a bigoted person states publically, and with the protection of Clause 25, that he is strongly against some development. He is then on the committee that determines the application but says nothing, then votes against the development. The noble Lord, Lord Pannick, said much the same. The noble Lord, Lord Hart, is right that nothing can be done, but the same would apply if the councillor was covertly bigoted—that is, if he said nothing at any point but still voted against and always intended to, no matter what argument was put forward. Perhaps he is racist and would never ever support an accommodation unit for asylum seekers. My own view, for what it is worth, is that in reality very few councillors operate with a closed mind.
However, Clause 25 does not go as far as some noble Lords fear. Let us move on to the scenario laid out by the noble Lord, Lord Pannick, on Report. A councillor says publicly, a month before a controversial planning application is considered by the planning committee, “I am going to vote against the proposal for the bail hostel. I was elected on a platform to oppose this planning development, and I am simply not interested in the arguments that may be advanced in favour of it”. The noble Lord, Lord Pannick, said that that would be a clear case of predetermination. I agree. Even if Clause 25 becomes effective, the councillor has gone far beyond expressing a view on the merits of the development in the light of what he knows at the time. However, I am sure that the noble Lord will agree that this does not preclude the councillor subsequently opening his mind, and what matters is the state or apparent state of his mind at the time he started to make the determination.
Suppose the councillor is not so unwise as to say he was simply not interested in the arguments, perhaps even adding a suitable caveat about listening to the arguments before voting. He then votes against in committee after appearing to be fully engaged in considering the matter. There is no legal problem here. Due to what will be Section 25 of the Localism Act, just because he indicated his view it does not mean that he is predetermined—a point touched on by my noble friend Lady Hamwee. After the decision has been promulgated, an e-mail string that was concluded before the determination is the subject of an FOI request in connection with an unrelated matter. Our councillor was asked by a friendly official if he thought that the bail hostel would be approved. He wrote back, “Don’t worry, it won’t happen”. On its own, it could be argued that this was merely a very unwise assessment of the merits of the application. Taken together with the public statement, a fair-minded person would surely conclude that apparent predetermination had taken place. I am sure that the noble Lord, Lord Pannick, if invited to, could construct a very strong case. It is important to understand that views indicated as being protected by Clause 25 can be taken into account when considering whether predetermination has taken place, but only in conjunction with some other evidence.
The noble Lord, Lord Sewel, asked about the extent to which the clause strikes at the practice of party whipping. There have been cases where accusations of predetermination have arisen because a councillor has followed the party line. The effect of Clause 25 is that this could no longer be sustained unless there was some evidence at the point of decision-making that the councillor was not acting properly and not considering the arguments. When I first studied Clause 25, I correctly understood what it meant—in other words, what you could and could not do—straightaway. As amended, I cannot see that it would have the desired effect of encouraging engagement with the electorate. It took me, as well as my noble friend Lord Greaves, some time to understand it and, when I did, I realised that a councillor would not be able to express his view on a matter without any risk of predetermination. This would defeat the policy objective of facilitating full engagement with the electorate.
With this explanation, I hope that the noble Lord will feel able to withdraw his amendment.
I am very grateful to noble Lords who have spoken in this fascinating debate and to the Minister for his detailed response. I shall respond briefly, attempting to avoid any indication of exacting purity that may offend the noble Lord, Lord True, or indeed any other form of reprehensible purity on this matter.
The Minister indicated that there is nothing wrong with the common law rules, and I respectfully agree with him. The problem, the Minister said, is the erroneous advice that is being given to local councillors up and down the land. The problem with that analysis is that, if the advice is the erroneous advice, we should deal with that advice. Let us not amend the common law in a way that changes the current position—and changes it by excluding from relevance the legal material that can demonstrate that there is unlawful predetermination.
May I explain the advantage of Clause 25 and the way that it is drafted? If I was a councillor and engaging, as a layman, with officials who were giving me advice, I would be able to produce the words in Clause 25 and say, “It says here that I can express a view”, and there would be very little that officials could do to counteract that.
I understand the point and am grateful to the Minister. However, the clause introduces clarity by amending the common law, which the Minister is concerned to maintain. The clause does not maintain the existing common law rules, which the Minister considers entirely adequate. The clause excludes from consideration anything that is said or done prior to the council meeting at which the issue is to be discussed, however extreme the previous statement may be. I entirely accept that what the councillor said prior to the council meeting may not be determinative of whether there is unlawful predetermination, but it must be relevant. That is the objection to Clause 25: it purports, in the Minister’s words, to restate the common law, which the Minister regards as entirely appropriate and unexceptionable. What it actually does is amend the existing common law in a way that will prevent real cases of predetermination being brought and succeeding.
