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Lords Chamber

Volume 746: debated on Wednesday 3 July 2013

House of Lords

Wednesday, 3 July 2013.

Prayers—read by the Lord Bishop of Truro.



Asked by

To ask Her Majesty’s Government what steps they are taking to encourage greater economic and political co-operation between Georgia and the European Union.

My Lords, the UK fully supports greater economic and political co-operation between Georgia and the European Union, particularly through regular and intensive high-level contact. Three senior Georgian Ministers have visited London in recent months and three UK Ministers and several senior officials have visited Tbilisi. We are pleased that Euro-Atlantic integration has remained a priority for the new Georgian Government, and, through involvement in the Eastern Partnership, Georgia is finalising an association agreement and a deep and comprehensive free trade area with the EU.

My Lords, I am grateful to the Minister for his response and for setting out the range of co-operation between Georgia and the EU. I remain concerned that, for most Georgians, this assistance remains invisible. Do the Government accept that to avoid similar mistakes to those made with the Ukraine, the EU should take steps to explain to the wider Georgian public the benefits of the association agreement and other such co-operation measures with the EU, rather than after they have been negotiated?

I was briefly in Tbilisi eight weeks ago and saw that the EU is quite visible there. The EU monitoring mission is the largest external monitoring mission in Georgia, monitoring the borders with the disputed territories of Abkhazia and South Ossetia. The EU heads of mission meet regularly, and comment regularly and openly, on developments in Georgian politics. The Council of Europe and the OSCE are also active in assisting with judicial training in Georgia and elsewhere. So we are quite visible and extremely active.

My Lords, the Minister mentioned the EU monitoring mission but failed to mention that Russia and its allies still prevent that EU monitoring mission doing its work in Abkhazia and South Ossetia. What protests are we making to Russia about that, and are we content for yet another frozen conflict in Europe to remain for a longer time?

My Lords, we are not content, but as the noble Lord knows well, the Russians are not always the easiest negotiating partners. As he will also know, a fence is being erected along the boundary of the breakaway regions and, in some cases, several hundred metres into Georgian territory beyond the breakaway regions. We continue to talk to the Russians about this. The new Georgian Government have made a number of deliberate unilateral moves to demonstrate their willingness to talk to the Russians. There have been some limited talks but so far the Russians have not given very much in return.

My Lords, does my noble friend agree that the greatest challenge for the EU with regard to Georgia is managing the relationship between Russia and Georgia? Can he tell the House the position of Her Majesty’s Government on Georgia’s application to join NATO, which could present some newer challenges?

My Lords, at Bucharest some years ago NATO agreed to accept Georgia as a candidate member. The largest non-NATO, non-British force at Helmand at the moment is two Georgian battalions. We support Georgia’s aspiration to join NATO but it will necessarily, unavoidably be a long process. There are, indeed, British military trainers in Georgia.

My Lords, the right reverend Prelate mentioned Ukraine as a possible parallel. However, is not Ukraine a good deal behind Georgia politically, and therefore could not Georgia qualify much earlier, given also that the Ukrainian opposition leader is still in prison?

My Lords, it is entirely fair to say that Ukraine is considerably behind Georgia in many ways. There was a free and fair election in Georgia last spring which resulted in a change of Government. The Georgian Government have just announced that on 31 October this year there will be a presidential election. Of course, that is not to say that it is a perfect democracy. There are a number of issues, including cases against members of the previous Administration, about which we are concerned. However, when I was in Tbilisi I had lunch at the British embassy with MPs both from the governing party and from the opposition. There are many countries in what was formerly the Soviet Union in which one could not do that.

My Lords, given that the European Union accepted Cyprus as a member even though its Government did not govern the entire island of Cyprus, why does the European Union welcome Croatia and not Georgia as a member?

I note some of the unspoken sentiments behind the noble Lord’s question. As he knows well, the process of admission to the European Union is long and arduous. Georgia is at a very early stage in that process. Georgia’s administrative capability and economic changes and the judicial, rule of law issues that it will have to go through mean that any approach to the European Union will be relatively long, but that is also true for some of the western Balkan countries.

My Lords, given that the eyes of the world will be on Sochi next February for the Winter Olympic Games and that Sochi is less than 100 miles from the Georgian border, will my noble friend urge the UK mission to the UN to encourage Georgian and Russian reconciliation when the Olympic Truce is presented to the United Nations General Assembly in October? Given that the Russians invaded Georgia in violation of the Beijing Olympic Truce, this might be a timely point for reconciliation.

I congratulate the noble Lord on the faithfulness with which he wishes to ensure that we think about the Olympic Truce. We are very conscious that the Sochi Winter Olympics are taking place extremely close to the border with Abkhazia and that that may potentially raise some security issues. There is instability in the north Caucasus as well as in the south Caucasus and we have, of course, spoken to the Russians about that.



Asked by

To ask Her Majesty’s Government whether they are proposing any measures to ensure that homelessness does not increase.

My Lords, we are currently investing £470 million over four years to prevent and tackle homelessness. In the recent spending round for 2015-16, it was announced that the Department of Health will bring forward a new £40 million hostels investment programme. We are also encouraging housing supply through expanding the private rented sector, with £10 billion in loan guarantees, the £1 billion Build to Rent fund and a new three-year affordable homes programme of £3.3 billion from 2015-16, including £400 million for new-product, affordable rent-to-buy.

My Lords, homelessness has risen sharply over the past two years, and recent government measures do not help. For example, on the BBC’s “Look North” last night, it was reported that rent arrears had shot up in Sunderland, Newcastle and north Tyneside as a result of the bedroom tax, raising fears of further evictions and homelessness. Will the Government recognise that misleading national figures about overcrowding and underoccupancy fail to appreciate the huge mismatch between these two things across the country, and that the Government should now, on an area-by-area basis, work urgently with local authorities and housing associations to stop the acute crisis in housing and homelessness getting even worse?

My Lords, the Government are already working across the country with individual authorities, providing access to funding and policies that enable local authorities to make the decisions they need to make and which we have encouraged. We have changed the law to ensure that local authorities can use the private rented sector for people who are homeless or in danger of homelessness. Local authorities need to make decisions on the amount of housing and money they need to support homelessness and on their policies for dealing with homelessness. The Government are fully aware that there are discrepancies across the country and we are working with local authorities to try to help with that.

My Lords, does the Minister realise that many of these homeless people are dealt with by charities, rather than by local authorities? They are very difficult for anyone to manage. When I was a chairman of social services, we had homeless shelters where people used to smoke so often that you had a permanent fire hazard in the building. People who elect to sleep on the street often do not wish to be under any authority that would regulate them. What is the Government’s estimate of the proportion of homeless people dealt with by charities, as opposed to local authorities?

My Lords, I cannot give the noble Baroness the exact proportion but, yes, a number of charities such as Centrepoint and St Mungo’s in London provide an extraordinarily important service. The Passage at Westminster Cathedral and similar organisations across the country play an enormous part in supporting and helping homeless people. The No Second Night Out initiative now takes place not only in London but across the country. It ensures that what my noble friend suggests happens does not happen. People are not on the streets for longer than one night. They are taken off and given advice, help and support to enable them to move back into proper accommodation.

My Lords, official figures say that rough sleeping has increased by 31% in the past two years but experts working in the field say that the increase is double that. Do the Government have a projection for how homelessness, and rough sleeping in particular, is set to go in the future? Do the Government agree that it is essential that all rough sleepers should have access to emergency accommodation and that that needs to be planned for if we are to see this increase continuing in the future?

My Lords, rough sleeping had gone down but I acknowledge that it is beginning to creep up again and, as I have said, that is completely undesirable. The No Second Night Out initiative ensures that people are not left on the streets for long spells of time and that they are given access and help. The £40 million I have just mentioned will come from the Department of Health. It is to build hostels and provide hostel accommodation for people who are sleeping rough and to get them off the streets. It will be very effective, particularly for the mentally ill, of whom there are more in that situation than we would wish.

My Lords, alongside homelessness often goes hunger. The Minister told us yesterday that there was no government policy to encourage soup kitchens. Is starvation part of the Government’s policy, because that seems to be the only way out?

My Lords, I will leave that to my noble friend the Minister who made the statement. Of course, starvation is not part of anyone’s policy or wish. One of the reasons for getting people off the street as quickly as possible is to ensure that they have access to food, medical help and help with accommodation.

Has my noble friend seen the excellent report from St Mungo’s charity, which she mentioned earlier, entitled No More: Homelessness Through the Eyes of Recent Rough Sleepers? According to the report, St Mungo’s found that most of the rough sleepers it surveyed had been in touch with the police before they slept rough, rather than with any other service. What can the Government do to encourage and assist the police to do more work with other agencies to address the problems before they escalate into homelessness?

My Lords, there is already good co-operation between all the agencies that are involved with people who are becoming homeless. The police are often involved in the initial stages, when people have perhaps committed minor crimes, and so they come across them that way. However, there is common accord across the health service, local authorities and the police to ensure that as much help as possible is given.

My Lords, the Minister has a long and distinguished career in local government. Will she join me in expressing concern that local authorities are repeatedly being told that they are given money for this and money for that, but that global budgets are being cut? The result is that individual groups and needs often start asking for the money to be ring-fenced, when in fact local authorities are being constrained far too much by central government. I remember occasions in her distinguished career when the Minister objected to central government doing that.

My Lords, we could now have a debate for half an hour on the financial situation and why we are in a position where we have to reduce funding across both government and local authorities. As I said before and will reiterate, local authorities need to manage the budgets that they have, and need to make the necessary adjustments to how they administer themselves and allocate their funding. The noble Baroness is right that budgets are not ring-fenced, but local authorities are given specific allocations to help with particular areas, including homelessness. However, we are where we are and in the financial situation that we are, which did not start with this Government. Therefore, we all have to play our part in trying to ensure that that is improved.

Health: Diabetes


Asked by

To ask Her Majesty’s Government what assessment they have made of the quality of healthcare available to diabetics with eye problems.

My Lords, we have set clear objectives for the NHS and Public Health England to improve the care and quality of life for people with diabetes. The public health outcomes framework includes an indicator on preventable sight loss, which will track three of the commonest causes of preventable sight loss, including diabetic retinopathy, to drive improvements in quality.

My Lords, given the decline in the regular and important annual check-up for diabetics, does the Minister acknowledge that the retinopathy screening for diabetics introduced by the previous Government is being undermined and underresourced? On cataract operations, will the Minister explain why, among our European Union colleagues, we are the most demanding regarding the threshold required to have such operations? Given the importance of cataract operations, especially for older people in retaining their vision, will the Minister meet me and other colleagues to discuss these matters and allied subjects?

I would be happy to meet the noble Lord. I am aware that the whole area of the cataract threshold and, perhaps more importantly, the interpretation of that threshold, is one that NHS England is now actively looking at to ensure greater consistency around the country.

I do not agree with the noble Lord’s interpretation of the screening figures. The UK countries, I believe, lead the world in the area of diabetes eye screening. This is the first time that a population-based screening programme has been introduced on such a large scale. The latest figures show that up to March 2013, 99% of people with diabetes who were eligible for screening were offered it in the previous 12 months.

My Lords, given the importance of prevention, have the Government been monitoring the progress of access to insulin pumps for children with diabetes, in order to prevent eye problems later in life, given that they have better control with insulin pumps?

My Lords, that tends to be a matter for provider trusts, working in conjunction with clinical commissioning groups. I am aware that there is concern about the variability of access to insulin pumps. Of course, they are not a universal remedy for every diabetic patient, but where they are appropriate they should be commissioned. If I can give the noble Baroness the latest information on that, once I have consulted NHS England, I would be happy to do so.

My Lords, the House has heard that eye screening is critical for those with diabetes. As the national screening programmes are now commissioned by NHS England on behalf of Public Health England, and while diagnostic and treatment services are commissioned by clinical commissioning groups, will my noble friend tell the House what challenges these arrangements pose to the patient when trying to assess quality?

The key thing here is for NHS England, Public Health England and local commissioners to work closely together, which is indeed what they are doing, so that the patient experiences a seamless service. Essentially, the new commissioning arrangements for national screening programmes enable effective commissioning and oversight of the whole screening pathway, alongside integrating those with the diagnostic and treatment services. To ensure a quality service, local programmes are assured by NHS screening programmes’ quality assurance teams and services are measured against 19 standards.

My Lords, I declare my interest as vice-president of RNIB. The Minister will be aware that NICE has recently approved the use of Lucentis as a treatment for those suffering from diabetic macular oedema. We are hearing reports from various parts of the country of queues building up of people requiring treatment for diabetic macular oedema. Will the Minister undertake to do his best to ensure that the necessary resources are put in place to relieve these backlogs and enable people to benefit from this new treatment that has now become available?

My Lords, I am aware of the issue that the noble Lord raises. He will know that NHS commissioners are statutorily required to fund clinically appropriate drugs and treatments which have been recommended by NICE. The Centre for Workforce Intelligence has been commissioned to review the ophthalmology medical workforce after discussions were held between the royal college and Health Education England earlier this year. That review is due to report in the summer and the results of it should, I hope, point the way to a resolution of the issue that the noble Lord has raised.

My Lords, as a type 2 diabetic, I benefit from annual retinal check-ups at UCH; it is an excellent service. However, despite there being a national screening programme, there is a large variation in take-up, which in some areas is as low as 65%. What steps are the Government taking to ensure a higher and more consistent take-up?

In the end, accepting the offer of screening is a matter for each individual. There are some people who, for personal reasons, will choose not to take up the offer. However, as part of the process of continuous improvement, we would expect the gap between the number of people offered and the number of people receiving screening to reduce, and for there to be greater consistency in numbers offered and received across local screening programmes.

Cyclists: Safety


Asked by

To ask Her Majesty’s Government, in the light of the Department for Transport’s figures on road casualties in 2012, what steps they are considering to increase the safety of cyclists on the roads.

My Lords, as I said on Monday, we take cycle safety very seriously. Earlier this year, we announced £40 million, including local contributions, for 78 junction safety schemes. In addition, the majority of schemes in the £600 million local sustainable transport fund include cycling. We have made it easier for councils to introduce 20 mph speed limits and install Trixi mirrors. We are considering the recommendations of the All-Party Parliamentary Cycling Group inquiry and will respond shortly.

My Lords, over the past two years, the number of cyclists killed on the roads has gone up from 111 to 118 per annum and the number seriously injured, perhaps more worryingly, from 2,660 to 3,222. One of the main problems that cyclists have is their interaction with heavy vehicles. It is welcome that the Minister for Road Safety announced, I think last week, the setting up of the cycle-lorry safety working group, jointly between the Transport Department and Transport for London. Can the Minister say when this working group will start work; who will be involved and particularly whether cycling organisations will be able to give evidence to it; and which specific aspects of cycle lorry safety will it look at?

My Lords, my noble friend has asked me quite a lot of detailed questions and I think it would be better if I wrote to him. I agree that HGVs are a disproportionate problem. HGVs do not have any more accidents with cycles than do cars. However, when they do have an accident, the result is generally much more serious. It is quite right that we pay special attention to HGVs.

My Lords, the use of mobile phones by motorists is illegal, because it is unsafe. Surely the use of audio headgear by cyclists is equally unsafe and should be made illegal?

My Lords, I agree with the noble Lord that it is extremely unwise to cover one’s ears when riding a cycle, because you cannot hear traffic approaching or someone sounding their horn. I am not sure that it is necessary to make it illegal.

Would my noble friend agree that cyclists should wear some form of identification? I was nearly knocked over outside Millbank. I shouted at the cyclist—I did not swipe him—but please could we have some identification on them?

My Lords, we want to do everything we can to increase the level of cycling because of the health benefits. To require someone to carry identification when riding a cycle would be an unnecessary burden. There can be incidents with pedestrians, for instance, when it would be good if they carried identity, but we do not require them to do so, so we do not see why a cyclist should carry identity either.

My Lords, what is being done to encourage children to wear helmets? Is the Minister aware of the particular fragility of the skulls of young children?

My Lords, we are acutely aware of this problem. We strongly encourage children to wear helmets. However, again because of the difficulty of enforcing the wearing of helmets for children, we do not want to make it compulsory—a legal requirement—but we strongly encourage children to wear helmets and we think it is a very good idea for adults to wear helmets as well.

My Lords, does the Minister agree that the health benefits of cycling may not be as great as he imagines, given that in London the pollution from slow-moving traffic is about 10 times the legal limit in Europe?

My Lords, the noble Lord raises an interesting point. The noble Baroness, Lady King of Bow, has raised this matter with me and I have had a meeting with her about it. We are doing everything we can to improve the air quality in London, but it is difficult to get to where we want to be.

My Lords, the most radical and probably most effective measures proposed by the cycling organisations, such as the Go Dutch campaign, would be quite expensive. However, does the Minister not agree that the benefits would be very substantial? There would be less pollution, less congestion in cities and a better urban environment—and, of course, as the Minister has acknowledged, anyone who gets on a bike instead of sitting in a car will be much healthier, whatever their age.

My Lords, I entirely agree with my noble friend. I was a little bit worried when he started talking about expensive solutions, but I do agree with him.

My Lords, I am concerned about the safety of pedestrians, as has already been mentioned. Cyclists ride with mobiles to their ear, with ear things otherwise filled with music, turning right across the traffic when the light is red against them. What are the Government going to do to tell cyclists to obey the red signs?

My Lords, I think that I agree with the whole House that it is important that cyclists adhere to all the rules in the Highway Code, in particular by not using a mobile phone while riding and not covering up their ears, in order to avoid unnecessary accidents.

My Lords, of course cyclists should obey the Highway Code, but the Question with which we started reflected on the fact that deaths and serious injuries for cyclists have increased during the past three years. Several months ago, the Times newspaper launched a campaign on cities fit for cycling and established eight points which have been largely endorsed by the cycling organisations. Are the Government supportive of those points and, if so, what action on them have they taken?

My Lords, we are generally supportive of the Times campaign; I have the list of all its suggestions here and we are measuring our performance against them. Not every single one can be adopted, but we are trying as hard as we can to reduce the casualties.

My Lords, how many cyclists actually pay the fixed-penalty tickets which are issued to them for offences such as riding on the pavement to the danger of pedestrians? My noble friend may know that they habitually give false names and addresses; there is no way for the police officer issuing the penalty notice to know that. What are we going to do? Are we going to compel cyclists to have some form of identification so that, if issued with a penalty ticket, they are required to pay it instead of just scoffing at the law?

My Lords, it is up to the police to decide how they enforce road traffic law, and they have the necessary tools to do so. I gently say to my noble friend that the police look at where they can deploy their resources to reduce casualties. Although it is extremely annoying for noble Lords to see cyclists riding on the pavement, and although it does cause accidents, it does not cause fatal accidents.

Press Regulation

Private Notice Question

Asked by

To ask Her Majesty’s Government how it will ensure that the relative merits of the two proposed royal charters on press regulation will be properly compared with one another given that it has been reported today that the relevant Privy Council meetings are likely to be months apart.

My Lords, the charter published on 18 March continues to have the support of the three main political parties. The Press Standards Board of Finance has petitioned with an alternative charter and this is being given proper, legally robust consideration in line with the Privy Council process. That will need to include consideration of the merits of the petition in the light of all relevant facts. The Secretary of State for Culture, Media and Sport will update the other House on these matters very shortly.

In thanking my noble friend for that response, perhaps I may ask him two questions. First, am I right in saying that the effective decision on the press’s proposal for its royal charter will be taken by a group of Ministers who happen to be privy counsellors? It is four months since the beginning of this royal charter process. Why has it taken so long? Given that the Government and Parliament have already rejected the press’s proposals, why do they need until October to give even further consideration to them? Secondly, is the Minister aware that press proprietors are now in the process of setting up their own body in any event and that one story is that they are to begin recruiting staff? Can the Minister therefore tell me just when we will get round to deciding the royal charter which was overwhelmingly approved by Parliament in March? Surely it is that charter, the charter approved by Parliament, which is pre-eminent and the one that we want to see considered and implemented?

A number of questions were asked, my Lords. We have to undertake due processes as regards the PressBoF charter application. One reason for the timing of that is that none of the detailed preliminary work with the relevant government departments and other interested parties that normally precedes a formal petition of the Privy Council has been undertaken. Indeed, that period of openness has resulted in 19,000 responses. Due processes have to be undertaken. That is the legal advice to which it is important to adhere. As for the Government’s charter, work is continuing on the outstanding points. I will perhaps go into them in further detail later, but work is being undertaken on the Government’s proposals. As for the press proprietors’ considerations, this is a matter for the Privy Council, not a matter for the press proprietors. The Privy Council will go through the due processes that are required. They may be lengthy or arcane to some, but they must be undertaken.