Real concern was expressed in this debate that it is absolutely vital that local councillors should be able to express their views on matters powerfully and strongly if they wish. The noble Baroness, Lady Eaton, and the noble Lords, Lord True and Lord Greaves, made this point. I entirely agree with them that that is the common law position. The cases make it absolutely clear that local councillors deciding any matter are not impartial in the sense required of a judge; they have political allegiances, their politics involve policies and they are entitled to express their views—of course they are. The case of Lewis v Redcar and Cleveland Borough Council in 2009, covered from page 83 of Volume 1 of the Weekly Law Reports, is the leading Court of Appeal judgment. It says that any local councillor who expresses his views powerfully and strongly on any view is not guilty of unlawful predetermination so long as he is prepared to keep an open mind when he goes to the council meeting.
The noble Lord, Lord Sewel, and the noble Lord, Lord Snape, asked for reassurance in relation to the role of party groups and party whips in local government. That, too, has been considered by the courts. In the same case of Lewis v Redcar and Cleveland Borough Council, the Court of Appeal approved an earlier judgment in 1985 by the noble and learned Lord, Lord Woolf—then Mr Justice Woolf—where he said:
“I would have thought that it was almost inevitable, now that party politics play so large a part in local government, that the majority group on a council would decide on the party line in respect of the proposal. If this was to be regarded as disqualifying the district council from dealing with the planning application, then if that disqualification is to be avoided, the members of the planning committee at any rate will have to adopt standards of conduct which I suspect will be almost impossible to achieve in practice”.
I apologise for intervening, but I wonder whether the noble Lord is aware that there is a very widespread view within local government, which in my view is widespread in its application, that on things that are thought to be quasi-judicial like licensing and planning applications there is no party whipping. There may be discussions, but no party whip is applied.
I understand that, of course; I am responding to the point made that if our amendment were to be carried, this would in some way affect the existence of that whipping that does take place in local government—those elements of party control that are effective. Let me just complete the citation from Mr Justice Woolf: he concluded that there is no objection to any of this so long as, when the councillors come to the council meetings, they have an open mind in the sense that they are prepared to listen to the competing arguments.
The noble Lord, Lord Greaves, was rightly concerned that we should do nothing that should enable lawyers to make lots of money out of all this. That is a very laudable objective. My concern is that Clause 25 is so unclear that it will inevitably provoke litigation, and it will do so because the Minister says that it is not changing the common law but merely expressing it, whereas its terms manifestly do change the common law.
On the question of litigation, will the noble Lord answer the point that my noble friend Lord Greaves and I made? If we are concerned about litigation, surely the construction of his proposed new subsection (2)(c),
“as is appropriate in the circumstances of the case”,
which may, as construed with the rest of the section, apply to any decision of any form made by a councillor, is pretty ripe for litigation. Therefore, I do not think his argument that the Government may cause more litigation stands up. Let him answer on this one.
My answer to the noble Lord is that paragraph (c) is simply designed to maintain—as the Government say they wish to maintain—the existing common law principle, which is that the judge will indeed look at all the circumstances of the case and decide whether there has been unlawful predetermination. I am not seeking to change the common law position; I am seeking to maintain it. The Minister has the same objective; he does not have the objective—as I understood him—of changing the substance of the common law. The objection to Clause 25 is that, on its wording, that is precisely what it will do, or there is a real risk it will do that. That is why it needs further consideration.
In the hope that the result in your Lordships’ House is neither predetermined—
Could the noble Lord explain how his amendment would affect, for example, the situation where, a councillor at a committee meeting having argued very strongly on one side but the party group having met and decided collectively on a different position, the councillor then says, when approached immediately before the council meeting, “I am changing my vote”, and, when asked why, says, “That was the decision of the group and I accept it” and then goes into the council meeting and votes in accordance with the decision of the group? How would the amendment address that issue?
The amendment would address that issue by dealing with the question in the same way as the common law deals with it at the moment. No judge is going to accept that there is unlawful predetermination simply because a local councillor has followed the whip that is imposed by his own party or his own group. This happens day after day in local government, and there are no cases that can be pointed to in which the courts have said that that is unlawful predetermination. It is not unlawful predetermination because the local councillor has listened to the matters addressed in the local council meeting.
We are dealing with a phantom problem that is created by erroneous advice being given, or is said to be given, to local councillors up and down the land. We are dealing with it in Clause 25 in a way which is going to make the problem far, far worse; and it is for that reason that I wish to test the opinion of the House.
Clause 27 : Duty to promote and maintain high standards of conduct
4: Clause 27, page 38, line 9, at end insert—
“(1A) In discharging its duty under subsection (1), a relevant authority must, in particular, adopt a code dealing with the conduct that is expected of members and co-opted members of the authority when they are acting in that capacity.
(1B) A relevant authority that is a parish council—
(a) may comply with subsection (1A) by adopting the code adopted under that subsection by its principal authority, where relevant on the basis that references in that code to its principal authority’s register are to its register, and(b) may for that purpose assume that its principal authority has complied with section 28(1) and (1A).”
My Lords, I should also like to speak to Amendments 5 to 9, 11 to 13, 68, 74 and 75. We had an extensive discussion on Report on the provisions dealing with local authority standards. It was obvious from the strength of feeling exhibited that noble Lords considered this matter to be important and worthy of careful consideration.