Is it not glaringly obvious to everybody that the press is playing for time in order to avoid their responsibilities? Is it not time that we faced up to this? May I offer my assistance to the Minister, having had some experience of Bills of this nature from 20-odd years ago? I suggest that a group of Members, whether in the House of Commons or the House of Lords or jointly, see the Culture Secretary with proposals for a Bill promoting Leveson’s recommendations. It might take into account some of the other factors that have come to light, but we could have proper regulation fairly soon by putting a Bill through Parliament and ceasing to play for time with royal commissions.

My Lords, I understand your Lordships’ frustration about timing. Indeed, already two elements of Acts of Parliament with cross-party agreement deal with some of the Leveson recommendations. Obviously, I will pass on to the Secretary of State the noble Lord’s suggestion. However, I repeat—and I am sorry for doing so—that we have to go through the due process. The legal advice on these matters has been given to the leaders of all the political parties and I know that the Leader of the Opposition is in possession of that. That is why we are going through the necessary procedures.

How much support does the Minister think there is for the PressBoF charter other than from a certain powerful interest group? The fact is that its proposal would not create a self-regulator that is genuinely independent or impartial. On Monday, I quoted Sir Tom Stoppard and I want to quote him again.

“The resistance to a statutory monitor suggests that the dream of self-regulation persists in some quarters. Well, they had that, and . . . they blew it”.

Does not my noble friend agree with one of our greatest defenders of the freedom of the press?

We are in the position we are because wrongdoing took place, and we have had to decide how best to ensure that this does not happen again. That is why the cross-party royal charter commands the support of all the political parties. Indeed, it is why at PMQs today, my right honourable friend the Prime Minister made very clear his views on the PressBoF proposal and his continuing support for the cross-party royal charter.

My Lords, when the noble Lord answered the question on Monday, he said,

“it is not appropriate for the Privy Council to consider more than one royal charter at a time on the same issue”.—[Official Report, 1/7/13; col. 976.]

Why is the Privy Council uniquely incapable of multitasking? I bet it is a man who is running it. Yes it is—it is the Deputy Prime Minister.

As I am sure noble Lords are aware, there are about 500 members of the full council. I bet there are more than enough in the Chamber this afternoon. Indeed, the noble Lord who asked the question is a member of the Privy Council, as are all the others sitting next to him. We could have a meeting now in the Moses Room. Could the Minister agree that this would be a desirable thing to do so that we can begin to do what the victims want and what Parliament has decided?

The noble Lord makes some very tempting suggestions but there is going to be an update by the Secretary of State very shortly—although I am not sure what “very shortly” means. I hope that it will be helpful to your Lordships. Clearly, we all want to make progress.

My Lords, what proposals do the Government have for dealing with the situation which may arise when, having gone through due process, two charters have the approval of the Privy Council?

Oh dear. The truth is that there will be this due process in which the PressBoF charter is considered. Obviously, I cannot prejudge that because that is part of the due process that will need to be undertaken. Once that is considered, clearly, the cross-party charter would come up for consideration. As we speak, work is going on to ensure that the fine-tuning of that is complete, and that involves Scotland compliance following the vote of the Scottish Parliament on 30 April, and discussions with the Commissioner for Public Appointments.

My Lords, for the sake of clarity, will my noble friend explain to the noble Lord opposite the difference between a meeting of Privy Counsellors and a meeting of the Privy Council? He does not seem to understand the difference.

I defer to the many Privy Counsellors in your Lordships’ Chamber. Not being one, I have not yet attended a meeting, so I am not in a position to comment fully, but I entirely understand the point that my noble friend is making.

The Minister said that wrongdoing took place, so can he explain the Government's retreat from the position that the victims of that wrongdoing had to be satisfied by the outcome of what is now before the Privy Council? Will he please explain to those victims that retreat and the delay in giving them the satisfaction that was promised?

The important thing is to make sure that this is done properly and correctly, and that is what is being done. I do not quite understand what the noble Baroness means in so far as we are going through the current process because of the need to ensure that this does not happen again.

I understood that. The victims are precisely why we are here. It is to ensure that this does not happen again. That is the final objective that we need to secure.

Is the Minister still committed to securing a royal charter that will underpin self-regulation but not self-interested regulation?

The intention with the cross-party charter is precisely to ensure that there is independent regulation of the press. As I said earlier, we need a free press but we need a responsible press. We need to secure a lasting settlement on both of those.

Reserve Forces


My Lords, with the leave of the House, I shall repeat a Statement made in the other place. The Statement is as follows:

“With permission, Mr Speaker, I wish to make a Statement on the future of our Reserve Forces. In November last year, I announced a formal consultation which lasted until January this year. I am grateful for the more than 3,000 responses we received. I have placed copies of the summary of consultation findings in the Library of the House.

More than 25,000 reservists from all three services have deployed on operations over the past 10 years. Sadly, 30 have paid the ultimate price, and I know that the whole House will want to join me in saluting their sacrifice.

In 2011, the Future Reserves 2020 Commission reported that our reserves were in serious decline. The Government responded by committing to revitalise our Reserve Forces as part of Future Force 2020, reversing the decline of the recent past, growing their trained strength to 35,000 by 2018 and investing an additional £1.8 billion in them over 10 years.

We recognise the extraordinary commitment reservists make and, in return, we commit to deliver the reservist a challenging and rewarding experience, combined with an enhanced remuneration and support package and an improved deal for employers, but to recruit the reserves we need and train and equip them to be fit for purpose in Future Force 2020 requires substantial change.

I am today publishing a White Paper setting out our vision for the Reserve Forces and the detail of how we will make reserve service more attractive. It also confirms our intention to change the name of the Territorial Army to Army Reserve—better to reflect the future role. Alongside the White Paper, I am publishing the first report of the independent External Scrutiny Group which I announced last year to oversee and report on our progress in delivering Future Reserves 2020.

The White Paper reiterates our commitment to improve access to modern equipment and provide better training as part of the £1.8 billion package. Two hundred million pounds will be invested in equipment for the Army Reserve and to kick start that programme I can announce today that we will bring forward to this year £40 million of investment in new dismounted close combat equipment—meaning upgraded weapons and sights, night vision systems, and GPS capabilities will start to be delivered to reserve units before the end of the year.

The integration of regulars and reserves is key to Future Force 2020. That integration prompts a closer alignment of the structure of remuneration across the Armed Forces. We have therefore decided to increase reservists’ total remuneration in two ways: through the provision, for the first time, of a paid annual leave entitlement in respect of training days and through the accrual of pension entitlements under the new future armed forces pension scheme 2015, for time spent on training as well as when mobilised. These two measures represent a substantial percentage increase in total reserve remuneration.

The White Paper sets out details of an improved package of occupational health support for reservists to underpin operational fitness. We will also ensure that effective welfare support is delivered to reservists and their families. Welfare officers are being recruited now for Army Reserve units. Additionally, we have already implemented measures to streamline and incentivise the process by which those leaving the Regular Forces can transfer to the volunteer reserve, with accelerated processing, passporting of medical and security clearances and retention of rank, as well as a signing-on bounty of £5,000 for ex-regulars and for direct entry officers joining the Army Reserve.

The support of employers is crucial to delivering the future Reserve Forces. We seek to strengthen Defence’s relationships with employers so that they are open and predictable. The White Paper sets out how we will make liability for call up more predictable; make it easier for them to claim the financial assistance that is already available; increase financial support for SMEs by introducing a £500 per month per reservist financial award to small and medium enterprises when their reservist employees are mobilised; and improve civilian-recognised training accreditation to help employers to benefit from reserve training and skills.

The White Paper signals a step change in Defence’s offer to employers. I urge them to take up this challenge. In turn, by building on the Armed Forces covenant with the introduction of the corporate covenant, we will ensure that reservist employers get the recognition they deserve. However, while Defence is fully committed to an open and collaborative relationship with employers, it is essential that the interests of reservists are protected. Dismissal of reservists on the grounds of their mobilised reserve service is already illegal. We will legislate in the forthcoming defence reform Bill to ensure access to employment tribunals in claims for unfair dismissal on grounds of reserve service without a qualifying employment period.

The job that we are asking our reservists to do is changing, and the way in which we organise and train them will also have to change. That will impact on both force structure, and basing laydown. The force structures and roles of the maritime and air reserves will remain broadly similar to now, although increased in size and capability. The Army, however, has had substantially to redesign its reserve component to ensure regular and reserve capabilities seamlessly complement each other in an integrated structure designed for the future role. That redesigned structure has been driven primarily by the changed function and roles of the Army Reserve and the need to reach critical mass for effective sub-unit training.

The details of the future Army Reserve structure are complex and beyond what could coherently be explained in an Oral Statement. I have therefore laid a Written Ministerial Statement, supported by detailed documents which have been placed in the Library of the House, showing the complete revised order of battle of the reserve component of Army 2020.

This restructuring will require changes to the current basing laydown of the Army Reserve. The TA currently operates from 334 individual sites around the United Kingdom, including a number of locations with small detachments of fewer than 30 personnel. Some of these sites are seriously under-recruited. To maximise the potential for future recruitment, the Army is determined that, as it translates its revised structure into a basing laydown, it should take the opportunity to rationalise its presence by merging small, poorly recruited sub-units into larger sites in the same conurbation or in neighbouring communities. As part of this exercise, the Army Reserve will open or reopen nine additional reserve sites.

However, the consolidation of all poorly recruited units would have led to a significant reduction in basing footprint and a significant loss of presence in some, particularly rural, areas. I have decided that that would not be appropriate as we embark on a major recruitment campaign. We will therefore retain a significant number of small and under-recruited sites that the Army considers could become viable through effective recruiting. The units on those sites will be challenged to recruit up to strength in the years ahead. Over the next couple of years, we will work with local communities, through the Army’s regional chain of command, to target recruitment into those units. I know that honourable and right honourable Members will want to lead their local communities in rising to this challenge.

The result of the decisions I am announcing today is that the overall number of Army Reserve bases will reduce from the current total of 334 to 308, a net reduction of 26 sites. With your permission, Mr Speaker, I am distributing a summary sheet which identifies the reserve locations being opened and those being vacated.

The White Paper and the WMS on structure and basing together set the conditions to grow and sustain our reserves as we invest an additional £1.8 billion over 10 years in our vision for the integrated reserves of Future Force 2020. That vision means an even bigger contribution from our reservists and from employers as we expand the Reserve Forces. I am confident that both will rise to the challenge.

For the first time in 20 years, the reserves are on an upward trajectory. Those of us who are neither reservists nor employers can none the less provide vital support and encouragement to our fellow citizens who make such a valuable contribution to delivering our national security, and I know that Members on all sides of the House will want to take the lead in urging our communities to get behind the reserves and the recruiting drive that will build their strength to the target level over the next five years. I commend this Statement to the House”.

My Lords, that concludes the Statement.

My Lords, I thank the Minister for repeating the Statement made earlier in the House of Commons by the Secretary of State. The Minister will be aware that the information on the hardly insignificant issue of the net reduction of 26 sites that will be lost was not available when the Secretary of State made his Statement. The Speaker in the Commons described that as “woefully inadequate” and reminded the Secretary of State that he was responsible for his department. The information on the sites is now available but will the Minister confirm that, in future, when the Secretary of State makes a Statement, he—the Secretary of State —will provide both it and the supporting documentation at the normally accepted time?

Before I go any further, I should say that we support an enhanced role for our Reserve Forces working alongside our regulars. We pay tribute to those who have served, particularly the 30 reservists who have died in the service of our country over the last 10 years and the much larger number who have been wounded. We welcome much of today’s announcement, not least those parts dealing with increased training alongside regulars, investment in equipment, the changed nature of Reserve Forces, improved occupational healthcare and welfare arrangements—including, presumably, for mental health problems—and the intentions to address the issues surrounding potential discrimination against members of our future Reserve Forces in their civilian employment.

We want the increase in the number of our reserves to be achieved, not least because the Government appear to be putting all their eggs in one basket on this issue; there appears to be no plan B. Today’s Statement and White Paper follow on from previous Statements and the consultation document Future Reserves 2020. In the foreword to that document, the Secretary of State said that it marked,

“a significant step forward in our plans to build the effective reserves our Armed Forces require to provide security for the Nation in future”.

The paper also said that our Reserve Forces,

“will be an integral and integrated element of our Armed Forces”,

will be,

“routinely involved in most military deployments”,

and that our Armed Forces will,

“increasingly rely on the Reserve Forces to achieve the full range of tasks set to Defence”.

On the basis of the Government’s own words, the reserves will not simply be complementing our Army; they will be plugging some of the gaps left by cuts to regular personnel. However, when I asked the Government two weeks ago for an assurance that the size of our Regular Army would not be reduced to the intended figure of 82,000 unless the strength of our Army Reserve had been increased to the intended trained strength of 30,000, the Minister said he could not give me such an undertaking.

The Strategic Defence and Security Review in 2010 addressed the issue of the commitments and planning assumptions that our future Armed Forces could be expected to carry out and the maximum level, extent and nature of operations they could be expected to undertake at any one time. Can those planning assumptions, set out in the SDSR in 2010 when there were 102,000 regulars in the Army, still be carried out with a Regular Army of 82,000 and an Army Reserve force of 30,000? Is the reduction in the size of our Regular Army to 82,000 dependent on our having increased the size of our trained Army Reserve to 30,000? If we need a Regular Army of 82,000 and an Army Reserve force of 30,000 to fulfil the maximum level, extent and nature of operations that we would expect our future Armed Forces to undertake at any one time, as set out in the 2010 SDSR, how can the Government allow the size of our Regular Army to fall to 82,000 unless there is, by then, a trained Army Reserve force of 30,000? If the reduction in the size of our Regular Army to 82,000 is not dependent on having first achieved an increase in the size of our trained Army Reserve to 30,000, that must surely mean that we will not have the manpower available that was assumed in the 2010 SDSR. Could the Minister confirm that this would mean less capability as a result and, if so, which capabilities would go or be reduced as a result?

The Statement has confirmed that the Government will be investing an additional £1.8 billion in the reserves over the next 10 years. How will that be divided between buildings, equipment, recruitment—including financial incentives—and pay? Will a trained Army reservist be regarded as having the same level of skills, expertise and experience as a comparable member of the Regular Army?

Some concerns have been expressed about the likelihood of increasing the number in our Reserve Forces to the required level. How is recruitment to our reserves currently going against targets? What was the situation in that regard last year? As for recruitment to the reserves, will new recruits be committed to staying in the reserves for a minimum or any other specific period of time? Will those receiving the taxable bonus of £5,000, to which I think reference was made in the Statement, be required to stay for a minimum period of time? What assumptions have been made about turnover in the reserves in future? How many people has it been assumed will need to be recruited into the reserves each year to sustain the greatly increased numbers in our Reserve Forces, including 30,000 in the Army Reserve?

How easy or otherwise it proves to increase the size of our reserve forces remains to be seen. A recent Federation of Small Businesses survey found that one in three employers believed that nothing would encourage them to employ a reservist, despite the fact that service experience provides people with organisational, team-building and leadership skills. It is of course possible that the financial incentives for SMEs announced in the Statement may change that position.

I reiterate our support for the enhanced role of our Reserve Forces. The move will also provide the opportunity to help to ensure that we can maximise niche civilian skills in a military setting, not least in the fields of cybersecurity and languages. It is also essential that those who want to volunteer to serve their country are protected in the workplace and do not suffer discrimination. That may not always be easy to achieve, since discrimination against someone who is not there the whole time can sometimes be very difficult to prove. I look to the Government to put particular emphasis on that point in the legislation and regulations that will follow.

We hope that the required increase in our Reserve Forces is achieved. The potential consequences for the defence and protection of our nation could be very serious if it is not.

My Lords, I thank the noble Lord for his general support for what we are doing. I share his and the Opposition’s aspiration to strengthen the reserves in a very bipartisan way. The noble Lord asked me about the Commons Statement. The Secretary of State said that he would investigate and write to the right honourable shadow Secretary of State. When I have more information, I will pass it on to the noble Lord. I myself have ensured that all the necessary paperwork was distributed in the Peers’ Lobby and the Prince’s Chamber during the first Question, and I hope that noble Lords have got their hands on everything. If they have not and we have run out of copies, I have some spare copies.

There is one correction that I need to point out: in the information that I have handed out, I have been advised that there is an inconsistency over Kilmarnock. There is no change in the end result for the figure of 46 sites for Scotland, but Kilmarnock should have been scored as a new site rather than as an existing one. That is therefore good news regarding occupation.

The reserves are an essential component of our national security, our future forces and success on operations. In future, their contribution to our defence capability will increase and the reserves will become an integrated part of the whole force.

I turn to the noble Lord’s questions. First, he mentioned plan B. I am confident that we can deliver on that, and I will come to that in a short while when I address another of his questions. His second question concerned whether the reductions in the Regular Forces made them more dependent on the reserves and the commitment that I was not able to give the noble Lord the other day. I still cannot give that commitment. We are aware that there are risks in this, but we are confident. Recruiting is going well and the historical figures are on our side. When I was in the Army—a long time ago, admittedly—the reserves numbered 100,000, with a much smaller population, and we had half the strength of the present reserves in 1990. Other countries, such as the United States, Australia and Canada, have a much higher percentage of reserves. We are investing £1.8 billion over 10 years and, as the Statement said, we are investing £40 million this year. We are confident that the reinvigorated reserves will deliver the quality and number of reservists that we will require in future, both in training and on operations.

Employers play a key role in enabling the reserves to deliver their essential contribution to defending the nation’s security. This future relationship may need some incentives, which could include a cross-government commitment to support employers who encourage volunteering. The public sector will take the lead in setting the example.

The noble Lord asked how the £1.8 billion will be divided. We review our allocation on a continuous basis, to maximise value for money from the available resources to meet the needs of the Reserve Forces. He also asked if a trained reservist would have the same level of skills as a regular. When reservists deploy to operations, they will be equally as skilled in their specialist roles as a regular they serve alongside. The noble Lord asked how recruitment was going. All the indications that I have heard indicate that it is going very well and we believe that the announcement will have a positive effect on Army Reserve recruiting.

Our Reserve Forces have always attracted highly motivated individuals, and the assurance that the reserves will play a more routine and assured role within the whole force concept will act to broaden the appeal and encourage those looking for such an opportunity and their employers. The noble Lord asked about the commitment that a reservist must give and whether there is a minimum time. Every service person enlists for an agreed period of service. As we are a voluntary force, we recognise that individuals can exercise choice to remain or leave. Measures announced in the White Paper should further encourage retention.

As for turnover, I can confirm that retention of reservists, particularly in the Army, is on average much better than that of their regular counterparts. The noble Lord then asked me about employers. The Ministry of Defence is committed to working with employers to understand their views on its use of reservists and the impact of legislation, to understand better what an employer can realistically sustain in future. The Ministry of Defence understands the importance of engaging with employers and potential employers and, in addition of engaging with employer groups such as the CBI and FSB through the chain of command, the National Employer Advisory Board, SaBRE and the Reserve Forces’ and Cadets’ Association.

Finally, the noble Lord asked about the legal situation relating to employment tribunals. An individual cannot generally bring a claim for unfair dismissal at an employment tribunal until he or she has completed two years of continuous service with an employer. Periods of mobilisation do not count towards continuous service; therefore, it can take reservists longer than two years to gain this protection. I think that covers all the noble Lord’s questions, but if I have missed anything I will write to him.

My Lords, I thank my noble friend for the Statement that he has repeated. From these Benches we associate ourselves with saluting the sacrifice made by our reservists. To meet the challenge of significantly increasing the numbers in our Reserve Forces we need to foster the belief that employers, employees and the nation all benefit from reserve service. Will the Minister say whether medically trained reservists will be able to bring skills to the military and develop additional skills to bring back to their UK employers? Will he also tell the House how employers and employees are to be convinced that there are benefits to the employer and the employee from improved skills and experience while serving, which might outweigh the temporary loss of civilian work time? Finally, will he say whether consultation with employers—which he mentioned previously—have uncovered signs of corporate social responsibility by allowing or even encouraging participation in the reserves?

My Lords, in answer to the first part of the noble Lord’s question, medical reservists develop additional valuable specialist skills when they are deployed, which they then bring back to the National Health Service. The Defence Medical Services is uniquely placed to share the development of operationally specific medical science and clinical excellence with the NHS. The National Institute for Health Research centre has brought together military and civilian trauma surgeons and scientists to share innovation in medical research, to advance clinical practice on the battlefield and to benefit all trauma patients in the National Health Service at an early stage of injury.

On the benefits to an employer who recruits an employee who is a reservist, I would say that reserve service will benefit different employers in different ways. For some, the improved skills, experience and training of the individual reservist will be beneficial. For others, where the reservist’s military role is close to their civilian one, there will be more benefit from transferable skills. For some companies and sectors, reserve service suits and supports their business models. For many, reserve service may support corporate social responsibility objectives and may be part of their social action plans, alongside wider volunteering policies. We encourage employers to publicise their support for the Reserve Forces to customers, suppliers and their local communities. The second part of my answer was in response to my noble friend’s third question.

My Lords, the Government say in the White Paper that they will introduce new legislation to enable mobilisation for the full range of tasks that our Armed Forces may be asked to undertake. Current mobilisation arrangements are something of a historical anachronism. Invariably they require ministerial authority. They date from a time when protection for employers was nothing like as good as it will be in future. Will there be arrangements to allow mobilisation of individuals for very small units to be carried out without having to seek ministerial authority?

My Lords, I cannot from the Dispatch Box answer the noble and gallant Lord’s question. That point is not in my briefing, but I will write to him.

My Lords, as a former president for 10 years of the Reserve Forces Association, I warmly welcome this Statement. I would be grateful if the Minister would confirm two key principles. First, we should maintain the footprint of the Reserve Forces—and the Armed Forces—around the country. I am very pleased that there are no dramatic plans to reduce their number. Secondly, will the Minister confirm that the support of employers, and in particular of small employers, is crucial to maintaining support for the Reserve Forces?

My Lords, I can confirm both points. We consider the footprint absolutely vital. Where we have had to close places it is because there has been a very small uptake in recruitment. We have managed to close fewer than we planned. I agree with my noble friend’s point about employers, and in particular small companies. In finishing, I pay tribute to my noble friend for the important work that he did.

The noble Lord was characteristically thorough and conscientious in informing the House and in answering my noble friend’s questions. However, I think that he left out one point. Will the £5,000 joining-up bonus be repayable if the officer does not do a minimum amount of service? I would be interested in the answer to that. I think that it will be quite a challenge to get to 35,000 but an ever greater challenge to get to a point where the reservists are on the same footing as the regulars and do not suffer a higher rate of casualties on active deployment. In that context, it is very important that we should put everything behind them in terms of equipment and training, and the noble Lord gave us some assurances on that point. Equally valuable is the promise by the Government to strengthen the defence of reservists against dismissal. However, would it not be a good idea for the Government to go further and to protect reservists not just against the danger of unfair dismissal but against discrimination in terms of remuneration or promotion? The American national guard has that kind of protection. Surely it is very important that reservists, or those who are planning to join the reserves, are confident that they will not suffer discrimination of that kind in the job market.

My Lords, as regards the noble Lord’s first question about the £5,000, I do not change my answer. The reservists who join up are free to leave whenever they want. We are very confident that those regulars who become reservists will stay and will not leave the minute they get their money. We are also very confident that by 2018 we will get up to the figures that we need. I have spent a lot of time being briefed and our recruiting figures are going better than we expected. Noble Lords will see in the White Paper all the inducements that we are giving to the reservists and their families, and the encouragement that we are giving to employers. We realise that we have to work much more closely with employers than has happened in the past and we will endeavour to do that.

Will my noble friend confirm to the House that no closures of Royal Naval Reserve and Royal Marines Reserve units are planned? I should remind the House that Corporal Croucher, a Royal Marine reservist, was awarded the George Cross while serving in Afghanistan, and Corporal Seth Stephens, a Special Boat Service reservist who was killed in action in Afghanistan, was posthumously awarded the Conspicuous Gallantry Cross. These two outstanding and brave men had both served for many years as regular Royal Marines. What encouragement are the Government going to give retiring members of the Regular Forces to join the reserves? Regular members of the Armed Forces have so much to offer the reserves. They have a high level of training and expertise and are fully aware of the demands that will be made of them.

My Lords, I can confirm my noble friend’s first point. No Royal Naval Reserve or Royal Marines Reserve units are closing as a result of FR20. As part of a wider betterment programme, three units will relocate to new accommodation, often in more populated areas. In some instances, the final decision on where the new locations will be is yet to be made, but the distance that current reserves will be expected to travel to attend their new location is likely to be less than 12 miles.

Regarding my noble friend’s question about regular redundees joining the reserves, the reserves have always benefited from the experience brought by ex-regulars, and some capabilities have relied heavily on their skills owing to the time that it takes to train on advanced equipment. Those who leave the Army through redundancy are being encouraged to consider a part-time military career in the reserves. For the Army, ex-regulars who enlist in the Army Reserve within three years of leaving regular service can enjoy a number of incentives and benefits, such as the reduced Army Reserve commitment and training requirement or, alternatively, a commitment bonus worth £5,000 paid over four years. That partly answers the noble Lord’s question. There is a comprehensive information campaign to ensure that all service leavers, and not just redundees, are aware of the opportunities and benefits of joining the reserves.

My Lords, can the Minister confirm that, pro rata, recruitment to the reserves in Northern Ireland in recent years has been greater than that in England, Scotland or Wales?

My Lords, I can confirm that to the noble Lord. That point came up in the Statement in the other place and it is absolutely true.

My Lords, I thank the Minister for his Statement and wish him and his colleagues every success in achieving this plan for the Reserve Forces. As the Minister knows, in the past I have asked him a number of questions about the Defence Medical Services and I see from the White Paper that 38% of the DMS is currently reservists. What percentage of the DMS does he envisage will be reservists in the future and will there be some medical competences within the DMS which will be entirely dependent on reservists?

My Lords, I thank the noble Lord for his support. He is absolutely right that the figure is 38%. I have seen the hugely valuable work that they do in Camp Bastion. Both the Armed Forces and the National Health Service benefit from the work that is going on and we will need these medical people in the future. I cannot give a specific percentage figure but I can assure the noble Lord how vital these people will be to us.

My Lords, the Written Ministerial Statement rightly makes reference to the potential implications that the basing changes may have on cadet force units where these are collated with reservist units. I welcome the statement that alternative accommodation will be pursued in such cases but, of course, “pursue” is a slightly slippery word and does not quite imply the same as “achieve”. Will the Minister undertake to keep a very close eye on this to ensure that the changes being made with regard to the Reserve Forces cause no harm to what is widely acknowledged to be the finest youth institution in the land?

My Lords, I can give the noble and gallant Lord that assurance. We take the cadets very seriously. In the few cases where a unit closes, mostly the cadets will remain in the building but on a very few occasions they will be moved very nearby. I have been a patron of sea cadets and I have first-hand knowledge of the important work that they do.

My Lords, can my noble friend say a little more about the integration of the newly enhanced Reserve Forces with the Regular Forces, which will be crucial to the effective transfer to which he referred?

My Lords, my noble friend is absolutely right. Army Reserve units will be paired with regular units in peacetime for training and force generation, enabling combined training and helping to build links with the local community, including employers, to aid recruitment and resettlement of service leavers. Reserve units in all three services may be integrated with regular units for mission rehearsals and for operations. We will ensure that our use of reserves is as predictable as possible to help reservists, their families and particularly employers to plan ahead. Specific levels of attendance will become a compulsory part of the proposition and the majority of reservists can expect a maximum of 12-months mobilised service in a five-year period. Whether it is needed will obviously depend on operational requirement.

My Lords, I very much welcome the Statement. It is certainly extremely comprehensive. From what one can see from a first glance at the White Paper, it fulfils many of the aspirations which those of us who commented on the Green Paper felt were necessary. However, I should like to ask my noble friend about the national relationship management scheme. I suggest that, in any adaptation of the current relationships that exist, the process should be evolutionary rather than revolutionary. Having been involved in it for several years as chairman of the National Employer Advisory Board, the mechanisms that have existed for the past 12 to 15 years have proved to be extraordinarily effective. For example, the branding of SaBRE is such that it is understood throughout the country. I hope that my noble friend will ensure that this can be built on rather than something totally new created which is more likely to confuse than to help.

My Lords, I thank my noble friend for his support. I also pay tribute to him for the important work that he has done for the reserves over many years. My noble friend made some very important points. I will take them on board and take them back to my department.

My Lords, in terms of the importance of enthusing and recognising employers, rather on the lines of the Queen’s Awards for Enterprise, and given the military service of Prince William and Prince Harry, would it be possible to consider something like the Princes’ Reserve Forces Award, which would combine employer participation, national interest and royal recognition?

My Lords, we are looking at this area very closely. As I said, we take the relationship with the employers very seriously, and this is one of the ideas under consideration.

My Lords, will my noble friend come back to the question of retention? If the reserve units are to be fully integrated into the Regular Forces, does it not follow that if their members do not step up to the plate when called on to do so, the Regular Forces concerned will be deficient in their capability? Can he think a little further as to whether what he says he has great confidence in ought not to be toughened up with something more enforceable?

My Lords, I repeat that I am confident. As I understand it, retention in the reserves, particularly the Army reserves, is very much higher than in the regulars. I do not have the figures in front of me, but I was told before I came into the Chamber that retention in the reserves is considerably higher than in the regulars. I can write to my noble and learned friend with the figures.

My Lords, the noble Lord is aware that the business community has culled and fined its companies in the matter of strength and management to get through this very difficult economic stage. As a number of noble Lords have mentioned, some sort of reward is essential for those companies which are taking part. I will say a little more bluntly that perhaps some tax benefit or some exemption from certain company taxes should be given to companies which fulfil the deal. Giving away one chap today in a company, particularly in a small to medium-sized company, is a considerable sacrifice, and I believe that Her Majesty’s Government have not fully thought through the rewards for the business community.

My Lords, I can assure the noble Viscount that nothing is off the table. We are open to any suggestions. As for his proposal for a tax benefit, I will run it by the Treasury. It is certainly a very good suggestion. We seek an open relationship with employers tailored to meet the needs of different sizes and types of employers, based on mutual benefit. That will include working together to credit the skills and the training that reservists gain during service with recognised civilian qualifications, and the area that the noble Viscount mentioned.

Finance Bill

First Reading

The Bill was brought from the Commons, read a first time and ordered to be published.

Care Bill [HL]

Committee (4th Day)

Clause 80 : Reviews and performance assessments

Amendment 74

Moved by

74: Clause 80, page 67, line 19, at end insert “including their integration with other relevant services”

My Lords, in the unavoidable absence of my noble friend Lord Warner, I shall move Amendment 74 and speak also to Amendment 75.

These two amendments give an opportunity to put into the Bill further emphasis on the importance of integration. Amendment 74 requires reviews by CQC of regulated health providers to cover the integration of those services with other relevant services. Amendment 75 does the same for reviews of local authority adult social care services. They are a clear reminder in the Bill that when CQC carries out such reviews it will have to pay attention to the issue of integration of services for the benefit of patients and service users.

I shall not detain the Committee today with yet another speech of a kind that I have made many times before on the importance of integration of health and social care services from the point of view of patients, service users and their carers. We all know how important that is. The Committee is familiar with the arguments and, more importantly, so is the Minister. Indeed, the Chancellor of the Exchequer, no less, acknowledged this in his announcement in the comprehensive spending review in regard to joint budgets. The announcement has been widely welcomed, although caution has been expressed about how these budgets will operate in practice.

The amendments are a modest attempt to give some practical effect to the aspiration for integration which we all share. I hope the Minister will say that it is a good idea, “Let’s do it”, and get us off to a cracking start this afternoon. I beg to move.

My Lords, I declare an interest as a chair of a NHS foundation trust and as a consultant and trainer with Cumberlege Connections. I am happy to support my noble friend Lady Pitkeathley’s Amendments 74 and 75, which rightfully push the CQC into the direction of integration of services. I also sympathise with the amendments of the noble Baroness, Lady Greengross, Amendments 76ZZA and 76ZAA, to which she will speak later.

My Amendments 74A, 76ZA and 76ZB and my opposition to Clause 80 stand part go to the core of the purpose of CQC and its approach to performance assessment in health and social care. Inevitably, recent events at that regulator in relation to Morecambe Bay and before that at Mid Staffordshire will readily come to mind. There can be no doubt that the current leadership of CQC faces a major challenge in changing the culture of the organisation and its approach to inspections. It has much to do to restore both public confidence and confidence within the NHS about the way in which it operates. That is why this clause is so important.

Clause 80 substitutes Section 46 of the 2008 Act and provides that the CQC’s duty to conduct periodic reviews, assess performance and publish reports of such assessments, which are henceforth to be known as “ratings”, is to apply in respect of any regulated activities and any registered service providers as may be prescribed in regulations. In addition, where regulations so provide, the CQC must also review and assess the performance of the provision and commissioning of adult social services by English local authorities. CQC is to be given responsibility for determining the quality indicators against which services and providers will be assessed. This may include measures of financial performance and governance if the CQC deems this appropriate. Different quality indicators, methods and frequency in periods may be used for different types of cases. The CQC may also review the indicators of quality and method statement from time to time as it sees fit.

Let me say at once that I support the broad intention of these clauses to make the CQC responsible for rating providers and local authorities. I say again that one should not underestimate the task. It is important that the CQC is not put under undue pressure to rush to change the way that it operates and to introduce new ratings without proper pilots being done and without having enough time to do it.

I refer the noble Earl to the Nuffield Trust’s work. As he knows, the Nuffield Trust was commissioned to carry out a review for the Secretary of State into the possibility of rating providers of health and social care. It argued that the new ratings must be given adequate time to work together with a range of stakeholders in developing a system which enables both patient choice and professional leadership to drive up standards of quality. That is vital. Yet I am concerned by the document issued by the CQC recently that indicates that it is to start inspecting and regulating NHS acute hospitals, in the ways that it set out in that document, from October 2013. Indeed, from December 2013, it will begin to rate NHS acute trusts and NHS foundation acute trusts, aiming to complete them before the end of 2015.

Have Ministers put pressure on the CQC around the timing of those ratings? Secondly, does the noble Earl not think that there is a risk that the CQC will be forced to rush into a new system without proper consideration? I remind him that the chairman of the CQC has recently made a number of statements. First, he has said that the approach to inspections by the previous leadership was wrong; it was wrong to go for generalist inspections. He also says that the culture of the organisation was wrong. Given that there are about 1,000 people employed by the CQC, although I am not absolutely certain, how on earth is the culture going to change in a short period of three or four months? I just do not think it is going to happen.

I have great admiration for the current leadership of CQC, but the risk is that it is going to be forced into a new system too quickly and it could fall over. As a result, its credibility will be very much damaged. Let us face it; it is almost starting from a negative position. I must confess that I am surprised that such an ambitious timetable has been set.

Who will be assessed? As I have already intimated, the clause provides for the Secretary of State to draw up regulations laying out exactly which services the CQC will rate. They are likely to be hospitals, GP practices, care homes, domiciliary care services across both the public and privates sectors and local authorities. Will the noble Earl confirm that? Will he say why this is not specified in the Bill? Does he not consider it important enough for Parliament to decide which bodies should be assessed, and to do so in primary legislation rather than through regulations?

I asked at Second Reading whether clinical commissioning groups are to be assessed. If not, why not? The Bill allows for local authorities to be assessed for their performance in the commissioning of adult social services, so I cannot really see why NHS commissioners—the CCGs—should not be similarly covered. The same logic then applies to NHS England which, after all, has been given a massive commissioning budget in relation to specialist services. If it is appropriate for local authorities to be assessed for their commissioning responsibility, surely all health commissioners should be similarly assessed. That must apply to NHS England because otherwise I do not see who will hold it to account for the mammoth amount of resources it will spend on commissioning specialist services.

I am particularly interested in local authority assessment, particularly in the way that services are commissioned. Can the noble Earl tell me whether this is intended to be a priority for the CQC? He will know that there is real concern about the practices of many private sector providers in social care in using zero-hour contracts and allocating only 15 minutes with each client. It is vital for the CQC to be able to investigate the way in which local authorities commission those services. We will come to this in Clause 5 but it would be very useful if the noble Earl could confirm that the commissioning responsibilities of local authorities will be a priority for the CQC.

Turning to the inspection approach and the rating system to be adopted, according to the recent document issued by the CQC:

“Our inspections of hospitals will vary in terms of the things they look at and the time they take, but they will take as long as is needed—typically 15 days, with an average of 6-7 days on site—to make a thorough assessment of the quality and safety of care. In the vast majority of cases, inspections will be longer and more thorough than our current approach of a small team of inspectors being on site for one or two days. Our inspectors will spend more time talking to people who use the service, to staff, senior managers and members”.

That is very welcome. I am sure that that is the right approach. The noble Earl will know that there has been a problem with short-scale inspections, which take just one part of a service and do not really give a measure of the scale of services being provided.

We then come on to the rating of services, which I have raised with the noble Earl. As far as I can see, the intention is to follow the Ofsted approach of rating from 1 to 4, with 1 being outstanding, 4 being a measure of inadequacy, 2 being good and 3 being satisfactory but needing to improve. That is an approach. But the noble Earl will be aware that the Nuffield Trust has argued that,

“the Government and CQC must be alert to the possibility of aggregated ratings which reflect high general standards of care but conceal individual failures within organisations”.

It goes on to say:

“For hospital trusts in particular, which operate across multiple sites and provide a range of complex services in different wards and units, it is important that service-level assessments are easy to find and understand”.

This is very important because the CQC is going to follow the Ofsted example. Outstanding hospitals will be inspected only every three to five years and good hospitals every two to three years. So a hospital could be rated as outstanding and then not inspected for five years. The problem with that is that we all know that services can go up and down and that changes in leadership can have an impact on the quality of an organisation. We know there are examples in education where schools or colleges have been rated 1, have not been inspected for five or six years, and some of them have gone down to 3 or 4.

I am more concerned about the public’s confidence in such a system. Where a hospital has been rated 1, within 1 there will probably be some inadequate services; if something goes drastically wrong, the whole rating system will come into serious question. What I am asking for is a much more sophisticated, balanced approach to rating these institutions. That is why it would be right that before any substantive programme comes into being there should be pilots, which should be fully assessed. I hope that Parliament would have an opportunity to debate them as well.

Finally, I come to my Amendment 76ZA. My understanding is that part of the criteria which will form the ratings judgment by CQC will be whether staff would recommend their organisation to patients. I am sure that that would be a very valuable component of the ratings. I have been contacted by the Chartered Society of Physiotherapists, which says that, perhaps, we should go even further and actually consider staff health and well-being. That seems to make a great deal of sense. Sickness absence in the NHS is a major problem. The sickness absence rate for the winter among healthcare assistants has been very problematic. I do not expect the noble Earl to agree to my amendment, but I hope he will give some comfort that CQC, in looking at the way staff feel about their organisation, might be able to develop some kind of indicator of the way staff are dealt with. Health and well-being might be a very good way to do this.

Overall, we wish CQC well. I am concerned about the pressure being put on it to come up with a new system before it has time duly to consider it. I hope the noble Earl will agree to an amendment around pilots.

My Lords, I shall speak to Amendments 76ZZA and 76ZAA in my name. I thank the noble Lord, Lord Hunt, for the support he expressed earlier. On Amendment 76ZZA, we know that one of the major problems identified in the Francis report was the inadequate handling of complaints and concerns. This issue has not been addressed in the Care Bill. My amendment would enable the Care Quality Commission to introduce more rigorous complaint systems across all care settings. I hope the Minister will consider this because it is very important to get this right now. This is about the way in which a registered service provider or a local authority will handle complaints and concerns, and it is very important.

Amendment 76ZAA is about continence care. I declare an interest as chair of the all-party parliamentary group on this subject. It is hardly spoken about, but it is terribly important; people just do not recognise how many people have some problem with continence. The NHS services should have continence care as an essential indicator of service quality. It therefore needs to be established as an essential indicator of high-quality services across the NHS and care settings within the periodic assessments of care standards undertaken by the CQC.

A number of recent assessments have demonstrated that continence care is still a low priority across NHS settings, with poor treatment resulting in escalated and more costly care needs and poorer patient outcomes. This is in spite of the fact that good bladder and bowel control are fundamental to people’s dignity and independence and that NICE has published a wealth of best practice recommendations to effectively assess and treat the condition. The Francis report included an entire chapter outlining the scale of failures in continence care. Given the expected rise in prevalence of incontinence and the impact that poor care can have on patients and the NHS, continence care must be seen as a key indicator of high-quality provision across care settings. An explicit requirement within the Care Bill for the CQC to assess providers for the quality of their continence care would directly respond to the failings in this field which the Francis report identified—the stated purpose behind Part 2 of the Bill. That would encourage providers actively to address how they manage incontinence by assessing their local protocols and policies about the condition, taking steps to improve awareness among staff about incontinence and undertaking internal audits in order continuously to improve care standards.

My Lords, I wish to register my support for the proposals in some of these amendments. The integration of services should always be highlighted. We have a long way to go and, since we are not providing an integrated budget, every encouragement short of that should be given, so I support the amendments that propose this.

The amendments and stand-part question in the name of the noble Lord, Lord Hunt, have to do with the standing of the CQC. CQC has been through a very rough patch, and to some extent, responsibility lies as much here as elsewhere. I remember the debates a number of years ago, when we changed the structure of the regulation that should be provided in this area three or four times within four or five years and always handed the ball on to a new organisation that we thought would solve all the problems. We failed consistently to answer the question: what are the signs that the new organisation will succeed in all the tasks being given to it? We now see that there have been difficulties. Moving with a degree of caution has a great deal to commend it, and I look forward to the Minister’s response to the questions raised by the noble Lord, Lord Hunt.