There was much common ground in that debate. Everyone in this Chamber agreed about the importance of maintaining the highest standards of conduct in local authorities. There was also broad agreement that the Standards Board regime has become a vehicle for vexatious, petty and politically motivated complaints, with more than half the allegations of misconduct being rejected when assessed.
At the same time, concerns were voiced that the provisions that we had set out to deal with local authority standards after the abolition of Standards Board regime were too localist and not up to the task of ensuring the high standards of conduct that we expect of local authority members. We undertook on Report to take those concerns away and see whether we could strengthen the provisions to address the concerns. Over the past few weeks, we have reflected carefully on that debate and had extensive and useful discussions with noble Lords on their concerns.
As a result of that, I am bringing back a package of amendments to modify the standards provisions in the Bill. All authorities will be required to have a code of conduct. Amendment 4 would put that in place, and local authorities must, as part of their duty to promote and maintain high standards of conduct, have a code of conduct. This requirement applies to parish councils as well as to principal authorities. That code of conduct must be in accordance with the Nolan principles of public life. Amendment 5 states that a code of conduct adopted by a local authority should be consistent with the seven Nolan principles: selflessness, integrity, objectivity, accountability, openness, honesty and leadership.
The code of conduct will, in addition, have to include the requirement for members to register and disclose interests. Amendment 5 provides that the code of conduct must include the requirement for members to register and disclose their pecuniary and non-pecuniary interests. Noble Lords will recall that under Clause 34 a member will be committing a crime if, without reasonable excuse, they fail to declare or register a pecuniary interest or if they knowingly or recklessly provide false or misleading information about that pecuniary interest.
Further, under Amendment 8 all local authorities will have to put in place a system to deal with allegations that members have breached the code. We are not going to dictate to them what those arrangements should be. They could, for example, continue to have a voluntary standards committee or they could adopt an alternative approach, but they must have in place arrangements as I have outlined.
To ensure that there is a strong independent element in these new arrangements, Amendment 8 also provides that a local authority must appoint an independent person through a transparent process and that, where a local authority has investigated an allegation, it must seek the independent person’s view before reaching a decision about the allegation. It must then have regard to that view. We believe that this will ensure that there is a check on vexatious or politically motivated complaints.
In addition, we have provided that a person against whom a complaint is made may also seek the views of the independent person. This will ensure that if a councillor feels victimised or pressured by a member or members of the council or the authority, he or she can have access to the independent person for a view.
In an investigation, where a complaint was dismissed, that would be the end of the matter. Where a complaint was upheld, a council would then have a number of options open to it under existing provisions. These are not there by amendment; they are existing provisions. In relatively minor cases, the council might conclude that a formal letter or other form of recording the matter was appropriate. Where a case involved a bigger breach of the rules, a council might conclude that formal censure—for example, through a Motion on the floor of the council—was required. In more serious cases of misconduct, the council might go further and use its existing powers to remove the member from the committee or committees for a time. We believe that this approach provides effective and robust sanctions, ensuring that the high standards of conduct in public life can be maintained, while avoiding the unnecessary bureaucracy of the standards board regime.
The requirement for an authority to have a code of conduct applies to parish councils as well as principal authorities. However, recognising the administrative limitations of parish councils, the relevant district or unitary council will administer the scheme for them. I beg to move.
My Lords, in speaking to this group of amendments, I draw attention to my own Amendment 10. I rise mainly to pay tribute to and thank the Minister for the constructive and very helpful way in which she has entered into discussions following the amendment that I tabled on Report, together with the noble Lords, Lord Tope, Lord Newton and Lord Filkin. Unfortunately, the noble Lords, Lord Filkin and Lord Newton, for very good reasons, cannot be here tonight, but they both specifically asked me whether they could be included in the thanks for the constructive approach that has been taken.
I shall not waste the time of the House by running over the ground that the Minister has already covered. I think we now have a package that is much better as a result of all our efforts, and this is now a very important part of the infrastructure of local government. As the noble Baroness knows, simply for the sake of clarity and comprehensiveness, I would have liked to have had a specific reference in the Bill to the power to suspend from a committee. However, I am grateful to her for having referred specifically to the powers that already exist, and I think that that, too, will help to clarify the situation. Therefore, all in all, I am very grateful for the help that she has provided. I know that sometimes she has had to act in the face of considerable opposition. I shall go no further than that, but I think that we have reached a place with which I feel content and, again, to save the time of the House, that means that I shall not be moving my Amendment 10.
My Lords, I follow my noble friend with a small “f”—the noble Lord, Lord Bichard. As he said, we moved a number of amendments at an earlier stage of the Bill and I, too, pay tribute to the Minister for listening so carefully and for taking so seriously the points that we made. The apologies of my noble friend Lord Newton have already been given, but I specifically undertook not only to give his apologies—a hospital appointment prevents his being here—but to pass on his warm thanks to the Minister. Those thanks are perhaps not so much for the extent to which she has moved but for the extent to which she has been able to move those close to her during the proceedings here.