The rhetoric around the comments of politicians, those in health regulation and the press continually refers to Ofsted and Ofsted-style inspections. I declare an interest, in that I had something to do with founding Ofsted and the type of inspections that in due course developed. Ofsted is a rather a different beast, and these comparisons do not help. For example, the chief inspector is independent of the control of the department, which seems not to be the case in the plans for the future. That means that the relationships with the Minister and Secretary of State will have to be very carefully managed. I am not sure that sufficient thought has been given to that. That is part of the case for asking whether Clause 80 should stand part of the Bill.

The other pressures being put on CQC have to do with financial assessment. These are additional responsibilities for which CQC is hardly prepared. There is a need for specialist staff and specialist abilities to decide whether companies providing care at all levels have the ability to continue sustainably to do that—but that does not, as we have seen in other forms of financial regulation, come easily to regulatory bodies. This has to be looked at very carefully, along with the pace at which change is introduced into the practices of CQC, which is under, we hope and expect, good new management.

My Lords, the need for the specialist staff referred to by the noble Lord clearly lies behind the tabling of Amendment 76ZB. It is precisely why we need to pilot the proposed system.

My noble friend on the Front Bench referred to the system being created as a new system. We were told that we were going to get a new system in 2009. I sat on the third Bench behind my noble friend—the noble Earl was on the Front Bench on this side—and pointed consistently to the deficiencies in the system while it operated under CSCI and the inevitability of further problems arising under the new structure that was being created. Indeed that is precisely what has happened.

It seems to me that it can only get worse. The report of the Select Committee on Public Service and Demographic Change sets out the scale of the problem that confronts us in future. It prays in aid the Office for National Statistics updating its projections up to 2021 based on a recent release of data from the 2011 census on the ageing population. It says that, by 2021:

“There will be 24% more people aged 65 and over”,


“39% more people aged 85 and over”.

It goes on to say that by 2030 there will be,

“will be 51% more people aged 65 and over”,

and that the population over 85 will have doubled. This means, to put it bluntly, that a lot more people will go into a lot more nursing homes throughout the country. Therefore, we have an absolute responsibility to make sure that the structure that we establish on this occasion is fit for purpose.

At the moment, I understand that there are 2,400 nursing homes catering for approximately 220,000 residents. That is going to increase, and I am still not convinced that the structure that this new so-called CQC is to set in place will be fit for purpose for taking on that task. Nor has the structure been defined in the legislation, as my noble friend has referred to. When I say fit for purpose I am reminded of the comments made by the noble Earl when we met on the last occasion to discuss this Bill, when he talked of a new broom at the CQC. As I understand it, it is not a new broom but an old broom with a new handle, because the person who is now running the operation is in fact the same person, I am told—and the information is available on the internet for anyone to read—who was responsible for the structure, which we are now debating, which has failed miserably over the past four years and is the subject of the complaint.

Mr David Behan, who runs the new operation, prior to his current appointment at the Care Quality Commission, was director-general of Social Care, Local Government and Care Partnerships at the Department of Health. As the director-general—and I read these words very carefully, because I do not want in any way to misrepresent the position—he had lead responsibility for the social care aspects of the Health and Social Care Act 2008, which created the CQC, the very organisation that we are having to review today because of its total failure and the scandals that have been drawn to our attention in the national media over recent years. I understand that he should have been aware of the Act’s requirements for the CQC to perform its functions for the general purpose of encouraging the improvement of health in social care services. This failure is implied in the Department of Health capability review, which in effect admits that the Department of Health was not sufficiently challenging and strategic in the way it supported the CQC.

David Behan is not new to social care regulation. Before taking up his appointment at the Department of Health, he was chief inspector of social services at the Commission for Social Care Inspection—CSCI—the organisation that we criticised in 2009 when the Act was going through on the basis of its failure in this particular area. I remember Ministers going to the Dispatch Box—Labour Ministers, yes—reading briefs produced by civil servants, in which they repeatedly assured us, as they did in personal correspondence to us, that the new structure that was going to be set up would work. It has not worked. It has been a complete and utter disaster area, which is why we are now faced with problems in this particular area that are reflected almost daily in the national press.

There is a very reputable organisation called the Relatives & Residents Association. Before anyone seeks to discredit its operations, it is worth pointing out that it is quoted in the most recent report by the House of Commons Health Select Committee. Its comments are prayed in aid in the committee’s criticism of the CQC. On 18 May 2009, in a letter to me following my criticism in the House, it affirmed its view. Four years ago, it said:

“we are concerned that … inspectors judge homes as delivering an adequate standard of care even when they are failing to meet national minimum standards for care homes”.

We were assured that that was going to be stopped. It has not been stopped under the structure that was established. The letter continued:

“the overall number of inspections of care homes has reduced. Homes that are failing to meet minimum standards are now inspected less often than used to be the case”.

We know that over the past 10 years, there has been a steady decline in the inspection of care homes nationally. We were told when the Act was passed in 2009 that it was going to be a risk-based system with a minimum of one inspection every three years. We know what a disaster that has been. We need an absolute minimum of unannounced inspections of care homes of at least twice per year, irrespective of the grading and irrespective of the ratings that have been applied to a particular home, because we all know that the management of a home can change over months, weeks or even overnight, and the home may drop in ratings dramatically as standards of care fall, depending on the financial considerations of the management of those homes.

The 2009 letter to me, four years before we stand here now, continued:

“requirements made by inspectors for action to improve care homes are often not met, there is little evidence of systematic follow-up by inspectors and requirements left unmet from one inspection to the next are common”.

That has happened over and over again over the past four years, and I am convinced that it will carry on happening until we set clear targets and a requirement of two unannounced inspections annually with a proper rating system, which is precisely why I support the amendment tabled by the noble Baroness, Lady Greengross, on the need for a pilot system for inspections.

I would now like to place on record the latest views expressed by the Relatives & Residents Association about what it believes the new structure should be. I do so because I understand that under the provisions of the Bill, the CQC will itself, following consultation with Ministers and others where necessary, be taking decisions on those very important areas. What does the Relatives & Residents Association say? I think that what it says should be implemented. It calls for the,

“reinstatement of regular twice-yearly inspections of all care homes to ensure compliance with regulations and standards. This case and others show that CQC needs to listen, record and act quickly on complaints which show older people are not receiving”,

the quality of care they should receive.

I add at that point that we are talking about complaints. I could never understand why we established the CQC without a proper complaints remit. According to the Relatives & Residents Association, people ring up to complain about the fact that the CQC is not dealing with complaints. The CQC says, “We do not deal with them, you have to go to the local authority”. The structure is wrong. The CQC should be the body that deals with those matters and should be given that responsibility. The association calls for investment and more and better training of all care home staff, with vastly improved training in leadership skills of care home managers and operators and up-to-date inspection reports which are easy to understand, with any action required by the provider clearly highlighted. It also wants to see:

“Care homes focusing on individual care rather than putting pressure on staff to complete daily tasks such as dressing and feeding.

Statutory registration of all care workers”—

a matter that we were dealing with on the last occasion we met as a Committee—

“by a professional body which can set standards for competence and hold individual care workers to account for their own practice.

The reinstatement of specific standards for care homes for older people”.

That might seem a particularly substantial agenda. However, if the Select Committee’s views on the ageing population are true and there is going to be a vast expansion of the care business in the future, more and more homes will have to open to deal with that increased population. We should be setting in place in this Bill a structure that is capable of dealing with that expansion in care. If we do not, we will be back here again in five years’ time arguing about a deficiency in the system. If I am still alive, I will be on my feet again complaining about the fact that the Bill we introduced in 2013 miserably failed. That is the route that the Government have set out to go down. Unless they make the resources available to address this, the CQC will inevitably fail again.

My Lords, I had not intended to speak in this debate and will do so briefly. We need to allow the CQC time to settle down under its new management. We should also remind ourselves of the rest of the history, because it is important to put it in context.

I was the deputy chair of the National Care Standards Commission, the first organisation that brought together the inspectorates for homes under the previous Government. It was also the previous Government who, after two years, made the decision concerning the organisation—which had been quite successful. It had established a baseline of inspection. It had integrated the inspectorates, which several other organisations which had tried to integrate the different teams had failed to do. Like other noble Lords, I would also cite CAFCASS in that regard. The commission did all of that. We should remind ourselves that it was only a year later that the previous Government announced through a newspaper, not directly to the staff, that the organisation would be merged with CSCI.

The merger took place and I think that it was extremely successful. David Behan was involved in ensuring that it went well. CSCI then took on the starring system which was put into place and was having some success. By that time, we had closed 400 poor establishments. The work was continuing in terms of co-operation when it was again decided that there should be a restructuring, this time to bring the inspectorate into health.

I think that we have two lessons to learn. The first is not to restructure yet again on a political basis. If there is good leadership and the lessons have been learnt, let the organisation settle down. The second lesson is clear. If you are going to inspect anything, you need to have the expertise within the teams to carry out the inspections. Again under the previous Government, it was a sort of theory that if you had somebody other than a nurse looking at nursing, a social worker looking at a social work establishment or a teacher looking at teaching—indeed, you usually did have teachers looking at teaching; that always seemed to be an exclusion—then you could get a better answer than if you had a professional do it.

I think that the present leadership at the CQC has learnt that lesson and understands that you need the professional expertise to know what you are looking for, although that should certainly be cross-checked by independents. I hope deeply that we will be able to keep that steadiness, because I understand absolutely what happens to organisations when they are in constant flux and change.

Perhaps I may make one other point while I am on my feet. I support anything that we can do about integration. We have singularly failed to reach some complex conclusions about how health and social care can truly be put together for the benefit of those who are the recipients of that care. We should ensure that we put into the Bill whatever we can about integration. I would support all of that.

I endorse what the noble Baroness, Lady Howarth, has just said because I am firmly of the belief that it will take time to find all the appropriate people for the move which the CQC has clearly said it would make, from generic to specialist inspectors. I am sure that this will make a huge difference to the outcomes of inspections. I, too, think that we should give this organisation time. From what I have seen, it has the drive and the initiative to make sure that things improve enormously.

My Lords, this has been a very useful debate and in addressing this group of amendments, it might be helpful if I began by setting out why we believe this clause is necessary.

At the moment, there is no straightforward way for members of the public to get a clear view of performance in hospitals and care homes, nor is there a measure to help drive up performance, so we believe that a new system is needed to give patients and the public a fair, balanced and easy to understand assessment of the quality of care provided. Clear ratings on performance will help to incentivise providers to improve their services, as they will be able to see how well they are doing. One of the central principles behind this clause is that it will enable the CQC to develop the new performance assessment system—informed by the views of stakeholders, of course, but nevertheless independent of government. In its report into ratings, the Nuffield Trust said:

“While there is a legitimate role for … government … to influence priorities, the process should largely be sector-led including the public and users”.

I am rather pleased that we did not debate this group of amendments on the previous Committee day because the CQC has, in the mean time, published a consultation on changes to the way in which it regulates, inspects and monitors care. I draw that to the attention in particular of the noble Lord, Lord Campbell-Savours, whose points I will address in a moment. This consultation, A New Start, sets out the commission’s initial thinking on the timetable for implementing ratings. The consultation document also sets out some detailed thoughts on how the CQC will rate NHS acute hospitals. I take the point made by the noble Lord, Lord Sutherland: this rating process will have to have some fundamental differences from that followed by Ofsted. However, the ratings will be based primarily on inspection judgments. They will be informed by a series of indicators, using data already available and the findings of other bodies such as those from accreditation schemes, clinical peer review and the judgments of other regulators. The CQC will be consulting on this model more fully later this year.

Noble Lords have raised concerns about the ability of a rating system to reflect the complexity of NHS acute hospitals. I assure the Committee that both the CQC and the Government are fully alive to this risk. The CQC is committed to producing ratings at a level which recognises the complexity of NHS services and is useful to people who use them, as well as those who commission NHS care. It is therefore proposing to provide ratings for certain individual services, such as emergency and maternity services, as well as for each hospital.

A rating will also be provided against each of the CQC’s key questions. They are: is the service safe? Is it effective? Is it caring? Is it responsive to people’s needs, and is it well led? This will mean that where the evidence is available, a trust would have five ratings at three different levels—for the individual service level, for the hospital site and for the whole trust. I am sure that noble Lords will agree that this is an ambitious aim, and one that seeks to reflect the complexity of the organisations that provide care.

The Government will draw up regulations that will enable the CQC to develop the programme of performance assessment in the manner outlined in A New Start. The consultation is the first small, but important, step in the process of developing a robust system of performance assessment of providers of health and adult social care. The first ratings of acute hospitals will appear at the end of this year: I will come on to the timetable in a moment. This will be another significant step in developing a ratings system, but it will not be the end of the journey. The Government are clear that the development of ratings will be a process of continuous evolution.

Amendments, 74, 75, 76ZA, 76ZZA and 76ZAA set out areas that the CQC must or could consider as part of its performance assessment of providers. These amendments would mean that the CQC would be required to include or consider the specific issues raised as part of its methodology. The Government share the view of noble Lords on the importance of the issues they have raised through these amendments. I am sure we can all agree that they are useful ideas. However, I hope that they will equally accept the importance of the central principle that we believe should be adhered to: that the CQC should be given freedom to develop its own methodology for the new performance assessments. The clause is deliberately designed to be flexible in that sense. I therefore hope that noble Lords will be content to withdraw their amendments, in the knowledge that the CQC is ready and willing to listen to all good ideas as it puts its final plans together.

The noble Lord, Lord Hunt, has also tabled Amendment 76ZB, which would require the CQC to undertake a pilot of its new performance assessment system and require the evaluation report to be approved by Parliament. The Government agree that the CQC’s new performance assessment methodology should be subject to evaluation. This is why, in our response to the Francis inquiry, Patients First and Foremost, the Government made the commitment that:

“The Department of Health will commission an independent evaluation of the operation of the new ratings system, and this will inform future adaptations”.

The amendment would give Parliament a power of veto over the methodology which the CQC develops for performance assessment. This is not desirable as it would constrain the freedom of the CQC to act on the findings of its consultation with stakeholders. I therefore hope that noble Lords will be content not to move that amendment.

Amendment 74A would require the CQC to undertake performance assessments of commissioners of healthcare services, specifically clinical commissioning groups and NHS England. The wording of Clause 80 could enable the CQC to undertake reviews of local authority commissioning of adult social care services. The absence of a similar requirement for healthcare commissioning therefore requires an explanation. The requirement for the CQC to review healthcare commissioning was removed by the Health and Social Care Act 2012 on 1 April 2013 when primary care trusts were abolished. This is because the function of supporting the development of the commissioning system for healthcare in England has become the responsibility of NHS England. NHS England’s role is to determine how the performance of healthcare commissioners, including clinical commissioning groups, is assessed and managed. There is therefore no need for the CQC to carry out a virtually identical role. I trust that the noble Baroness will be content to withdraw her amendment, but I would like to address the particular points raised.

I do not quite see the logic of that, because in a sense NHS England has a vested interest in ensuring that all is well with the CCGs. It is not an independent body in the way that the CQC would be.

The other question is about NHS England itself. It is a massive commissioner of specialist services. If a local authority is to be assessed, I still do not see why NHS England ought not to be subject to some kind of independent assessment. It could have a huge impact on where specialist services are going to be provided in future. We know that Ministers are no longer prepared to answer questions about lots of things that NHS England does, so there seems now to be a gap in the architecture.

Ministers most certainly are willing and able to answer questions about what NHS England is doing, and will continue to do so. Parliament, of course, will be entitled to keep NHS England’s performance in the spotlight; that architecture was built into the 2012 Act very deliberately. I do not accept the noble Lord’s point about clinical commissioning groups, because it is for NHS England to assure itself that the commissioning system for healthcare in England is working properly. There will be a high degree of transparency in that regard. The performance management role of NHS England will be right there, and I think that the proof of that will emerge over the coming months.

Perhaps I could cover the individual points raised by noble Lords. The first point was raised by the noble Lord, Lord Hunt, and echoed by the noble Lord, Lord Campbell-Savours, about how we expect the CQC culture to change in a relatively short time. I say to both noble Lords that I firmly believe that the CQC is already very much a changed organisation. It has a new leadership team in which I have full confidence. It has a new board—which, incidentally, the noble Lord, Lord Hunt, may be interested to know will include Kay Sheldon—and I think it has a new attitude to openness and transparency, as its handling of the Grant Thornton report demonstrates.

On 16 July, the CQC’s chief inspector of hospitals, Professor Sir Mike Richards, will start in post, so that is very soon. By September the CQC will be publishing a list of hospitals that it has the greatest concerns about, and it will be using its new surveillance system to develop this list. The CQC is committed to learning from the past and pressing ahead rapidly to improve for the future. I agree with the noble Baroness, Lady Howarth, that the CQC needs stability.

On the question of the surveillance system that the Minister just referred to, what about the proposal that keeps coming up all the time of two unannounced visits per year for every care home within the United Kingdom? Why can that at least not be set down by the Government as a requirement, irrespective of all the other recommendations and decisions that the CQC comes to over its new so-called surveillance system?

It is not for Ministers to do that. I say that with great respect to the noble Lord. In saying that, however, I also highlight the ability of the CQC to flex its inspection frequency in accordance with information received. The noble Lord will know that organisations such as local Healthwatch, and indeed local authorities themselves, are able to alert the necessary authorities through Healthwatch England, which, as noble Lords know, is an integral part of the CQC, to any problems that may be flagged up. The CQC will be consulting in future on its proposals for care home inspections, and I do not doubt that a difference of view will emerge about the frequency of those inspections. I am the first to say how important it is that the inspections take place, and I totally take the point that those assessments should not be allowed to drift in any way. However, for better or worse we have an independent body known as the CQC, which should be allowed to act accordingly. The noble Lord, Lord Campbell-Savours, took us back to the 2008 Act. I would say to him that, in agreeing with the noble Baroness, Lady Howarth, Robert Francis was clear in his report that the system should not be significantly reorganised.

I fully agree with the point raised by several noble Lords that the CQC under new leadership should be given the time that it needs, both to improve the performance of its current functions, such as registration, and to embed the new functions, such as ratings. The noble Lord, Lord Hunt, asked whether Ministers had put pressure on the CQC. No, absolutely not. We are clear—I am looking at the noble Lord, Lord Sutherland —that the chief inspector should be an independent post in itself. The chief inspectors are appointed by the CQC, not by the Government or the Department of Health, and we think that this is appropriate.

The noble Lord, Lord Campbell-Savours, asked why the CQC does not have a complaints remit. Again, going back to earlier debates under the previous Government, all organisations in healthcare were aware that the Healthcare Commission—as it then was—provided independent review of individual complaints cases. This seemed to act as a perverse incentive not to investigate thoroughly at a local level. In other words, it is arguable that providing an independent stage through a separate organisation had actually worked against effective local resolution of complaints, because NHS organisations were aware that the Healthcare Commission would ultimately undertake the work. So there was less willingness to take ownership of the problem at the source of that problem. A lot of duplication also emerged from that, with the Healthcare Commission tending to carry out investigations even where the work had been done at local level. That was not a good use of public money. I remember that the Parliamentary and Health Service Ombudsman and the Local Government Ombudsman fully supported the decision to remove handling individual complaints from the regulatory body.

As for the evolution of these ratings, the Government do not expect the CQC to have fully developed ratings for hospitals by the end of this year. That would be unrealistic. The initial ratings will not be a final product. They will instead represent the first stage in an ongoing development process. The Government expect that CQC will improve its methodology over time, and one of the most robust ways to do that is to continually test the methodology in the field. The new Chief Inspector of Hospitals will spearhead the new approach to assessing hospitals, using his clinical expertise to develop an effective approach for rating. I direct noble Lords to the CQC’s consultation document A New Start, which sets out all these plans in some detail.

CQC plans to commence rating providers of acute care from December, with the aim that all these providers receive a rating before the end of 2015. It will begin to develop ratings for mental health trusts during 2014, and for other NHS trusts, such as community healthcare and ambulance trusts, during 2015-16. Why do we not specify in the Bill who will be assessed? The answer in the first instance is that this Bill consolidates the existing regulation power in Section 49 of the Health and Social Care Act 2008, to allow the CQC to have the flexibility to focus on providers of most interest to the public. That is important in defining the scope of the new performance-assessment system through regulations. We are giving the CQC increased flexibility to focus its assessment on those providers and services that are of most interest and concern. We must avoid overloading it with the task of assessing the entire system. We wanted to focus, first, on services where an assessment and subsequent rating are likely to provide the most benefit to everybody.

The noble Lord, Lord Hunt, asked about the commissioning responsibilities of local authorities, and whether they would be a priority for the CQC when it conducts its ratings. The CQC has a duty under the Health and Social Care Act 2008 to carry out reviews of local authority commissioning, but the policy position agreed with the Department of Health is that, for the time being, local authority commissioning performance and assessment will be led by councils as part of wider moves to devolve responsibility for improvement in the sector, underpinned by strengthened transparency and accountability to local people. The policy position is still under consideration. Therefore, the clause gives the Secretary of State the power to define in regulations the scope of the performance-assessment system. Until it is agreed to what extent there will be a need for reviews of local authority commissioning, the policy will be kept out of scope in the regulations.

I hope that I have answered most if not all the questions. Naturally, I shall reply in writing to any noble Lords whose question I omitted.

Perhaps I may ask for clarification on one further point relating to complaints. Amendment 76ZZA does not propose that the CQC should handle complaints, which was the gist of the Minister’s response. Rather, it proposes that there should be a clear and transparent method of handling complaints within each trust and relevant area. The role of the CQC is to open up that window, very much in line with the Francis report, so that we can know that complaints will be handled at the appropriate level and in the appropriate way.

I completely understand the noble Lord’s point. He will remember that in the registration requirements for providers of health or social care, the existence of a complaints system is one factor on which the CQC will need to satisfy itself. On the quality of the complaints-handling system within that provider, my answer is that it is a powerful point and an important area, but in the end it is one on which we should let the CQC decide as it develops its methodology. I do not in any way dismiss the noble Lord’s suggestion, but it is one for the CQC to take forward.

My Lords, this has been a wide-ranging and well informed debate. It has focused on anxieties about the role and competence of the CQC. The anxieties seem to focus on questions about whether the job of the CQC is doable at all, doable in the very short timescale, or doable with current resources. Suggestions about how to address the anxieties and concerns have included piloting new structures, but there has been much support for the CQC being given time to improve its strategy and performance—although with strong reservations from my noble friend Lord Campbell-Savours. I am grateful for the support for my amendments on integration, and sorry that the Minister was unable to accept them. Given the concern and strength of feeling about the CQC, I am sure that we shall return to this matter on Report. For the present, I beg leave to withdraw the amendment.

Amendment 74 withdrawn.

Amendments 74A to 76ZB not moved.

Clause 80 agreed.

Amendment 76A had been withdrawn from the Marshalled List.

Amendment 76B not moved.

Clause 81 : Offence

Amendments 77 and 77A not moved.

Clause 81 agreed.

Clause 82 agreed.

Amendment 77B

Moved by

77B: Before Clause 1, insert the following new Clause—


The provisions enshrining the new duties and responsibilities for local authorities in Part 1 shall not come into force unless and until a comprehensive and sustainable solution has been provided by the Secretary of State to address the funding of existing care and support commitments for local authorities and those arising from this legislation.”

My Lords, we now come to the beginning of the Bill and the very important Part 1, sensibly postponed until after the Chancellor’s Statement last week on the spending review.

I declare my interest as president of the Local Government Association. The LGA has drafted this amendment and, as with many other Bills, has provided invaluable analysis and briefing for parliamentarians, alongside its direct negotiations with central government on behalf of local councils. Indeed, I commend the LGA’s new publication, Rewiring Public Services, which was launched yesterday and sets out a radical agenda for local services, including social care services.

The provisions in Part 1 have been widely welcomed. They will update and reform the adult social care system. They will support greater integration of health and social care and, on the issue of paying for care, the Bill’s provisions will redefine the relationship between the state and the citizen. Some of these changes will lead to future savings in the cost to the public purse of providing adult social care.

However, achieving later savings means spending more today, and some elements of the Bill mean a shift in the cost of care from the individual to the state. Therefore, before your Lordships’ Committee embarks upon its consideration of the important changes contained in Part 1, it seems important to consider the financial position from which we are starting out.

There is compelling evidence that rising costs of care are leading inexorably towards a crisis in funding for the local authorities which are trying to meet the needs of an ageing population. Before we can assess the practicalities of extra activity and extra spending for social care, it is necessary to be clear how existing care commitments can be paid for, as well as how extra costs arising from the Bill will be funded. Decisions on funding need to be taken before, or at least at the same time as, the policy decisions. Therefore, Amendment 77B—and I am very grateful to the noble Lord, Lord Tope, who has added his name to it—seeks to postpone implementation of Part 1 until the Secretary of State has addressed the crucial issue of how the costs of social care and support will be met in the years ahead.

What we now know from the Chancellor’s Statement last week is that the spending review includes genuinely helpful steps to fund key measures contained in the Bill. Following productive dialogue between central government and the LGA, the plans set out in the spending review make it clear that significant extra funds will be available from the NHS to assist with the costs of local care services. As well as needing reassurance that all extra costs for local authorities resulting from the Bill really will be covered, there remains the greater underlying concern that the financial foundation on which the new position is to be built is not secure. Over the past three years, adult social care budgets have reduced by 20%. In a number of areas, to cope with the funding cuts it has already been necessary for councils to raise the bar before regarding older people as eligible for help from the council. Accordingly, despite growing numbers of older people, fewer people are now being helped because their needs are assessed as moderate, not substantial, even though earlier support can prevent the need for higher costs later.

The Association of Directors of Adult Social Services notes that the bulk of this reduction has been made up by efficiency gains. Many adult services directors believe that they can go a bit further; for example, through better procurement, shifting activity to cheaper settings, subcontracting provision to the private sector, and so on. But the scope for further efficiencies clearly now is much reduced. Demographic pressures, with a 3% growth every year in numbers of older people, mean that savings are predicted to be immediately cancelled out by the cost of meeting increasing demand. The cost of just standing still is estimated at another £400 million a year. Efficiency savings alone cannot keep pace with these budget pressures.

Local government funding from central government has taken a huge hit with a 33% reduction over the period 2011 to 2015, prior to the additional 2% cut made in the Autumn Statement for 2014-15 and now the further 10% reduction in funding for 2015-16 announced in the spending review. Many of your Lordships will be aware of the frightening prediction that, unless the funding arrangements can be sorted out, local authorities face the so-called Barnet graph of doom. This shows how social care costs could absorb almost all local authority resources by 2019-20, leading to massive reductions in a whole range of existing local authority services. Already increasing costs, alongside a growing ageing population, are stretching adult social services to the limit. The funding issue really needs to be addressed before we consider a reform system for social care. Analysis by London Councils suggests that the combined effect of inflation and demographics means that there will be a potential £421 million additional cost pressure on adult social care in London by 2015-16. That is before any reforms are implemented.

The new spending review includes some really helpful measures for adult social care and health. The £3.8 billion pooled budget for health and social care services, with a continuation of the existing transfer from the NHS to social care that emerged from the 2010 spending review, is enormously important. Some of that transfer includes additional funds for the measures in this Bill. The new costs to be covered include resources to accelerate the transformation of services, provision of support for carers, capital funding for projects to improve integration locally and help for councils to organise themselves to implement this legislation. Costs are also coming down the line to support the scheme of local authority assistance for equity release by home owners who defer repayments. The extra funding in the spending review is greatly welcomed. I believe that the Government have listened to the concerns expressed by the LGA and others, and recognise the importance of providing sustainable funding for adult social care.

However, it is not clear that the sums add up. London Councils has helpfully spelt out that very significant costs arise from the legislation covering paying the care costs for people who have spent up to the cap of £72,000 and/or have become eligible for support because the means-tested threshold is being raised to £118,000; assessing the increasing number of self-funders coming forward as a result of the reforms; monitoring each individual’s care accounts and progress towards spending up to the cap; assessing carers’ needs for support and making extra carers grants; setting up new safeguarding boards for adult services like those for children safeguarding boards; and promoting integration with health services, fulfilling a new duty to provide information and advice on care.

In its new analysis released this week, London Councils has found potential total additional cost pressure of £1.3 billion for London local authorities by 2019 as a result of introducing the new measures. Approximately £877 million of this will be as a direct result of implementing the capped cost model for care and raising the eligibility threshold over the first four years. If these figures are right, the Government’s estimates of providing £1 billion per year to fund the cost of the reforms for the whole country will clearly be inadequate. London Councils’ analysis has found that the reforms nationally over the four years will be in the region of £6 billion, on average £1.5 billion per year, with cost pressures heavily weighted in the first and fourth years of implementation. It seems very likely, therefore, that the additional burdens on local government will not be matched fully by extra central government support.

I think we all appreciate the hazards of going boldly forward without real clarity on whether councils can afford to meet both their existing and their new commitments for social care. This amendment provides the opportunity for greater clarity as we set out to consider the details of Part 1. I conclude by asking the Minister the following questions. Have the Government fully assessed the likely costs of the nation’s adult social care for the years ahead? If so, do they accept that there is an alarming growing gap between resources and demands? Do the Government consider that their new funding plans are adequate both to cover the extra costs of implementing the Care Bill’s measures and to fill the funding gap already looming so dangerously, and, indeed, that funding allocations will reflect different costs and population pressures in different parts of the country? In relation to the existing funding gap and to any inadequacies discovered in the financing of the extra spending in this Bill, what contingency plans are in place if actual costs prove more than expected to prevent the already hazardous position becoming quite untenable? Until these questions are answered satisfactorily, it seems wise to hold back on implementation of Part 1 of the Bill. Accordingly, I beg to move Amendment 77B.

My Lords, I rise briefly to support this amendment as a mere vice-president of the Local Government Association. Very few Members of this House were here a week or so ago when the noble Lord, Lord Bates, sponsored a debate on the increasing complexity of legislation and, indeed, the increasing volume of legislation. It is a shame that more noble Lords were not there. In that debate, the noble Lord referred to a recent report from the Office of the Parliamentary Counsel, which pointed out that when the Queen came to the Throne in 1952, after 740 years of legislation we had 26 volumes of Halsbury’s Statutes; we now have 74 volumes. In 1952, the average Bill was 22 pages long; it is now 122 pages long. In 1952, there were 29 statutory instruments; last year there were 3,328. This is an astonishing increase even on 2008, when there were just 1,325. On that last statistic, I can bear witness as a member of the Secondary Legislation Scrutiny Committee. Indeed, my postman particularly asked me if I could do something about the volume of secondary legislation.

We have reached a point where we need to think seriously about the volume of legislation and its complexity, and whether we can carry on imposing new burdens and responsibilities, not least on local authorities. It would be fine if all this additional legislation was actually removing some of the red tape and bureaucracy that previous legislation had provided, but we know that it is not doing so and that it does not do so. We need to do one of two things. Either we genuinely reduce the volume of legislation and the additional responsibilities that it places on all sorts of bodies, or, as the noble Lord, Lord Best, suggests, we have realistic costing of what these new responsibilities entail and ensure that resources are available. If we do not, we remain in a cycle of despair and decline where we expect others to deliver new responsibilities, which they are just not able to do. We also raise the expectations of clients and users, who believe that things will change, when in all honesty they probably will not. That, I think, is a cycle of despair and decline, and it is the reason why I support this amendment.

My Lords, I rise briefly, as yet another mere vice-president of the Local Government Association, to bring a slightly different dimension to this debate. The noble Lord, Lord Best, pointed out that local authorities are finding a variety of different ways of delivering services. I have been looking at some of those and listening to messages about them. One issue is that they are delivering cheaper services, which often means commissioning them from providers which will then deliver them at a different level of quality. I declare an interest as a provider in the charity Livability, which delivers services to the disabled, the elderly and some children from residential care.

We need to know whether we are prepared to open the debate. Have the Government as a whole given thought to discussing with the community at large what we really can and cannot afford for the future? The noble Lord, Lord Campbell-Savours, raised the issue of the numbers of inspections. When I was involved in inspections, one issue was that you could deliver as many inspections as you had funding for. Now you can use that funding in a variety of different ways to get better options but, at the end of the day, resources count and, unless we know how far the resources will go, it is pointless to try to descend into the abyss, as the noble Lord, Lord Bichard, said.

If we are going to take this forward, we have to know what level of quality people are prepared to accept. Then, when there are failures in organisations, people are not blamed, because the failure is not necessarily one of individuals or even of groups but of the corporate whole simply not having enough resources to work across the whole piece. Until we start that debate, we will not be able to intervene in discussions about criticisms of local authorities giving only 15-minute slots to people when they have only enough resources for 15-minute slots. In residential care, we are taking away some of the extra services because there is no more money them. We are reducing staffing in various institutions because there are simply not enough resources.

I am not denying that because of the deficit we have to look at funding; I think we do. However, we have to open up the debate. Otherwise, we raise expectations in the country of what we are entitled to. I sat in this Chamber until 11 o’clock last night discussing the Children and Families Bill, and we were having exactly the same discussion. We all want these wonderful things. I want things in this Bill, but somehow we have to decide on some priorities between them all. Whatever we say, we cannot go on expecting to get the same out of the same.

My Lords, I support this amendment in particular. I declare an interest as the president of Mencap. There is no doubt that the services that we are able to provide are being severely cut back because local authorities simply do not have the money to support those services. Where we used to get, say, £15 an hour, we now get £12 an hour. The implication is that we can lower the standard of our services, but we are not prepared to do that. Therefore, we will end up reducing our services and, as a result, people with learning disabilities, their families and their carers will suffer. This is exactly the situation at the moment. Local authorities will try to provide the services, but they are making it much more difficult for voluntary organisations such as Mencap.

My Lords, I shall refer to the report of the Public Service and Demographic Change Committee. Members of the House who have not read the report should do so because it is a fascinating document. It is probably one of the best documents to come out of the House of Lords for many years. On the question of Dilnot, to which I am opposed but I shall explain that later on in the Bill, paragraph 193 states:

“The major gainers will be the relatively better-off, who will be protected from depleting their housing assets”.

In other words, potentially we will be spending in the longer term money that could have been raised in taxation. We are losing that revenue at a time when the same report refers to the deteriorating ability of the state to help people who are in need of medical services. It refers to the fact that the number of people aged over 75 is expected grow from 5.4 million in 2015 to 8.8 million in 2035. It refers to the fact that the demand for hospital and community service spending by those aged 75 and over is, in general, more than three times the demand from those aged between 30 and 40. We have higher demands from the elderly, more people falling into the groups that are liable to want the services historically provided by local authorities and the state, and yet, at the same time, with these Dilnot proposals, over a period of time we will be handing back money to the taxpayer to which, in my view, the taxpayer has no right.

The report says that the number of people in England with three or more long-term conditions is predicted to grow from 1.9 million in 2008 to 2.9 million by 2018. It is forecast that the number of people in England and Wales aged 65 and over with dementia—we all know the care requirements of people with dementia—or moderate or severe cognitive impairment will increase by over 80% between 2010 and 2032 to 1.96 million. The report goes on to say that it is estimated that by 2022 the number of people in England aged 65 and over with some disability will increase by 40% to 3.3 million.

As I understand the amendment of the noble Lord, Lord Best, he is simply saying, “Hang on a minute, before we start spending money, we should take stock of what is available in the longer term. Can the state afford to pay all the bills that are to come? Has that work been done?”. I hope that the noble Earl will seek to give the Committee those assurances because if the work has not been done and the predictions of some have not been taken into account, it may well be that the amendment of the noble Lord, Lord Best, is relevant. Let us defer much of this expenditure until we have sorted out the budgeting.

My Lords, I had thought that I would not respond to the amendment of the noble Lord, Lord Best. However, I feel I must because there seems to be a missing voice in this debate—the voice of the thousands of people who use social care, over 70,000 of whom receive some form of direct payment. Ten years ago, when direct payments were successfully introduced and allowed disabled people to live independently in this country, we were proud to be employers. We were able to employ RPAs at a good rate, with holiday pay, and we were able to advertise. We were equal to those who employed individuals in their own companies. Ten years on, many cannot even give holiday pay and cannot advertise. They fall back on costly social care services or enter hospital as a result of not being able to employ assistants.

We, too, want to know the costings before new services come into effect. Disabled people may have to accept these services and find that they lose choice and control over their lives. So please do not forget the voice of those who say, “We, too, wish to know that the money is settled. We, too, need a voice to remind people that, in order for us to employ or control our services, we must feel that we can do this with equality and dignity and do it absolutely properly”. Otherwise independent living will become just a memory.

My Lords, the noble Lord, Lord Best, is right in his analysis. He is pointing towards a financial problem that we all know is there and will continue to be there, not least in the current situation, for a number of years to come. The noble Lord, Lord Rix, is right about the consequences of this within the community. I declare an interest as president of Alzheimer’s Scotland and I know that the same applies to its sister body in the rest of the UK. There is a shortage of cash, which means that services are being provided more cheaply or, of greater relevance, are not being provided and are being squeezed. That is the analysis.

I do not think I can vote for the amendment as it stands. What is driving this difficulty is not the profligacy of this Government, previous Governments or local authorities—we can all tighten our belts and are doing so—but the reality of changing demography. My favourite statistic is that since the start of this Committee stage our statistical life expectancy has increased by 27 minutes. We cannot cash that in individually, but that is the reality. That is the driver of the difficult position we are in.

Ministers are often between a rock and hard place, and none more so than now. However, in the light of these facts, the Government have not reviewed the priorities of public expenditure across the board—I hope the Minister will persuade them to do that—and how many things can we afford to do with the population that we have. That means looking at priorities across departments. I do not just mean health and social care. It is inevitable that we will have to do this. The sooner the Government—the previous Government were not good at this—are prepared to say that we must undertake a review of priorities in view of the changing nature of our society, the sooner we will begin to move forward. In the mean time, I am in favour of keeping pressure on the Government by introducing a Bill of this kind because there is no doubt that that will sharpen the appetite of the voters for how change should be devised in the future.

My Lords, I declare an interest as a vice-president of the Local Government Association and as a member of Newcastle City Council.

Forty years ago, as the newly-appointed chairman of the social services committee in Newcastle, I had to come to terms with the impact of Sir Keith Joseph’s reorganisation of the health service which came into force that year. Among much else, that involved the transfer of responsibility for public health from local government, where it had largely resided for over a century, to the NHS, taking with it paramedical services such as chiropody and bath attendants. The area health authority, as it turned out, was so limited in its resources that, for a period, we as a council felt it necessary to fund the continued provision of those services by the health authority. At the same time, we hugely increased social care provision, doubled the home help service and trebled the number of meals on wheels. I am sad to say that now those services are roughly back to where they were in 1973 as a result of the pressure on the authority’s budget. Now, in a step on which the Government are to be congratulated in principle, public health largely returns to its local government home and the concept of a holistic approach to social care, involving both local government and the NHS, is enshrined in the Bill.

It is unfortunate that the previous Secretary of State, in his shadow capacity, walked out of cross-party talks which the Labour Government had initiated to address the issue of care and its cost, and that it has taken three years to produce the proposals that we are debating. However, it is even more unfortunate that during that time not only has demand risen inexorably, but local authority funding has been severely and deliberately reduced by a greater extent than any other area of government expenditure. It is sad, but not untypical, that the Secretary of State for Communities and Local Government should not only have acquiesced in, but actively promoted, this perverse order of priorities with all it has implied for key services, including those that we are debating in this Committee.

As we have heard, the Local Government Association avers that adult social care budgets have been reduced by £2.6 billion, or 20%, over the past three years, with additional dire impacts on other services, such as leisure and housing, which should contribute to health and well-being and which are threatened with virtual extinction as local authority services by the end of the decade. The noble Lord, Lord Best, reminded us of the London Councils report and its estimate that the cost of the reforms—which, I repeat, we welcome in principle—will amount nationally to an average of £1.5 billion a year over the next four years. Apparently, the greater amounts will be spent in the first and last years of those four. London itself will be facing a bill of at least £877 million as a result of implementing the proposals.

Of course, this, in part, reflects the increasing demand from different client groups. We largely talk of the elderly, but there are other significant groups. The noble Lord, Lord Rix, has reminded us about people with learning disabilities, and there are also people with physical disabilities. These two groups are growing as medical advances have enabled them to live longer. The quality of their life, of course, is the subject of much concern and that imposes additional strains on the budget. It is another example of incremental demand that needs to be met. In addition to that, there are people suffering from mental health problems. The increasing demand so far has manifested itself as between something like 10% and 14% in these different categories. It is clear that inflation and demographic trends alone will push up the cost, as the noble Lord, Lord Best, has indicated, by some £421 million by the beginning of the next spending review period.

There is also a serious question about the amount and timing of the funding designed to assist transition to the new regime, given that this welcome increment was announced in the spending review for 2015-16, but work will have to begin before then if we are to make progress at that time. It would be helpful to know, given that part of the rationale for the changes is that a whole-systems approach is likely to be more cost effective, just what savings the Government anticipate will be made and over what timescale by each of the two principal partners—local government and the health service—and in the case of the latter, by which of its several components.

Given the huge problems currently experienced in A&E—in contrast with the position under the previous Government when 98% of patients were seen within four hours—and the emerging problems that we have read about in the past few days in general practice, how confident can we be that the basic funding projected for both partners is adequate, even before taking into account the scale of change envisaged? How do the Government respond to the comment on the spending review of the Foundation Trust Network, which warns of,

“a further major squeeze on NHS front line services as £4 billion is diverted from the NHS budget to social care”

in 2015-16? It points to fact that trusts,

“are, in many cases, struggling to meet the rapidly rising demand created by an ageing population”.