I think that we have moved a very long way from the position that we were in in Committee, when the person replying on the Front Bench said that standards were a matter for local discretion. I am probably one of the greatest localists in your Lordships’ House, but I thought at the time, and feel very strongly now, that if there is one thing that should not be left to local discretion, it is standards in public life. We have got to the point that we have now reached because in the past there has been rather too much discretion over standards in public life.
I am very pleased that we are going to have a mandatory code—or, rather, that it is going to be mandatory to have a code—but I am a little sad that its minimum provisions are not to be the same throughout the country. I think that in reality they will be the same throughout the country, because my expectation is that the great majority of local authorities will simply keep the code that they all already have. My concern relates to what I hope will be a tiny minority of councils that decide not to keep the code that they now have, and it relates more particularly to why they make that decision and in what way they might change it. That leads me to ask the Minister whether there will be any form of monitoring, whether by her department or by the Local Government Association, so that we know what changes are happening throughout the country. There may well be some that are a cause for concern. What we do about them may be another matter, but we should at least know about them.
The noble Lord, Lord Bichard, has already told us that he will not be moving his amendment, but my other concern is that councils now have, and will retain, the power as a sanction, if necessary, either to remove councillors from certain committees or sub-committees or simply not to appoint them. Will that also apply to outside bodies, as all councils appoint councillors as their representatives on outside bodies? Will they now also be able to remove a councillor from an outside body to which the council has appointed him or her?
Many councils, including my own, also have local committees or area committees that are constituted and stated in the council’s constitution to comprise all the councillors elected for that area. Presumably there is a power now to remove them from that area committee. Is that the case, and how does that fit with the constitution of the council, which says that all councillors representing that area have a right to be on that committee?
My other concern is about the form of monitoring—I do not mean imposition, but monitoring—there will be to let us know what is happening under the new regime. I certainly am grateful to the Minister for moving us so far on this, but quite a number of us are still concerned about this issue and feel that we are not there yet—well, we are there but this is not perfection and we may well have to return to the issue in the years to come after a number of high profile cases.
My last point is to welcome the lengths to which Ministers have now moved in the appointment of an independent person and in trying to ensure as far as possible that that person is genuinely independent and open. That independent person now plays an even more important role, in effect being the right of appeal—the only appeal that a councillor has—against what he may well feel is the unfair victimisation by a council with a heavy one-party majority, whatever the party, of someone who is a thorn in the flesh but is not necessarily doing anything improper. Again, it is important that the independent person, as far as it is ever possible, is upheld to be genuinely independent.
I join others in very much paying tribute to the Minister. I know from other sources how hard she has had to work at times to persuade more reluctant colleagues of the necessity to move in this direction. I congratulate her on her persuasive powers and the success that she has achieved. As my colleague, the noble Lord, Lord Bichard, said, we do not have all that we want but we have a lot more than we thought we would get at an earlier stage in the Bill, and I am grateful for that.
My Lords, I want to raise a specific issue, but first to declare an interest as a councillor and one-time member of a standards committee. I welcome the amendments because they move us towards a system that is proportionate, will protect the right to free speech, give confidence to the general public, be fair to an individual councillor and should prevent party-political prejudice leading to unjustifiable and unreasonable decisions. The introduction of the independent person—or at least one independent person—seems to me to be a major help in enabling us to abolish the Standards Board for England so that matters can be dealt with locally and we can remove the need for a national referral system.
My one remaining doubt is on how the decisions on allegations will be made. That relates to subsection (3). The Minister said that all local authorities would have to have a form of process for investigating and determining matters relating to breaches of the code of conduct but it is for them to decide what those processes should be. I hope that guidance will be given requiring a local authority to have a formal committee structure to achieve this. Otherwise, it is not clear how that will be delivered. If there is to be a formal committee structure, in my view it should be chaired by an independent person but not necessarily the same one who is the independent person referred to in other subsections. In addition to having an independent chair, there will be independent members, as now, along with sitting councillors. Then the whole council will be able to decide on any suspension from committees that might be recommended.
I believe that because it is extremely important to avoid any perception or possibility of party-political bias in reaching a decision. Standards committees with independent members seems to be a means of preventing what may appear to the general public to be party-political decisions being made. Therefore, pursuing independence at a local level through the independent person and independent members of standards committees is extremely important.
My Lords, I am rather more sympathetic to the Government’s attempt to find a formulation than some of the demurrers and I congratulate my noble friend on finding an admirable way through. That is another example of the way in which she has conducted the Bill. If I may help my noble friend Lord Tope, surely the answer to the question of committees or bodies to which councils mandate members is that in the first instance questions of misconduct must come from those bodies themselves, to which the people are mandated. It seems inconceivable that any council would wish to be represented by somebody who had attracted censure. It would certainly be within the power of any council to withdraw a nomination and I would hope that every authority would do that.