The concept of pooled budgets is welcome, but given the number of parties to the commissioning process, with local authorities joined by clinical commissioning groups commissioning hospital services and NHS England, currently the national Commissioning Board, commissioning general practice and mental health services, how will this pooling work in practice?

Moreover, the Minister’s letter of 27 June makes it clear that,

“to stimulate real change, £1 billion of the £3.8 billion”,

which is the sum that the Government are investing in the change and allocating to pooled budgets,

“will be linked to the delivery of outcomes. So local authorities and the NHS will only benefit from this investment if they show commitment to integration and take action which makes a difference on the ground”.

Perhaps the Minister will explain what is meant by this. What outcomes are we talking about? How will they be measured, by whom and when? Will money paid up front, as presumably it would have to be, be clawed back if the outcomes are deemed insufficient? If so, given that we are talking about pooled budgets, by whom, when and from whom?

We are anxious that progress should be made in addressing the urgent need to transform the provision of social care and promote the essential joint working of health and social services in the interests of those who need such care and indeed of their carers. The whole House is united about the desirability of these objectives. I hope that the Minister will be able to respond positively to the concerns expressed by the noble Lord, Lord Best, and other noble Lords in this debate, and I offer a suggestion which could help to allay at least some of those concerns while facilitating an early start on fulfilling the aspirations set out in the Bill.

I join my right honourable friend Andy Burnham in calling on the Government to demonstrate their commitment by utilising part of the £2 billion NHS underspend that the Chancellor siphoned off in his March Budget. Some £1.2 billion could be used in the next two years to help tackle the current crisis in social care and smooth the way to the new system, which we all welcome, by relieving the pressures it will face.

I know very little about local government other than that I work with it in the health sector, but I wonder whether, with the pressure that is on all of us with the cuts and the absolute need to reduce things, local authorities have looked at every opportunity. All I know is that since our income in an NHS trust has been looked at more carefully, we have had to have a look at the cost improvement programmes that we can deliver. We had never done that before, but we have delivered so many of those, improving costs by £17 million in the last year.

I am not making a criticism as I have no idea at all, and I know that we can all bemoan the fact that we have less money and all the rest of it, but until we know that we have done everything that we can, and got right down to questioning if we could do things differently, then we perhaps need to look at ourselves as well. Forgive me if you have already done that.

Perhaps I might respond to the question that the noble Lord is asking about what it means to integrate social care and local authority stuff. This is why I worry to death about this amendment. If this part of the legislation does not happen, the whole system will be in much worse straits than it is now. We have an issue about our local authority cutting back on some of the places in nursing homes, which means that we do not have the opportunity to put patients who no longer need to be in a hospital in the place where they ought to be to receive care.

At some stage or other, all of us have got to work together and say, “How do we do this?”. For lots of different reasons, not just the bed space, it is much cheaper for an individual to be in a care home bed than in a hospital bed. If we cannot resolve it between ourselves, and we cannot do it on our own as providers, local authorities cannot do it on their own, and neither can the care sector generally, then I wonder if we are ever going to get there. People perhaps need to start to look at how we might achieve this by being a bit tighter in other things.

My noble friend is right to draw attention, as many of your Lordships already have, to the need to integrate the provision and to avoid the sort of cost-shunting that can arise if organisations are kept separate. That is the point of the pooled budget: you look not just at the straightforward provision of care by one or other partner, or both partners, but at what will perhaps reduce the need for care in other ways. As I say, other local services such as leisure and adequate housing, in conjunction with the public health agenda, may very well reduce the demand for particularly expensive forms of care, as I am sure we all agree.

Of course, local government’s track record is not uniform, but it is right to say that local government has proved over the years to be the most efficient part of the public sector. There has been a huge improvement programme in local government, recognised by the shortly to be lamented Audit Commission, and others, over the years. The LGA in particular has sought, through a whole series of policies, including the very extensive and successful use of peer review, to engender new approaches and more cost-effective ways of dealing with a range of problems, including those in the social care arena.

I was about to conclude by drawing attention to another figure, which has just emerged today. It is a rather startling figure: £9.8 billion of uncollected VAT—10% of the total take—according to today’s Guardian. That dwarfs the amount that the Government are putting into the new arrangements. Just as local government needs, together with its partners, to engender the utmost efficiency in the mechanisms that it develops to provide services and make them cost-effective, as my noble friend suggests, so on the revenue-raising side central government has a massive obligation to ensure that it collects the taxes—instead of cutting the resources going into HMRC, which is responsible for collecting VAT, by a further 5% in the spending review.

We do not consider the cost of £3.8 billion and the welcome money that the Government are going to provide to be the last word in these matters. There will have to be a continuing process of establishing programmes that are effective and cost-effective. Looking at the totality, there is scope within the system to prioritise this area, providing that the Government take the right decisions—across the piece, not merely on the narrow front of health and social care but considering the implications for other services and functions of government—and collect the money that they are due anyway and which would relieve the huge pressure on these services and others.

I have a good deal of sympathy with the concerns expressed by the noble Lord, Lord Best, but I share the view of the noble Lord, Lord Sutherland, that it would not be right to hold things up. We must get on, but in doing so we must be realistic about the challenges that will be posed to those responsible for delivering these services. I look forward to hearing the Minister’s response to the various questions that have been raised in the debate.

My Lords, I do agree with the spirit of this amendment. It is critical that care and support generally, and these reforms in particular, are fully funded. Without adequate funding, they will not deliver the benefits we all want to see. However, let me reassure noble Lords that we already have full procedures in place to ensure that there is proper funding for social care.

The first and very basic point is that the Government set spending plans for all areas of public expenditure at once during a spending review. This ensures that decisions can be taken about the future funding requirements of government as a whole, rather than assessing each part piecemeal. The noble Lord, Lord Sutherland, spoke about the review of priorities being a task of government. I agree, and that is exactly what spending rounds are designed to do.

Secondly, we have the new burdens doctrine in place, which requires that,

“all new burdens on local authorities must be properly assessed and fully funded”.

That ensures that all new funding pressures, including those that result from this Bill, are fully funded. I can tell the noble Lord, Lord Best, that our commitments are in line with the new burdens doctrine, the costs have been identified in the impact assessment, and the funding in the spending round will support local authorities to deliver on current and future commitments through to 2015-16. To answer the noble Lord, Lord Campbell-Savours, yes, the work has been done.

It is only right that the Government take spending decisions for all areas of public expenditure at once. This ensures that future spending plans are drawn up which are coherent and consistent across all public services. This is exactly the purpose of a spending round, the latest of which concluded last week, as noble Lords know, and set spending plans for 2015-16. Fundamentally, this settlement delivers the funding required to ensure that service levels in the care and support system can be protected and are able to deliver on all the commitments in this Bill.

However, with additional pressure on the system, we must ensure that the Government, the NHS, local government and care and support services are all working together to offer the best possible services for patients while also addressing the growing demand on the system that the noble Lord, Lord Best, rightly referred to. That is why we have announced in this year’s settlement a £3.8 billion pooled health and care budget to ensure that everyone gets a properly joined-up service, so that they get the care and support they need from whoever is best placed to deliver it, whether that is the NHS or the local authority.

In 2014-15, the NHS will transfer £1.1 billion to support social care with a health benefit. The pooled fund will include £2 billion more through the NHS in 2015-16. But this money will be given only on the basis that services are commissioned jointly and seamlessly between the local NHS and local councils. I hope that that helps to answer the question posed by the noble Lord, Lord Beecham.

Before the noble Earl moves on, perhaps he can answer this question. Is he saying that the statistics that were used in the report by the Committee on Public Service and Demographic Change were known to the department and were all taken into account, and that the calculations the department made were based on those statistics, which were well sourced, when the budget for these areas was decided upon by the Government?

The statistics that the Government relied upon were official statistics and, I think, were exactly the same as the statistics used by the report to which the noble Lord referred. Of course, that report takes us forward 10 and 20 years. I am not pretending that the spending round has done that—it never does and I think it is safe to say that it never will. But we did look forward in a rigorous way to the pressures on the system in 2015-16 and based our assessment on the statistics that are officially issued.

As all plans will be jointly agreed by the NHS and local authorities in the pooling arrangements that I referred to, that in itself will provide a strong guarantee that the money is spent in a way that delivers on the priorities of health as well as of care and support. Not only will this fund help to deliver joined-up services, it provides the necessary funding for all the commitments and duties set out in this Bill, and the growth in demand from an ageing population and growing number of disabled people—I say in particular to the noble Lord, Lord Rix, and the noble Baroness, Lady Campbell. In particular, funding worth £335 million has been set aside for the introduction of the cap on care costs and the extension of deferred payment agreements.

With some of the biggest users of the NHS being those who also use care and support services, the drive towards better integration in the system is absolutely essential. This is not just to create a more efficient service, but because the individuals and families who will benefit the most are often those who fall between the cracks of the two systems, being pushed from pillar to post and not getting the care and support that they should.

The investment in integrated services will back the wider moves towards supporting people at home, reducing unnecessary admissions to hospital and focusing more on prevention and support in the community. All of this will improve care and help to reduce burdens on the system. Local areas will work together to draw up plans for the use of this money, ensuring that it is spent on health and care services. All plans will include a commitment to protect care and support, which will guarantee that care and support services receive the investment that they need.

Pooling budgets and producing joint plans have all kinds of advantages. Importantly, they will help to drive down costs in the acute sector by tackling expensive pressure points in the system, like A&E; by improving prevention services; by reducing unplanned hospital admissions; and by allowing people to stay in their homes and live independently.

The noble Lord, Lord Best, raised the point about regional variation and questioned whether the funding allocations would adequately address that. Funding for social care is distributed to local authorities according to relative needs formulae, which ensure that local variation is taken into account. I am satisfied that that was done during the spending review.

The noble Baroness, Lady Howarth, pointed to the risk that, if we are not careful, funding pressures could mean commissioning cheaper and poorer quality services. We are all alive to that risk and we want to avert it. We recognise that the last spending review provided local authorities with an extremely challenging settlement. That is why we took the decision then to prioritise social care and we have done it again in the spending round. I hope that the announcement last week, together with this Bill, demonstrates our commitment to funding social care and promoting quality in care and support services. We took the decision to provide extra funding to help local authorities maintain access to services. As I said, that includes £1.1 billion in 2014-15. Local authorities, however, should be looking at how they can transform care by innovating and exploring new ways of working. Many local authorities are already doing this; I will mention a few examples in a moment.

The noble Lord, Lord Beecham, asked me how the pooled budget arrangements would produce the kind of outcomes that we all want to see. I think the key point here is that this pooled health and social care budget will benefit by its very nature both care and support and the NHS. It will safeguard those funds in the process and it will, as I have outlined, help to save money by keeping people well for longer. It will be given only on the condition that services are commissioned jointly and seamlessly between the local NHS and local councils. I have already explained about having all the plans agreed together, so that we can ensure that the NHS’s priorities are also met and that this money, as it delivers on the priorities that are important to the NHS—I have mentioned a few—will be used effectively.

My question was not about the purpose of the pooling, which I think we all share. My question was rather more detailed. If part of the funding is to be based on outcomes, how and when is that to be judged? If the outcomes are not achieved, how will the money be reclaimed? All this is something of a mystery as matters stand.

The details of the payment-by-results system will be worked through. We are working with our partners in the sector including the LGA and NHS England to ensure that the system is designed with a view to incentivising integration. Further details of those arrangements are in course and we will announce them as soon as we can.

The kind of things that we will be looking for are, for example, the results that we have seen in places such as Cheshire West and Chester. The pilots, the whole place community budgets, showed that savings from integration could be substantial if implemented effectively. A business case needs to be presented. In that context, the pilot suggested that, once proposals are fully implemented, the net savings that could be achieved over five years are considerable.

Cheshire West and Chester has made savings of £26 million, with £3.8 million for Greater Manchester, £190 million for the Triborough authorities and £90 million for Essex. These savings are being identified. It gives us confidence to say that there is real potential to save money across the country, as shown by the pilots and other reviews, such as the Audit Commission review. Oxfordshire recently announced that it was nearly doubling the amount of money in its pooled budget for older people. That is a significant move.

I agreed with much of what the noble Baroness, Lady Wall, said. Savings are eminently possible without detracting from quality, by slowing and preventing the development of care needs or the onset of health conditions, or the loss of independence. We hope and believe that preventive care can increase the quality of life for individuals. A proactive stance by local authorities will deliver that. At the same time, preventive care will provide longer-term financial savings to the public purse. For the first time, Clause 2 creates a clear legal duty on local authorities to ensure the provision of preventive services.

I come to the point raised by the noble Lord, Lord Campbell-Savours, about the Dilnot package. I do not view the Dilnot package in the same way that he does. I do not see funding reform as being about protecting people’s inheritances. It is about providing hard-working people with peace of mind about how much they will pay for their care. Deferred payments will ensure that people will not have to sell their homes in their lifetime to pay for care. That will prevent distressing sales of houses and provide everyone with breathing space to make decisions and choices about what happens to their home. In the long term, the scheme is broadly cost-neutral to government, because the deferred payments will be repaid. Everyone will benefit from these reforms, but they will particularly help people with modest wealth who are most at risk in the current system of losing their entire home and savings.

Delivering on these transformational changes to health and care is the only way to secure the long-term sustainability of services, both for the NHS and local authorities. I would be firmly against delaying this —I think we would be heavily criticised if we did. The noble Lord, Lord Bichard, referred to the burgeoning weight of regulation during the past 60 years and one cannot argue with the statistics that he produced. This Bill serves to consolidate more than 60 years of legislation; it will repeal provisions from more than a dozen Acts of Parliament. Reducing the complexity of the statute and rationalising burdens on local authorities are our key aims in this context. I hope that, for the reasons that I have outlined, the noble Lord, Lord Best, will feel sufficiently reassured to be able to withdraw his amendment.

My Lords, I am deeply grateful to all noble Lords who have spoken: to the noble Lord, Lord Bichard, for pointing out that we cannot keep loading responsibilities on local authorities and others without willing the means to pay for those things; to the noble Baroness, Lady Howarth, who said that we cannot go on like this; and to the noble Lord, Lord Rix, who explained the position from the Mencap perspective—it could have been that of many other charities which are facing very tough times because local authorities cannot keep up the level of support that they used to have. The noble Lord, Lord Campbell-Savours, produced more impressive statistics, not least in relation to the people with long-term conditions and dementia who are living in the community and need to fund their care needs. The noble Baroness, Lady Campbell, brought us the users’ voice, pointing out that funding cuts have already meant people losing some of the control and choice which had been increasingly expected with use of direct payments and so on.

The noble Lord, Lord Sutherland, pointed out that the culprit is not local government or central government but demography, and that we need to make some choices as a result of those demographic pressures. However, in his view, one of those priorities is clear: it is that we should go ahead with this Bill. The noble Lord, Lord Beecham, also felt that it would be unwise for us to delay things, even though he accepted that cuts mean that social services in Newcastle have returned to the position that they faced in 1973 in terms of the resources available. He pointed that it is local government that has shown itself best able to be more efficient in these difficult times. We need to remember that. The noble Baroness, Lady Wall, pointed out that local authorities should try to make savings wherever they can, and the noble Lord, Lord Beecham, was right that statistics show that local government is doing just that.

I think that it is fair to say that the noble Lord, Lord Bentham, felt that it was necessary to find additional resources, but he thought that those could be found from the underspend in the NHS or the uncollected VAT or some other source. However, he did not want the amendment to delay the good things that the measures bring with them. The noble Earl, Lord Howe, agreed that we need fully to fund the measures—did I say Bentham?

I deeply apologise, and not for the first time, to the noble Lord, Lord Beecham, one of the most distinguished of the vice-chairs and past chair of the LGA.

The noble Earl, Lord Howe, agreed with everybody that we need fully to fund the new measures and to ensure that the funding for existing care services is there. He expressed to us the belief that the new measures will do just that and they herald a sustainable funding arrangement for the future. He noted that the settlement for local authorities is extremely challenging this time round, but that, in terms of social care, the settlement that we are now pointing towards, with jointly commissioned services, the pooling of the £3.8 billion and NHS and local authorities working together, will in his view prove enough to fund a sustainable care service. Only time will tell whether those calculations prove to be accurate rather than too optimistic. In the hope that the noble Earl’s predictions are correct, and recognising that government really are attempting to make serious change in this Bill to the funding system as well as in so many important ways to the care services, I beg leave to withdraw the amendment.

Amendment 77B withdrawn.

Clause 1 : Promoting individual well-being

Amendment 78

Moved by

78: Clause 1, page 1, line 4, at end insert—

“( ) The Secretary of State, in making regulations or issuing guidelines under this Part, must have regard to the general duty of local authorities in exercising a function under this Part in the case of an individual to promote that individual’s well-being.”

My Lords, I shall speak also to my Amendments 78D and 88L. I am also supportive of Amendment 79, which very much follows the thinking behind my own Amendment 78. I also support Amendment 78ZA, in the names of the noble Lord, Lord Bichard, and the noble Baroness, Lady Tyler. I am sympathetic, too, to the amendments tabled by the noble Lord, Lord Black. I have also added my name to Amendments 78A and 78B in the name of the noble Baroness, Lady Barker. She will speak substantively to those amendments, which we have proposed in a number of Bills going back many years. They try to make sure that, when a regulator is dealing with a religious care home, regulations do not get in the way of the spiritual beliefs of the residents in that home.

Amendment 78 takes us to the very important well-being principle. In its consultation paper which led to the consolidation of the social care legislation that we see in this Bill, the Law Commission proposed that there should be tightly defined processes for determining the scope of adult social care. That follows on from the debate that we have just had. Replies to that consultation persuaded the Law Commission to define the purpose of adult social care as promoting or contributing to the well-being of the individual. That recommendation was accepted by the Government and is central to their new approach to adult social care.

Clause 1 provides for a set of legal principles which govern how local authorities are to carry out their care and support functions for adults under the Bill. Subsection (1) establishes the overarching principle that local authorities must promote the well-being of the adult when carrying out functions under the Bill in relation to that adult. This duty applies both in relation to adults who use services and to carers. The well-being principle applies to local authorities when they exercise a function in the case of an adult. My understanding is that it is not intended to be directly enforceable as an individual right, but to carry legal weight where a local authority’s failure to follow the principle may be challenged through judicial review.

This issue was considered very carefully by the Joint Select Committee, which commented specifically on the role of the Secretary of State in relation to the well-being principle. It took the view that many of the details that will shape the way in which local authorities discharge their functions under the Bill are subject to regulations and guidance issued by the Secretary of State. We will, of course, come on to one example—that is, the regulations in relation to eligibility, which we will debate not, I suspect, tonight but on another day.

The Joint Select Committee referred to Section 1B(1) of the National Health Service Act 2006, which provides:

“In exercising functions in relation to the health service, the Secretary of State must have regard to the NHS Constitution”.

The Select Committee suggested that the Secretary of State should be obliged to have regard to the requirements of Clause 1 on well-being when exercising the functions under the draft Bill. In giving evidence to the Joint Select Committee, the Minister replied:

“We absolutely want the wellbeing principle to apply comprehensively”.

The Joint Select Committee comments:

“We welcome the importance that Ministers attach to the well-being principle. We recommend that the draft Bill should include a provision requiring the Secretary of State, when making regulations or issuing guidance, to have regard to the general duty of local authorities under clause 1”.

We debated this at Second Reading. The noble Earl, Lord Howe, said that,

“Clause 1 is intended to apply at an individual level, when a local authority makes a decision. This individual focus on the specific well-being and outcomes for that person is at the heart of the way that the Bill has been drafted. It is not intended to apply in a more general way”.—[Official Report, 21/5/13; col. 829.]

He went on to say that it would therefore not be appropriate for the Secretary of State to be subject to the same duty, as the Secretary of State does not make decisions at the individual level.

I think there is an element of Ministers almost washing their hands of what actually goes on at ground level in health and social care. We have already seen that in the Health and Social Care Act 2012, and we are seeing some elements of that here. Of course, the Bill places a responsibility on local authorities to promote well-being in the way they implement the provisions of the Bill locally. However, if the Secretary of State were to issue regulations without having regard to the promotion of well-being, there is a risk that those regulations or guidance will conflict with the well-being principle. That would place local authorities in an impossible situation. For instance, if the eligibility criteria issued in regulations by the Secretary of State do not take full account of all aspects of well-being in Clause 1, local authorities may find that people who need support to promote well-being as defined in Clause 1 fall outside the eligibility criteria. I will come on to debating the eligibility criteria, but there are some aspects of the eligibility criteria which would suggest that they do not meet the well-being principles in Clause 1. I hope the noble Earl will think very carefully about this. There is a broad consensus in your Lordships’ House and within the Select Committee dealing with the draft Bill that the Secretary of State, when issuing regulations and giving guidance to local authorities, ought to be operating under the same principle of well-being as those local authorities are. It seems to go straight back to the debate instituted by the noble Lord, Lord Best, in relation to the Government legislating but not giving the wherewithal to local authorities to actually carry out that legislation effectively.

I turn to Amendments 78D and 88L, which are concerned with ensuring that health needs are taken fully into account in decisions taken by the local authority. I fully acknowledge that I have been inspired to do this by the noble Baroness, Lady Campbell. The starting point here is that it is essential to look at this through the prism of person-centred integration. As a starting point, we need to look at ways to put the individual’s and carer’s need for integrated working in the Bill and outline a statutory framework for person-centred integration that will support and incentivise local moves towards more integrated working. There are clearly points of contact here with the scheme which the Minister’s honourable friend Mr Norman Lamb announced recently for local pilots on health and social care integration.

Promoting the individual’s well-being, assessing their needs and those of their carers, deciding on eligibility and the priority for needs to be met, developing them with an appropriate care and support plan, enabling the best use of a personal budget and/or direct payment, and ensuring continuity of capacity during and after a move such as a house move are all processes or stages in which active engagement of NHS professionals or services could have a positive effect on the outcomes for individuals and carers. Integrated approaches by social care and the NHS can inform decisions, expand options, widen choice, retain or restore capability, prevent or reverse deterioration, avoid admission to and accelerate discharge from more intensive support and enable more efficient, equitable and economic use of scarce resources.

These amendments, which aim to ensure that happens in relation to the whole well-being agenda, are entirely relevant to the eligibility criteria. I remind the noble Earl that Mr Lamb, in his foreword to the document that we have received, makes the observation that,

“there needs to be better integration between local authorities and the NHS to remove gaps and build services around the needs of people”.

The discussion document’s only reference is in one paragraph which says:

“The assessment process in the Bill … provides for joint assessments between local authorities and other bodies such as the NHS. Improved integration will ensure that the person does not have to undergo separate assessments and will support better care planning to meet the individual’s overall health and care needs, or to join up whole-family assessments which look at an adult needing care alongside those who care for them”.

Of course, that is welcome as far as it goes, but there is a risk that it depends on an ill-defined concept of better integration and may well fall short of a holistic approach to well-being, assessment, care and support planning, carer support and review. We will come to the draft regulations later. This has a significant bearing on assessments for health and social care integration. The intention is to scrap the present assessment system, based on judgments about degrees of risk to areas of individual capability and exclusion from participation in various aspects of ordinary living. The new model proposes to examine people’s ability to carry out various personal care tasks and undertake a selections of household tasks. The rationale offered is that the new system will be more objective and fairer in its application, but there are some concerns here. First, this is explicitly a deficit-model of assessment, requiring individuals, their carers, relatives and social workers to almost play up or exaggerate the things that they are unable to do in order to qualify for support. In many ways, that replicates the very bad approaches that we have seen in some welfare assessments. It is certainly bad for morale and distorts the overall framework for making decisions. In one sense, one can argue that it reverses efforts over the past 20 years to maximise independence, choice and control and build on the strengths, contributions and aspirations that people can have. I must say to the noble Earl that is has some very uncomfortable reminiscence of the new approach to disability benefits, whereby people are required to prove limitations under the inexpert and unsympathetic eye of ATOL assessors. I hope that is not the approach that is going to be taken in relation to the eligibility criteria. There will be very great concern if that is to be the case.

The noble Baroness, Lady Campbell, has many examples, which I hope she might be able to intervene and provide, of disabled people with high health and social care support needs, who are ready for discharge but languishing in costly high-dependency hospital units because clinical commissioning groups have almost ground to a halt due to decision-making, with arguments about who pays being one of the many reasons for this. It is absolutely essential to ensure that when we debate and take forward the well-being concept, which of course we welcome, not only do we have a situation where the Secretary of State is subject to those principles as well, but the health service plays its part in ensuring a wholly integrated approach. As we come to debate the eligibility criteria, that is going to be a very important factor for our consideration. I beg to move.

My Lords, I support the amendment and in particular speak to my own Amendment 78ZA, which seeks to place the concepts of dignity and respect on the face of the Bill at the outset. I should declare an interest as chairman of the Social Care Institute for Excellence.

A week or so ago I visited a residential home in Edgbaston, Birmingham, and I came away convinced that I could happily live there. I am not sure that they would want me but I was convinced that I could live there if they would have me. As I reflected on that visit I asked myself why I felt so positively, because I do not always feel that way about a visit. The accommodation was comfortable, clean and not overly institutionalised. The staff were skilled and well qualified. There was a rich programme of voluntary recreational activities and a great deal of interaction between the local community and the home. A special school was visiting on a regular basis and there was clearly a bond between the residents and the students at the special school.

All very impressive, but above all, I experienced a place where residents were treated with dignity and with respect by staff who seemed to understand that people’s greatest need at a time when they have to receive some support is not to lose their dignity. Those residents wanted, above all else, to retain their dignity, and so would I.

Recently, we have all seen distressing coverage of care—residential or domiciliary—which falls below anyone’s acceptable standards. Although I am sure that we have all been shocked by the nature and level of abuse and neglect which have been exposed, I, for one, found the most heart-rending thing was the way in which all that had stripped people of their dignity. The fact that someone in a caring profession could treat another person with such a lack of respect and basic humanity—whatever the pressures, and we know that those pressures are considerable—is what I found truly shocking. To see vulnerable people stripped of their dignity is, frankly, devastating.

Dignity and respect are the basic rights which those in care have the right to expect, but they also provide the benchmark by which professionals should be judged as they go about their work. Whatever else carers do, it is simply not acceptable to treat people with a lack of dignity and respect. That brings me specifically to the Bill and my amendment.

Many of us have said on Second Reading and already today that in many respects this is a mould-breaking Bill, much of which is to be welcomed, but because it is so significant it will long be a reference point for those in the caring professions and a place where people look for definitions of good care. They will look for a clear statement of what users and professionals should expect and should be expected to provide. That is why I think that it is so important that we ensure that the Bill captures and articulates boldly what we expect. As it stands, Clause 1 says much that is important, as it is intended to exemplify what is meant by providing well-being. In Clause 1(2), there is even a cross-reference to personal dignity. I suspect that the Minister may well suggest that that deals with the thrust of my amendment, but for me, it is lost in a series of other references. It just does not stand out boldly enough and its impact is diminished.

Well-being is a phrase well used now in the world of health and certainly within the Department of Health. There is nothing wrong with it, but for me, it just does not quite capture the essence of good care. It is also not a phrase in common usage. It does not encapsulate the fundamentals of good care in the way that “dignity and respect” do. My amendment would state boldly at the outset of the Bill that dignity and respect is what we are all about. They encapsulate the cornerstones of good care. They are the foundations on which everything else should be built. Even in an age of austerity and cost-reduction, they cannot ever be compromised, because they are, in many ways, our most basic human rights.

The amendment is really meant to help the Government and the Minister, to enable them to make at the outset that bold statement of intent and expectation. It does not need additional expenditure—that must be a good thing—it just involves us being prepared to state simply and unambiguously what the Bill is about and what good care is about.

My Lords, I shall speak to Amendments 78A and 78B, which stand in my name and that of the noble Lord, Lord Hunt of Kings Heath. These and other amendments which will crop up throughout our discussions have been inspired by the Christian Science movement. I wish to say that I am not a Christian Scientist, but Christian Scientists hold to some very firm beliefs which are of great importance to them. Part of their belief system is that they do not wish to receive medical treatment in circumstances where other people would make a different decision. Therefore, in health Bills such as this, where we are setting out the principles that underlie what we define to be good care, it is not uncommon for me and the noble Lord, Lord Hunt, to put on record again that there is a spiritual dimension to health and well-being and that the way in which that spiritual belief is manifested can be different for minority groups.

One great strength of the Bill is that it takes a principled approach to what we define as well-being rather than attempting to define well-being in a descriptive sense. One reason why I think that that is increasingly important is that we have an increasingly diverse population. Therefore, the meaning of well-being for individuals is becoming distinct and diverse throughout society. The amendments place a duty on local authorities and relevant health bodies to respect the increasing diversity of our population.

There are two other reasons why I am very pleased to support the amendments. Like everyone else in the House, I am greatly in favour of the integration of health and social care. I see the undoubted benefits of that, but as someone who has worked in the field of social care, as opposed to health, all my life, I still carry with me the fear of the medicalisation of disability or of old age. When push comes to shove, when budgets are tight, some of the certainties which surround physical health, in particular, can overtake social goods which are less easy to define. Therefore, it is important that we ensure that we do not allow that to happen. One way to prevent that is by taking the approach of the amendments.

The final reason why I raise the amendments now is that I think that setting that out as they do right at the top of the Bill is a strong reminder to everyone who will refer to the Bill in years to come that the autonomy of individuals is an important part of health and well-being. You cannot have good health and be a fully functioning member of society if you do not have that autonomy, an autonomy which means that, in some cases, you have the right to make decisions which other people would regard to be unwise. It is a point of principle, but one which I think has a great deal of practical application not just for those who are receiving care but for those who are in charge of making decisions about it.

My Lords, I am very sorry that the noble Lord, Lord Warner, is not in his seat. He tabled Amendment 79 to express the strength of feeling of Members of this House who were sitting on the scrutiny committee about the Secretary of State’s the duty to have regard to well-being. Were there room for more than four names to the amendment, there would have been more Members of your Lordships’ House on that list.

To put this in context—and the noble Lord, Lord Hunt, has taken us through quite a lot of this—this Bill was widely consulted. It was probably the coalition’s most widely consulted Bill; somebody might be able to tell me to the contrary. At each stage, people welcomed the well-being principle. Perhaps I may remind the House that in the majority report on the Bill, one of the recommendations was that the Secretary of State should have due regard. When the final Bill was produced, many in the sector approached me, and I suspect many others, to express their disappointment that that was not included in it. When the Secretary of State came to give evidence with the Minister for Care and Support, the right honourable Norman Lamb, he was very positive about it. According to the transcript of the session, Norman Lamb said:

“We absolutely want the wellbeing principle to apply comprehensively”.

The well-being principle is around the change of culture and it puts the person at the centre. It is absolutely critical that that happens, and next week we will debate the whole business of assessment and how we are undertaking it. However, unless the Secretary of State has to have regard to the same principle as local authorities, there is an opportunity for future Secretaries of State when making regulation to disregard well-being and just make regulation in the old way. One thing that sets this Bill aside from many others is that it is written in plain English and throughout its intention is pretty clear.

I ask the Minister if he is able to offer any assurance to the House, to the sector and to those for whom the Bill is written—the service users and the carers—that the Government will think again about the decision not to include in the Bill a duty on the Secretary of State to take well-being into consideration.

My Lords, I apologise for not being able to bound in as soon as the noble Lord, Lord Hunt, sat down. At that moment my papers cascaded to the floor. I rise to support Amendment 78D. For logistical and physical reasons, as my noble Lords can probably hear, I was unable to put this amendment down myself and the noble Lord, Lord Hunt, has done miracles to articulate our conversations in such a lucid manner.

I feel, however, that I must give your Lordships a very clear example of why I believe this amendment is so necessary. Why do health and social care practitioners need this further direction in this amendment?

It is true that health and social care consumers enjoy greater personal control now, which affords a small percentage support to live independently in the community. I am an example of the few who live with complex health and social care requirements and live a life just like any other: pursuing a career, tending the family, or in my case revising legislation.

We remain, however, an exception, rather than the rule. Let me give your Lordships a couple of examples. Just over a year ago, I led a JCHR inquiry into Article 13 of the UNCRDP, a right to independent living. When we launched the findings, I dedicated the report to a disabled young man who had secured optimum control over his own life using social care direct payments. He lost everything within a couple of months, after his support needs changed, due to requiring a tracheostomy. He had graduated from university and was about to start his first job .

The tracheostomy is a significant procedure requiring recovery and adaptation, but he was considered well enough to return home after two months to pick up his life. Despite what he had been through, he was bright and optimistic about his future, and I had no doubts that he would adjust and go back to work.

Five months later, he was still on the same high dependency ward. Had his health declined? No. He remained in hospital because his tracheostomy meant he was no longer allowed to manage his social care direct payments. Without his knowledge, he was passed from social services to his local PCT, which suggested he move to a nursing home for older people. When he and his consultant said no, this file was put in the pending tray. There this young 23 year-old watched patients die, and the noise of machinery made sleep possible only for the very tired or the very ill. It was a life barely lived for days, weeks and months on end.

That situation occurred only due to the inability of local health and social care services to work in an integrated, efficient and effective way. It could not have been a question of funding, as the cost of his care was three times more expensive in the hospital unit. This was not an isolated case. Since then, the unit has experienced an increasing number of cases.

Britain no longer routinely places disabled people in institutions, but that does not mean that it does not institutionalise disabled people through bureaucratic failure, red-tape and a lack of support, precisely because the duty struggles to provide a holistic publicly funded health and social care support service.

I am not a fan of a health model of disability, but so many disabled people are living with considerable health issues. That is why we have to have a clear structure and direction in both health and social care so that they work together equally to produce outcomes for disabled people that enable them to go on living the life that they so long for: a life lived independently in the community.

My Lords, I apologise to the noble Baroness, Lady Campbell. I was so eager to follow the noble Baroness, Lady Jolly, on Amendment 79, and I did not know that she was wishing to speak.

I particularly wanted to follow the noble Baroness, Lady Jolly, in speaking in support of Amendment 79, on which my name appears as well as hers and the noble Lord, Lord Warner, who was unavoidably absent today, and indeed the noble and learned Lord, Lord Mackay.

It will not have escaped the notice of the Committee that we are all members of the Joint Select Committee which scrutinised this Bill. We were very keen to have in Clause 1 the recommendation that when making regulations or issuing guidance, the Secretary of State must have regard to these principles, as must as local authorities.

We put this issue to the Secretary of State and the Minister as the noble Baroness, Lady Jolly, has mentioned, when they appeared before the Joint Committee. They appeared to be very favourably inclined towards it. We were very hopeful that this would be in the Bill. The civil servants were clearly less eager about this, so perhaps it was no surprise that it did not appear. However, we took away from the evidence session the understanding that Ministers were sympathetic to the idea. That is one of the reasons this amendment has been tabled.

Sadly, the official line now seems to be that used by the Minister at Second Reading on 21 May, when he said that,

“the well-being principle in Clause 1 is intended to apply at an individual level, when a local authority makes a decision. This individual focus on the specific well-being and outcomes for that person is at the heart of the way that the Bill has been drafted. It is not intended to apply in a more general way. Given that we do not think it would be appropriate for the Secretary of State to be subject to the same duty, the Secretary of State does not make decisions at the individual level”.—[Official Report, 21/5/13; col. 829.]

Nobody could disagree with the first part of that statement but the second part simply does not follow on, because the Secretary of State’s actions in regulations and guidance determine to a great extent whether local authorities can discharge their duties under Clause 1.

If the Secretary of State asks so much of local authorities without adequate funding being available, they will simply be unable to discharge their duty. Only if the Secretary of State is bound by the same duty as the local authorities can there be any realistic chance that, over time, he will avoid making unreasonable demands of local authorities in the instructions that he gives them. The way that the Bill is drafted, the Secretary of State can simply pass the buck back to the local authorities, which differs from his position in relation to the NHS, where he is required to act in accordance with the NHS Constitution. If it was the Secretary of State’s intention, as he seemed to be saying in his oral evidence to the Joint Committee, to support the well-being principle in practical terms, this amendment should be acceptable, and I hope it will be.

My Lords, I shall speak to Amendments 78E, 87K and 88J, which are in my name. They raise the issue of companion animals—mostly cats, but dogs as well—and the positive role that they can play in the care of elderly, vulnerable and sick people, whose welfare is at the heart of the Bill. I should declare an interest as president of the Printing Charity, as it runs two homes providing sheltered accommodation and financial support and care for people from the printing industry.

Amendment 78E includes the positive contribution of a companion animal to an individual’s well-being in the list of factors to which a local authority must have particular regard in exercising its functions under Part 1. Amendment 87K includes identifying the role of companion animals in the care and support of an individual when a local authority is assessing their needs and those outcomes that an individual wishes to achieve in day-to-day life. Finally, Amendment 88J deals with the issue of companion animals in regulations under Clauses 9 and 10. Taken together, their purpose is to ensure that the benefit which companion animals can provide to well-being, a subject not currently covered in the Bill, is not overlooked by those implementing and interpreting it.

It is estimated that 25% of people over retirement age own one or more pets. For the elderly and vulnerable, the companionship that cats and dogs can bring cannot be overstated. Academic research over many years has documented this. One study by Brooks, Rogers and others, published just last year, highlighted the emotional and practical impact that companion animals offer. Noting that they provide unconditional support and love, as we all know, the study concluded that,

“the policy implications of this study suggest that pets might usefully feature alongside consideration of the usual support systems associated with the management of long-term conditions and in planning how needs might be ... creatively met”.

That, of course, is precisely what this Bill is designed for and what these amendments are crafted to deliver.

Cats in particular can help those who are vulnerable, through age or health, in three ways. First, there is a powerful body of evidence about the contribution of cats to physical health. According to one study published recently in the Journal of Vascular & Interventional Neurology—not a magazine I look at frequently, but it is there—they contribute to a reduction of fatal cardiovascular disease by around 30%.

Secondly, the ownership of a cat brings positive benefits to an individual’s mental health. Research conducted in 2011 for Cats Protection and the Mental Health Foundation among people with a mental health problem found that 76% of people who owned a cat felt they could cope with everyday life much better as a result, and that 87% said it had a positive impact on their well-being. Cats can be especially helpful for depression during the winter period—a particularly important point since, as we now know, this goes on for about nine months of the year. As the Cinnamon Trust, which works tirelessly to support the elderly and their pets, summarises it:

“Pets have the ability to bring happiness and laughter and lift depression. Communication with other people is often easier when a pet is present for reassurance”.

Thirdly, cats make particularly suitable companion animals for those with chronic health problems, including those who are immobile or disabled. I know that this is a charge always made against cat lovers, so I am not forgetting our canine friends. I highlight, for instance, the excellent work of the innovative Dementia Dog Project, which helps to keep people in the early stages of dementia active and engaged with their local community, as well as providing a constant companion to reassure those suffering from dementia in new or unusual situations. This project in particular shows that a dog may aid a sufferer to stay on longer in his or her home—an important ambition that many noble Lords have highlighted in this debate—and may even slow the onset of this terrible disease.

Real-life examples of how cats promote well-being and play a vital role in an individual’s care appear regularly in the excellent magazine, The Cat, which is a publication I do look at regularly and is published by Cats Protection. In recent months, there have been stories about how their cats helped an owner to cope with epileptic seizures, helped a seven year-old boy to deal with the debilitating problem of selective mutism, and comforted a 17 year-old girl confined to bed with the life-long incurable condition of Behçet’s syndrome. One particularly moving story related to how a visit from a cat to an elderly lady who was in a hospital ward and suffering from severe dementia got her to speak for the first time in three months.

There are many other examples. Indeed, I think of the experience of my own mother. In the last year of her life, she was widowed, immobile and more or less housebound. Her faithful cat, Toby, was her constant companion. She talked to him, laughed with him and moaned and shouted at him; he cared for her in return. Indeed, he lay on her bed as she died. That companionship is a priceless gift, which this legislation should protect. Let me explain briefly how these amendments might help, as I ask my noble friend the Minister to consider these three issues.

First, one of the many problems that those who are elderly with a pet can face is how to care for it when they go into a care home. There are some amazing care and retirement homes which welcome pets but others do not have a policy on them, which can cause anxiety and distress to those who need to enter one. For a person to have to give up what might be their sole companion is a tragedy for an owner and for the pet. It also adds to the growing burden on many animal charities, which are having to take increasing numbers of abandoned pets as economic problems have bitten hard in so many families.

Secondly, it would encourage those at the front line of care—GPs, in other words—to become aware of the role of a pet in an individual’s life. Many GP surgeries include in their information about the over-75s whether a companion animal forms part of the client’s household. The signal sent from amending the Bill would encourage many more GPs and clinical commissioning groups to ensure that this important information is routinely collected for all age groups, including the elderly.

Finally, the Bill needs to be drafted widely enough in its definitions of well-being and needs assessments to allow for money, whether budgets or direct payments, to be used where necessary to support an individual who perhaps wishes to retain a pet but is having problems due to health. Professional pet-sitting or feeding may be needed when an individual is hospitalised and where there are no friends or family to help. Knowing that a pet is being cared for can help encourage otherwise reluctant individuals to go into hospital for treatment and relieve anxiety. Equally, in cases where a care assessment shows that a companion animal would bring individual health benefits, money may be needed to help an individual obtain a companion animal. There are many examples of such budget programmes in other countries—most notably, I think, in Australia—where health and local authority budgets are pooled to provide companion animal support programmes. This principle should be embedded in regulation and statutory guidance for all relevant implementing bodies.