My noble friend Lord Shipley raised a point on subsection (3). I rather like that subsection although I agree with my noble friends Lord Shipley and Lord Tope, and the noble Lord, Lord Bichard, that there has to be some sense that there is independence. Often these matters can be dealt with by arbitration and a sensible person who will put two people together. It is clearly sensible, as my noble friend Lord Shipley says, that we may need to get two committees. However, there may be things that can be dealt with more effectively without getting to that process, but giving everybody along the way the sense that they can go to an independent body. I would not want my noble friend to be much more prescriptive, but I agree with the sense of what my noble friend Lord Shipley said. We have found an admirable way through and I congratulate the noble Lord, Lord Bichard, and others who have contributed to it.
My Lords, I declare an interest as a member of a council—hence my straying into jargon that we apply in council debates—a member of the standards committee, which meets later this week, and vice president of the Local Government Association. I join other of your Lordships in extending warm congratulations to the Minister who is clearly responsible for, and indeed embodies, an outbreak of sweet reasonableness over this issue that we hope to be pursued by some of her ministerial colleagues when we come to other legislation after this evening’s proceedings.
Like other noble Lords, I believe that there are issues that one might have wished to have taken a little further. A mandatory code would have perhaps been preferable. As the noble Lord, Lord Tope, indicated, in all probability we will end up with something like that. I hope that the Local Government Association, with others, will draft something that will be useful and will be adopted by many local authorities. It is very important that this independent role should be reflected. I agree with the noble Lord, Lord Shipley, that mandatory committees, perhaps with that independent element, would have been preferable. Nevertheless, we have gone a long way forward since the original Bill and our earlier discussions on Second Reading, in Committee and on Report. For that we are clearly indebted to the Minister.
I am not quite so sure about the sanctions that are available and whether they are sufficient to meet some of the more serious cases. A huge range of cases has applied at national and local level. I note that people from all political groups have transgressed, sometimes quite significantly. A prominent Conservative ex-leader of a council was found to have leaked a confidential document related to a land sale and was suspended for 28 days by his council. A Labour deputy group leader was also found to have breached confidentiality in relation to a compulsory purchase order. These are not insignificant issues, and they are not personal issues either. He was suspended for three months by his local authority. A Lib Dem councillor was suspended for six months for bullying and disrespectful behaviour at a training session. One of the worst cases was an independent borough councillor who had undermined and humiliated the council’s press officer systematically in front of other councillors until she began to cry and had to leave the room. That is intolerable behaviour in any circumstances and is certainly not consonant with holding a public office. A suspension for three months took place in that case.
However, I wonder whether suspension from a committee or even removal from outside bodies is necessarily sufficient for the more serious types of case. We clearly cannot pursue this further tonight, but it may be that over time, and bearing in mind that we need to see how this works in practice, we might have to revisit that element. Another place has quite draconian powers of discipline. I am not quite sure that they are quite as draconian in this place, although there are matters currently under consideration of a very grave nature and one hopes that one would not see anything like that again in your Lordships' House. It may be therefore—given that the national framework has been dismantled and that there may still, unfortunately, be a few cases where really serious misconduct occurs—that one must wonder whether the sanctions currently available and reflected in the amendment tabled by the noble Lord, Lord Bichard, are adequate. We have clearly moved on and I am grateful and pleased that we have achieved this. I congratulate the Minister and the noble Lord, Lord Bichard, and thank them for the work they have done on this matter.
My Lords, I thank everybody for the very kind compliments. It is unusual to hear them, so I am basking a little bit. I am also grateful to the noble Lord, Lord Bichard, who fought very hard with the noble Lord, Lord Filkin, to make sure that we took this matter on board. He has been very persistent and was gracious in saying that he will not move his amendment.
We think that these procedures will have a real impact on the conduct of local councillors. While not spelling out how councils should put a scheme in place, it is clear that they have to. They must have some means of dealing with complaints. It seems almost inescapable that if you are going to do that, you are probably going to have to have some sort of committee structure to deal with them. That would be fine if local authorities decide for themselves, but to be fair and independent, they will need to have a balance.
I do not think that anybody has misunderstood. However, I want to make it clear that whatever the system and whether local authorities have independent members in that committee structure, they will still be required to have a further independent member who will act outside the committee system and will have to be referred to.
The noble Lord, Lord Tope, asked about the monitoring of the process. From the Government’s point of view, there will not be any further monitoring. It is possible that the Local Government Association will want to know what is going on, but unless things are very different from what we anticipate, it will be up to local authorities themselves to see their systems through and to make sure that this structure works.
I have been asked questions about representation on outside bodies. I think the answer must be that where the council is appointing somebody to another body, if there is a complaint about the councillor, the council is still responsible for them so it would be able to take action against them.
The other aspect that must be clear is that this has to be a transparent process. Each step must be open to comment and it must be dealt with openly. If there is a complaint that results in a warning or a letter, that must be clear so that local people who have elected these councillors know exactly what has happened or can find out. Some of the sanction will therefore be imposed by the electorate. They will know that somebody has transgressed or offended before they chose to re-elect him. The day-to-day monitoring will be carried out under the transparency of the decision-making process. The noble Lord, Lord Shipley, mentioned the decision on allegations. I hope that I have covered that. If not, I will talk to him subsequently.
I think this system will work. It leaves a big localist element, but it has structure and elements that were not there before. I am grateful to all noble Lords who contributed to this debate.
Amendment 4 agreed.
Clause 28 : Voluntary codes of conduct
Amendments 5 to 9
5: Clause 28, page 39, line 33, leave out subsection (1) and insert—
“(1) A relevant authority must secure that a code adopted by it under section 27(1A) (a “code of conduct”) is, when viewed as a whole, consistent with the following principles—
(a) selflessness;(b) integrity;(c) objectivity;(d) accountability;(e) openness;(f) honesty;(g) leadership.(1A) A relevant authority must secure that its code of conduct includes the provision the authority considers appropriate in respect of the registration in its register, and disclosure, of—
(a) pecuniary interests, and(b) interests other than pecuniary interests.(1B) Sections 29 to 34 do not limit what may be included in a relevant authority’s code of conduct, but nothing in a relevant authority’s code of conduct prejudices the operation of those sections.
(1C) A failure to comply with a relevant authority’s code of conduct is not be dealt with otherwise than in accordance with arrangements made under subsection (3); in particular, a decision is not invalidated just because something that occurred in the process of making the decision involved a failure to comply with the code.”
6: Clause 28, page 39, line 37, at end insert “or”
7: Clause 28, page 39, line 38, leave out from second “conduct” to end of line 39
8: Clause 28, page 39, line 40, leave out subsection (3) and insert—
“(3) A relevant authority other than a parish council must have in place—
(a) arrangements under which allegations can be investigated, and(b) arrangements under which decisions on allegations can be made.(3A) Arrangements put in place under subsection (3)(b) by a relevant authority must include provision for the appointment by the authority of at least one independent person—
(a) whose views are to be sought, and taken into account, by the authority before it makes its decision on an allegation that it has decided to investigate, and(b) whose views may be sought—(i) by the authority in relation to an allegation in circumstances not within paragraph (a),(ii) by a member, or co-opted member, of the authority if that person’s behaviour is the subject of an allegation, and(iii) by a member, or co-opted member, of a parish council if that person’s behaviour is the subject of an allegation and the authority is the parish council’s principal authority.(3B) For the purposes of subsection (3A)—
(a) a person is not independent if the person is—(i) a member, co-opted member or officer of the authority,(ii) a member, co-opted member or officer of a parish council of which the authority is the principal authority, or(iii) a relative, or close friend, of a person within sub-paragraph (i) or (ii);(b) a person may not be appointed under the provision required by subsection (3A) if at any time during the 5 years ending with the appointment the person was—(i) a member, co-opted member or officer of the authority, or(ii) a member, co-opted member or officer of a parish council of which the authority is the principal authority;(c) a person may not be appointed under the provision required by subsection (3A) unless—(i) the vacancy for an independent person has been advertised in such manner as the authority considers is likely to bring it to the attention of the public,(ii) the person has submitted an application to fill the vacancy to the authority, and(iii) the person’s appointment has been approved by a majority of the members of the authority;(d) a person appointed under the provision required by subsection (3A) does not cease to be independent as a result of being paid any amounts by way of allowances or expenses in connection with performing the duties of the appointment.(3C) In subsections (3) and (3A) “allegation”, in relation to a relevant authority, means a written allegation—
(a) that a member or co-opted member of the authority has failed to comply with the authority’s code of conduct, or(b) that a member or co-opted member of a parish council for which the authority is the principal authority has failed to comply with the parish council’s code of conduct.(3D) For the purposes of subsection (3B) a person (“R”) is a relative of another person if R is—
(a) the other person’s spouse or civil partner, (b) living with the other person as husband and wife or as if they were civil partners,(c) a grandparent of the other person,(d) a lineal descendant of a grandparent of the other person,(e) a parent, sibling or child of a person within paragraph (a) or (b),(f) the spouse or civil partner of a person within paragraph (c), (d) or (e), or(g) living with a person within paragraph (c), (d) or (e) as husband and wife or as if they were civil partners.”
9: Clause 28, page 40, line 1, leave out “this section)” and insert “arrangements put in place under subsection (3))”
Amendments 5 to 9 agreed.
Amendment 10 not moved.
Amendments 11 to 13
11: Clause 28, page 40, line 6, leave out “withdrawal” and insert “replacement”
12: Clause 28, page 40, line 8, leave out “withdrawal” and insert “replacement”
13: Clause 28, page 40, line 10, leave out “withdrawing a code of conduct under this section” and insert “replacing a code of conduct”
Amendments 11 to 13 agreed.
Clause 29 : Register of interests
14: Clause 29, page 40, line 21, at end insert—
“(b) members of a designated neighbourhood forum under section 61F of the Town and Country Planning Act 1990”
My Lords, this amendment deals with another issue of standards, but of a rather different nature. It relates to the position of members of the neighbourhood forums which the Bill establishes and which, of course, will have the responsibility of initiating, potentially, local plans which will be, it is hoped, a significant part of the planning process. Originally, as your Lordships may recall, the Bill proposed that such forums could be constituted by a mere three individuals. That has been expanded sevenfold and now 21 individuals can constitute themselves into a neighbourhood forum and may be involved in the process thereafter that gives rise to a local plan.
There is effectively no restriction on those who might constitute this forum, and it may well be that in some cases they would have interests. They might be interests as residents or landowners in the area, or they might be as employees of a concern wanting, for example, to open some facility such as a shop. They might be employees or participants in such a business. As matters currently stand, there would no obligation for any of those interests to be disclosed. I would have thought that in the interests of transparency, they ought to be. This would not be a complicated process. Those who apply to be designated as a neighbourhood forum would, in making the application, simply indicate their relevant interests in exactly the same way as councillors, certainly when elected, have to declare their interests. The Bill has dealt very fully with that, so it is not an inordinately complicated process.
The amendment provides a safeguard to avoid a situation where, effectively, a community might find itself being manipulated by particular interests without being aware of what those interests were. I hope that the noble Baroness will look again at this matter. This is the last opportunity, of course, in this place for that to be done. I cannot really see any strong argument against extending that degree of transparency in as sensitive an area as planning to these new forums, in the same way as would apply to members serving on a planning committee of the local authority, or indeed the parish council—given the scale, it is more like a parish council, obviously. Equally, those interests should be declared. I believe it would be consistent with the general approach that the Bill adopts in these matters for that to be the case. I beg to move.
My Lords, I am sorry to say that I have a lot of sympathy with the spirit behind this amendment, but having wearied the House with my views on neighbourhood forums and not having been able to persuade my Front Bench fully about this question, I think that noble Lords opposite will know that my view is that we should start from the assumption that the neighbourhood forum includes everybody in the neighbourhood area. In those circumstances, if the neighbourhood forum is very large, I do not think that the kind of amendment that the noble Lord, Lord Beecham, has proposed would be practicable. I do not think that we could ask everybody who lives in a village or in a neighbourhood area to publish their interests simply because they wanted to participate in a neighbourhood forum.
If, however, it emerges—and I think we have to wait and see the guidance on the Bill—that my maximalist view of what a neighbourhood forum should be does not prove to be the case, and if the neighbourhood forums turn out to be rather small bodies of perhaps only 21 individuals wielding a great deal of influence in the name of the community, then I would find the arguments of the noble Lord, Lord Beecham, quite persuasive. As we gain experience going forward of what these bodies are actually going to be—whether they are small or big—this will affect the judgment that I would make about this question. I would suggest, however, that this is something that we might leave until we see further guidance on the Bill. I am sure it would be a matter that might be addressed then. If 21 people are going to be very influential in an area, I would like to know where they were coming from, and I am sure local people would, too.
My Lords, Amendment 14 would require local authorities to maintain a register of the interests of members of designated neighbourhood forums. From the outset, I remind Members and my noble friend behind me that 21 is a minimum. You can have as many as you like on a forum—if he wants the whole bloomin’ neighbourhood, he can have the whole lot on it. There is nothing to stop that happening. I would take his view that if you are going to have most of the members of a ward or an area, which might amount to 1,500 or so, this proposal would probably be otiose.
A neighbourhood forum is designated by a local authority for the express purpose of preparing a neighbourhood plan or order for a designated neighbourhood area. The neighbourhood forum will not make decisions on planning applications or on whether a neighbourhood plan or order should come into force, nor will it take on wider duties and responsibilities. Neither is the neighbourhood forum intended to form an equivalent governance function to that of a parish council. The neighbourhood forum is simply a group designated by the local authority to prepare a neighbourhood plan or order.
We have worked hard to ensure that the Bill reflects this position by imposing minimum requirements that community groups must meet in order that they can be designated as a neighbourhood forum. This will enable existing groups to take a leading role in neighbourhood planning. To avoid forums acting inappropriately, the Bill gives local authorities the power to remove the designations of neighbourhood forums in certain circumstances. In addition, requiring their members to register and declare interests would be unnecessary. Since the forum is similar to a planning applicant submitting a planning application to the local authority, it is not making a decision in the public interest.
Furthermore, in practical terms, maintaining a register of the interests of neighbourhood forum members would be extremely difficult for the authority to achieve, given the wide range of individuals who could be members of a neighbourhood forum and the likelihood of frequent change in the forum’s overall membership throughout the process of preparing the plan or order. The Bill requires all neighbourhood forums to include, as I said, at least 21 members who live or work in or are elected members of the neighbourhood area and to have an open approach to their membership.
In addition, of course, there was the requirement that we put into the Bill—I think at Report stage—that there should be consultation before any plan is put to the local authority. I hope that Members will accept this view and not push this amendment today.
My Lords, I am grateful for the conditional support of the noble Lord, Lord True, which I occasionally receive. I quite take his point, and I also listened carefully to the Minister. I think that the noble Lord, Lord True, is right, and this may be an issue to be revisited at a later stage. I am not entirely sure that we will in fact have large neighbourhood forums. I think the surveys that have taken place so far indicate that there is not—at the moment, at any rate—a huge appetite for the formation of these things. Therefore, we may be in the position where they tend to be rather small and in that case we will perhaps need to look again. In the circumstances, however, I beg leave to withdraw the amendment.
Amendment 14 withdrawn.
Clause 46 : Repeal of provisions about petitions to local authorities
15: Clause 46, leave out Clause 46
My Lords, there have been significant changes wrought by this Bill. One of those that we debated in earlier days was the abolition of the duty to promote local democracy, which I thought was somewhat inconsistent with the general localist agenda. That elicited little or no support on the Benches opposite and did not seem to me to be worth while bringing back at this stage. However, in respect of another issue, which was the provision about petitions, it does seem to me that the case for some provision—as opposed to the elimination which Clause 46 of the Bill would have carried through—has been heightened by at least two recent developments.
The first is the changes in the Bill around the issue of democratic engagement. I very much welcome the withdrawal of the proposals for local referendums, which I thought were misconceived, overelaborate and calculated to produce a great deal of mischief and trouble. Nevertheless, they were a form—and in my view a very unsatisfactory form, and I think that has ultimately been accepted by the Government themselves—of promoting public engagement. This still leaves the issue of how one does promote particular forms of public engagement.
In another place a week ago, there was a diverting evening using the petition process which the Government have initiated to debate rather grander matters, I guess, than will normally be the case at the local level. Of course, the Government have proceeded with their electronic petitioning and the right of the other place to debate matters that receive a significant degree of support—a policy which may not have entirely produced the results anticipated last week and which some members of the Government may even have cause to regret. At any rate, the procedure is there.
For some time, in some councils, there has been an approach which has welcomed, and indeed encouraged, the bringing of petitions and discussion of them. Looking back, about three years ago the New Local Government Network, which is not a partisan organisation—it has councils in it that are controlled by all three major parties and indeed some independent members—advocated a proposal for a more defined process for bringing petitions. That proposal was, in almost the last gasp of the previous Government, embodied in legislation which, as the noble Lord, Lord Shutt, pointed out in his typically robust fashion was somewhat overelaborate, to put it mildly, and that certainly was the case. I think the legislation was announced in December 2009 and passed into law shortly after that, and it was certainly much too overprescriptive in the way it laid down how the process should be implemented.
Nevertheless, although a significant number of councils have a process to facilitate the bringing of petitions and their consideration, it is by no means universal. It seems to me important that there should be an obligation on local authorities to foster that kind of engagement with the communities they represent so that matters can be brought to the attention of the council and discussed in whatever form the council decides is appropriate, on the basis of the basic requirement that Amendment 49 would create, of having a scheme under which the petitions might be considered. This would also include another right that was brought into being by the previous Government, the right to call an officer of the council to account, in a properly structured way.
This is not an overbureaucratic process. As I say, many councils have their own procedures now. Mine certainly does; I dare say the councils of the noble Lords, Lord True and Lord Tope, and perhaps even that of the noble Lord, Lord Greaves, will have similar procedures. However, it is not universal, whereas it seems to me that it should be, so that any number of people—the council may lay down a minimum if it chooses—would know that they have the right to have matters raised at the level of the local authority, not just with their individual councillors, although that is always an option, but in a more systematic way.
The amendment also provides for a simple enough procedure for the council to give an account of what happens to those petitions, so they do not just disappear into a black hole. That certainly is the case in my own authority and I suspect in many others, and all there really needs to be, perhaps even just once a year, is a brief summary of what matters have been raised and how they were dealt with, so people can know that their views and concerns have been taken care of. It is not a huge obligation and would contribute to a healthier relationship between a local authority and its members on the one hand and the community on the other. I hope that even at this late stage the Government will have second thoughts. I beg to move.
My Lords, that is a nice try by the noble Lord, Lord Beecham, but I am afraid I am going to be conditional in my support again. Petitions are important and he is quite right to say that my own authority considers them: tomorrow night we have a debate on a petition from the public; and there are two running petitions, both with over 2,000 signatures, which I am sure will lead to debates at future council meetings. I agree that it is good practice for local authorities. I do not think the Government are withdrawing from encouraging that but it would be a pity if they were.
I have not had time to study the details of his new clause so for that reason alone I would find it hard to support it. However, I am slightly worried about the concept of public petitions calling an officer to account. All those who have been in positions of authority in local government will know the amount of, frankly, sometimes libellous and hostile comment one gets about officers, and one of the duties of people who are elected is to take responsibility. I do not care for the encouragement of petitions to call officers to account. For that reason, as well as not having studied it, I would be doubtful about the form; the spirit is right but I do not think that it is something we could add to the Bill at this stage.