Most importantly of all, these amendments would ensure that the role of companion animals is given proper recognition and protection through an individual’s care journey. Some may be too vulnerable or frail to request that their beloved pet is taken into account when their care is planned. Others may need help or assistance in retaining their companion. Others still may not be aware of how a cat or a dog could improve their quality of life, ease their loneliness or help tackle a chronic disease. The amendments I have tabled would ensure that this happens as a matter of routine and is not left to chance in the way that, tragically, too often happens now.

My Lords, today is bowel awareness day. I have been chairing a reception for bowel care this afternoon. Two of the speakers had disabilities: one with multiple sclerosis and one a tetraplegic, paralysed from the neck down. Both needed bowel care and they both said that dignity and respect were so important. Amendment 78ZA should therefore be a must for the Bill. There are many important amendments in this group, including those on well-being and companion animals, which I support. Happiness is something we should all aim for.

My Lords, I add my support to Amendment 78ZA, to which my name is also attached. The noble Lord, Lord Bichard, has already spoken very eloquently of the reasons behind the amendment. Dignity and respect are absolutely fundamental pillars of well-being, which is why I would like to see these words spelt out in the Bill. Well-being is unattainable without dignity and respect as central components. In saying this, I am conscious that the public’s opinion on this matter is one of pessimism and distrust of the current social care system. In a recent survey, only 26% of the public felt confident that older people receiving social care are being treated with dignity. If the public do not trust their loved ones in the hands of the social care sector, what hope is there that well-being is being promoted?

We have recently seen and heard of shocking failures in the care of older people in both the health and social care sectors. These very harrowing examples serve to illustrate the importance of enshrining dignity and respect as a critical part of well-being in order to try to change the culture among care workers in the health and care sectors, to ensure the transformation of services that this Bill is intended to bring about and to have the sort of compassionate care that we all like to see. Dignity will also be very important when it comes to secondary legislation and specifically to the eligibility criteria. It is vital that these criteria have regard to the well-being principle. I am happy to be corrected about this if I am mistaken, but the draft feels very health-and-safety-oriented and does not mention dignity at all.

I would have liked to add my name to Amendment 79 about including well-being as part of the Secretary of State’s duty, the reasons for which have already been set out very clearly. The very wide-ranging definition of well-being, set out in The Care Bill Explained, makes it absolutely clear that for the well-being principle to be made a reality it would need to be the joint responsibility of a wide range of partner agencies, nationally and locally. Government action on key issues such as welfare, transport and housing are likely to have a very distinct impact on well-being at an individual level.

We rightly hear a lot about the importance of joining up health, social care and wider services: horizontal integration, if you like. For any system to work as it is intended and to be fully aligned it must be, as I said at Second Reading, vertically integrated as well to make sure that everyone, from the Secretary of State downwards, has the same objectives and is pulling in the same direction.

My Lords, I support Amendment 78ZA. Six years of serving on the Equality and Human Rights Commission taught me that if we embedded dignity and respect into the training of staff we would avoid many of the tragedies we have read about. This applies, right across the board, to staff in health, social care and housing. It is essential that we take dignity and respect as very serious elements of the training of all staff who come into contact with frail and vulnerable people.

My Lords, the well-being principle in Clause 1 was devised on the basis of the Law Commission’s report on adult social care which this part implements. The report recommended that the new statute should set out a single, overarching principle that adult care and support must promote or contribute to the well-being of the individual. Not least in the light of our debate at Second Reading, I can therefore understand the noble Lords’ intention in tabling Amendments 78 and 79. It is to ensure that any functions that the Secretary of State exercises under this part take into consideration how such provisions will impact upon people’s well-being. I can give the Committee what I hope will be a welcome reassurance on that issue and, in the process, a rather better and fuller answer than I gave at Second Reading.

It is already the case that the Secretary of State must have regard to the general duty of local authorities to promote an individual’s well-being when making guidance or issuing regulations. This is because, when making regulations or issuing guidance, the Secretary of State must consider how local authorities can fulfil their statutory obligations. He cannot ignore those obligations and I believe this addresses the central concern of the noble Lord, Lord Hunt, and others who have spoken to the amendment. The question is whether the Bill should go further. The Government do not believe that it is appropriate to apply the well-being principle directly to the Secretary of State. The well-being principle is intended to apply at a very real, individual level. It has been designed to frame the relationship that exists between the local authority and the individual adult, in effect setting out how it is expected the local authority will behave when making a decision, or doing anything else, in relation to a person needing care and support or to a carer. The Secretary of State does not act at this individual level, and I am still reluctant to make any amendment which might be seen to detract from this important legal reform.

Having said that, I have listened with care to the strength of feeling in this debate, not least to the point made by the noble Baroness, Lady Pitkeathley, about the Secretary of State’s duty to have regard to the NHS constitution and whether there was something comparable that we could devise in this context. That is an interesting comparison and, while I am not yet convinced that it is fully comparable, I am happy to take the points that have been made away with me and give this matter further thought before the next stage of the Bill.

Amendment 78A seeks to bring in to the well-being principle the idea of spiritual well-being and I listened with care to my noble friend Lady Barker who spoke to this amendment. The Government believe that the clause, as it is already drafted, takes such a factor into consideration. Clause 1(2) sets out that well-being means an individual’s well-being in relation to emotional well-being. The Government believe that emotional well-being incorporates the concept of spiritual well-being.

I turn to Amendment 78B, which proposes that local authorities must take into consideration an individual’s beliefs, values and past practices. While we share my noble friend’s intention in this regard, we believe that the clause as it stands already incorporates the idea that people’s beliefs and values should be taken into account when a local authority has regard to an individual’s views, wishes and feelings.

The second part of the amendment would be to ensure that “past practices” were also taken in account. I reassure my noble friend that we will be setting out in guidance the importance of taking into consideration, when planning a person’s care, their views and feelings as well as considering any practices in the past that have been important to that individual.

The noble Lord, Lord Bichard, highlights the importance of dignity in care in his Amendment 78ZA, and he spoke about that concept very powerfully. I am pleased to say that the Government agree that this is important, which is why we amended the Bill to make an explicit reference to dignity into the well-being principle, following pre-legislative scrutiny. With respect to the noble Lord, I cannot agree with him that the word has somehow been lost; it is right there on the page.

I turn to Amendments 78E, 87K and 88J, tabled by my noble friend Lord Black of Brentwood. These amendments focus on the very important topic of pets. The Government have considered this issue carefully since the amendment was tabled, and we believe that the Care Bill already allows for the consideration of pets. First, Clause 1, the well-being clause, provides that local authorities, when exercising any function under Part 1 of the Bill, have a duty to promote the well-being of an individual. Well-being is composed of many aspects, including emotional well-being. A pet might be so important to an individual that their emotional well-being would depend in some way on their pet. If that is the case, a local authority will have to take it into consideration.

Furthermore, Clause 1(3)(b) sets out that in exercising any function under Part 1 of the Care Bill a local authority must have regard to an individual’s “views, wishes, and feelings”. This could include how an individual feels about a pet, and their wishes for the pet. Clause 9, which covers the assessment of needs for care and support, also allows scope for pets to be taken into consideration in the assessment process. As Clause 9(4)(a) sets out, a needs assessment must take into consideration a person’s well-being. This could certainly include an individual’s pet, from which they derive a lot of emotional well-being.

I turn to Amendments 78D and 88L. The Government believe that it is more important than ever that care and support services operate in tandem with health services. The Government have committed to breaking down barriers between health, care and support, as well as encouraging co-operation, integration and joined-up working between local partners. The Government believe that the Care Bill already allows for such co-operation to occur, and I shall explain how. First, Clause 1(2)(a) makes it clear that the well-being principle incorporates physical and mental health. Local authorities must therefore already consider a person’s health when exercising any functions under Part 1. Secondly, Clause 3 details how local authorities must exercise their functions under Part 1 with a view to ensuring the integration of care and support with health provision, where they consider that this would promote the well-being of an individual.

Regulations on assessments for care and support are also relevant. As Clause 12(1)(f) sets out, regulations may set out when a local authority must consult someone with expertise before undertaking an assessment. Regulations may also set out conditions around co-operation with the NHS, by specifying the circumstances in which the local authority must refer the adult concerned for an assessment of eligibility for NHS continuing healthcare.

The noble Lord, Lord Hunt, expressed the view that the eligibility regulations do not sufficiently promote integration. I note the point that he made and look forward to debating this in perhaps fuller measure when we come to discuss eligibility. However, I ought to point out that the draft regulations published last week are subject to consultation, and I am sure that the discussion will explore the points that he made.

My noble friend Lady Tyler said that the regulations do not mention dignity specifically. I think that they have to be read in context. The well-being principle, including the reference to dignity, applies to the assessment of the adult’s needs and to the local authority’s determination of whether those needs are eligible.

To return to my noble friend Lord Black’s amendment on companion animals, we are clear that there should not be any limitations on the uses of direct payments, which was an issue that he raised, as long as they are used to meet needs for which they are paid and not in a way that is unlawful. The key is that direct payments are used to improve people’s outcomes.

I understand the intentions of noble Lords in tabling these amendments but I hope that they feel reassured that they are not necessary, although I will take back the specific issue that I referred to earlier. In the light of that, I hope that the noble Lord, Lord Hunt of Kings Heath, will feel able to withdraw the amendment.

Before the Minister sits down, I would just like to ask him: does he not really want to get things right? When there were problems at Mid Staffordshire, people were desperately thirsty, drinking out of flower vases, and were lying in their own refuse in their beds. Surely dignity must be written in all over the Bill.

I agree that dignity is a very important concept, which is why we expressly amended the Bill to include that word right at the beginning. Clause 1, which defines the well-being principle, is the foundation for everything that follows. While one could pepper the Bill with references to the word “dignity”, I am not sure that that would add very much in practice.

My Lords, I am grateful to the Minister for that response. I hope that he will reflect a little on the amendment from the noble Lord, Lord Bichard, and the noble Baroness, Lady Tyler. I understand what he is saying about the words in the Bill; I think that noble Lords just wanted to find a way of giving that greater focus. That will be well worth giving further consideration to. With regard to the amendment from the noble Baroness, Lady Barker, I am grateful for the reassurance that the Minister has given.

On Amendments 78 and 79, the Minister has essentially said that he still sticks to the general principle that the well-being clause applies to local authorities and individuals. The point here, though, and the reason why I am glad he is taking it away, is a point raised by a number of noble Lords: this legislation, which is a wholesale recasting in the light of the Law Commission’s work, is likely to endure for many years to come. That is why it is so important that the link between the Secretary of State’s duties, and those of local authorities, and the Secretary of State’s powers regarding guidance and regulations are brought together. I hope that the Minister will find a way of getting this into the Bill.

The noble Baroness, Lady Campbell, was very eloquent when she talked about what happens if health and social care do not provide an integrated service. She gave an example of a very distressing case of someone who could be out of hospital and back into work. This was down to a failure of two public bodies to sort things out. I know that the Minister says that in fact the legislation is okay; the problem is that these public bodies will continue to fail people who fall between two stools. These bodies do not seem to have an understanding that it is imperative for them to look after the interests of those individuals. I hope that the noble Baroness might return to this at a later stage.

The noble Lord, Lord Black, made some wholly persuasive arguments. My noble friend Lady Wheeler reminded me that Canine Partnerships is another organisation that is very much involved in pet companions for people with stroke, epilepsy and other illnesses. I myself have come across organisations in Birmingham in connection with the health service that do a fantastic job. All I would say is that if the noble Lord put this to a vote, the Opposition would be right behind him, so let us see. I beg leave to withdraw the amendment.

Amendment 78 withdrawn.

Amendment 78ZA not moved.

Amendments 78A and 78B not moved.

House resumed. Committee to begin again not before 8.50 pm.

London Finance Commission: Raising the Capital

Question for Short Debate

Asked by

To ask Her Majesty’s Government what assessment they have made of the findings and recommendations of the report of the London Finance Commission Raising the Capital.

My Lords, I am grateful to all noble Lords who have put down their names to speak in this short debate. As somebody who has lived in London all my life, I should explain that my starting point is that London is the greatest city in the world. I would find it difficult for anyone to argue against that. I spent 26 years as an elected politician in London: as a councillor, council leader, chair of the Association of London Government, and member of the London Assembly. I believe that the London Finance Commission should be congratulated on the report that it has produced.

I should explain that the London Finance Commission was established by the Mayor of London and London Councils, which in my time was called the Association of London Government. It was an independent group, chaired by Professor Tony Travers, who is probably the country’s pre-eminent expert on local government finance, and it contained cross-party representation and senior representatives from elsewhere in the United Kingdom, including Stephen Hughes, the chief executive of Birmingham City Council. It published its final report in May, and its recommendations have been accepted by the Mayor of London and by Mayor Jules Pipe, on behalf of London Councils, with both Conservatives and Labour accepting. It has been supported by all four parties on the London Assembly.

The context for this report is that London is the engine that drives growth in the rest of the UK economy. I will give just one example. Forty-one thousand jobs were supported outside London last year simply by Transport for London’s supply chain—24,000 of them in the North and Midlands. That is more than the number directly employed by Transport for London—London Underground, buses and so on—in London itself. In addition, 62% of Transport for London’s procurement spend went to suppliers outside London, with the bulk outside the south-east. That is one example of the extent to which London drives the rest of the UK economy. London also makes a net contribution of over £5 billion in tax to the rest of the country each year.

Even without my bias, London is universally acknowledged as one of the leading international cities in the world. To quote the report:

“It is difficult to envisage a scenario in which London’s economic decline would be favourable for the rest of the UK and we reject the notion which is occasionally articulated that London should be constrained in order to ‘balance’ UK economic growth. In most markets, London is competing as much, if not more so, internationally than against other UK cities. Many foreign direct investment projects that London wins in competition with other international cities provide benefits for other regions, and many tourists who visit London go on to other parts of the UK. Other international cities vie for investment, visitors, students and talent, and in the global competition, London risks falling behind and, in respect of infrastructure, further behind”.

That is the context in which this report was prepared.

London's population is equivalent to those of Scotland and Wales combined—and probably to that of Northern Ireland as well if those here in this capital city illegally are included in the count. Its economy is almost double the size of Scotland and Wales combined, but as the report says,

“while the dynamic of devolution continues to offer new powers and financial freedoms to the governments in Edinburgh and Cardiff (and, indeed Belfast) there have been no proposals to increase the autonomy of London government”.

The commission received no evidence as to why London and other English city regions should not be afforded the kind of decentralised power offered to Scotland, Wales and Northern Ireland.

Yet London’s international status and its continued ability to help drive the rest of the UK economy cannot be taken for granted. Historic population growth in London has already placed considerable pressure on the full range of public services and local infrastructure and this is set to increase from a growing population with increasingly complex demography. London's population is growing at a faster rate than any other region in the country. By 2020, its population will exceed 9 million. London’s school-age population grew by 107,000, at a rate of 8.2%, in the past decade—the fastest regional rate.

London has an inherently mobile and changing population. In 2011, it had approximately 70,000 short-term residents, over a third of all short-term residents in England and Wales. It is estimated that 240,000 households live in overcrowded conditions, with 90% of London’s housing stock built before 1991, and new housing supply meeting housing need in only six of the past 20 years. This means that London has the most overcrowded households in the UK, living in the oldest homes, where the market is not delivering sufficient new homes to match current and future demand.

However, if London’s infrastructure crumbles and the quality of life deteriorates, its ability to attract and retain international business will decline, and that cannot be good for the rest of the United Kingdom. It is economic growth that the commission sees as the potential prize of a further shift of financial and fiscal control to London. As the city population grows to 9 million, then perhaps 10 million by 2030, there will need to be massive investment in enabling infrastructure simply to accommodate these new residents and, indeed, commuters. Beyond this investment to keep pace with the population, the commission is convinced that London would be better able to prioritise decisions about that investment. After all, Londoners know they need new railways, schools, homes, waste facilities and streets. Because of their day-to-day dependence on physical infrastructure, London voters are much more likely than voters elsewhere in Britain to prioritise spending on longer-term investments.

If London had enhanced fiscal capacity to back such investment, there could be an enhanced level of capital spending which would, in turn, produce additional growth and tax yield. London government could then reinvest higher tax revenues in more infrastructure and a virtuous circle would be created. As the report acknowledges:

“London is not a city state. But it could have a greater degree of self-government and thus, in our view, be better governed. The same is true for other city regions. No one can seriously any longer believe that Whitehall always knows best”.

In terms of fiscal autonomy, London is an outlier compared to the other cities that the commission studied. By comparison, it relies heavily on transfers from central government, with 74% per cent of its income received through grant, compared to 37% in Madrid, 31% in New York, 25% per cent in Berlin, 17% in Paris and only 7% in Tokyo. Moreover, London does not have comparable access to the diverse tax bases enjoyed in other cities.

I understand that, in correspondence with the chair of the commission, no less a person—if such a thing were possible—than the Chancellor of the Exchequer, the right honourable George Osborne, expressed support for the commission and stated that,

“under the right conditions, fiscal devolution has the potential to increase the financial accountability of local government and promote additional growth”.

The commission accepted his suggestion that the proposals should be judged against three tests. First, they should be based on evidence; secondly, they should have cross-party support; and thirdly, they should be without detriment to the rest of the UK. The achievement of the commission is to meet those three tests. The report is evidence-based. It has the support of all four parties on the London Assembly, all three parties in London Councils, the Corporation of London and significant, leading sections of the London business community, including the London Chamber of Commerce and London First. What is more, what is proposed would not be to the detriment of the rest of the UK. Indeed, it is likely to be of benefit in sustaining the UK’s future growth.

The commission proposed that any devolution of tax-raising powers would be offset by a reduction in government grant. Moreover, many of the commission’s recommendations could be replicated in other cities. Some cities, such as Manchester, have already evolved governance models from which London could learn.

The report, No Stone Unturned, of the noble Lord, Lord Heseltine, who is not in his place, made a parallel case for devolution to city regions. I hope that the Minister will agree that technical working parties should be established by her department and by the Treasury, with the Greater London Authority and London Councils, to examine the detail of these recommendations.

The London Finance Commission report meets the Chancellor’s conditions. It provides a blueprint for taking forward the localism agenda that the Government espouse. It protects and enhances the position of the rest of the United Kingdom. Above all, it would ensure that London continues to be the greatest city in the world.

The first-order question to ask is whether there is a problem in London, and, if so, whether this report answers it. I do not think that London itself is a problem. In the 1940s, the French scholar over the Channel, Jean-François Gravier, wrote a great book, Paris and the French Desert, in which he reflected on the absolute dominance of the capital in French national life, sucking energy from the rest of the country. It is an odd reflection, which he would certainly not have predicted, that London is the city with the fifth or sixth largest French population, because of the large number of extremely welcome financial and professional people who have come here en masse to escape the Hollande terror.

London has dominated English life for a very long time—certainly since Cobbett’s day. Now it is the most dominant city in Europe, and one of only two or three true global megalopolises. I agree entirely with the noble Lord, Lord Harris of Haringey, who in his tip-top speech said that London was probably the greatest city in the world, among the two or three other megalopolises—the term was coined by another great French geographer, Jean Gottmann.

This has not happened because it was planned or because of governance. It happened of its own volition and vigour, always—at least until recently—more or less free from, and often despite, the actions and policies of national and local government of all colours. Truly, Mr Livingstone and his successor, Mr Johnson, inherited a going concern. This has not happened overnight. I do not think that this is clearly recognised in the report, which in many ways seems to think that London will run into problems caused by its own success, and that those perceived problems will be sorted out only by more government and more power going to London government. So much for lack of concentration.

All this is not surprising, because the commission, with its solemn, grand-sounding title, is a creature of the present London government, and so generally starts from the point, “Please give us more government and more powers as quickly as possible”. Yet already the United Kingdom is one of the most overgoverned countries on earth. This may well be reaching a satiation point rather than a tipping point.

There is a constitutional change industry that promotes constitutional change as the only way to deal with any issue facing any part of the United Kingdom. Hosts of experts, otherwise indigent scholars and think tanks without number and no visible means of support are always proposing more constitutional change as a solution. To suggest that constitutional change, more power and more government is a cure-all for London is a delusive and tinsel thing.

In my experience, most Londoners are much more concerned with the present system of governance and whether it is delivering the goods. I will give one very rapid example: namely, the growing number of rough sleepers in London. The number is indisputably rising, not going down, at the moment. This is a tragedy. I walk along Victoria Street to our flat down the road by the cathedral every night. Since late May, just opposite New Scotland Yard, where Strutton Ground meets Victoria Street, there has been a growing number of rough sleepers, tragically, right under the window of the commissioner for the metropolis. I walked past them tonight at about 6.30 pm and counted seven. They were all clearly British. Two, possibly three, were extremely jolly Scotsmen. That is not a xenophobic remark. They deserve help and not criticism for being there. It is extraordinary, in the middle of what the noble Lord, Lord Harris of Haringey, called one of the greatest cities, if not the greatest city, in the world, that for the past six or seven weeks we have had a growing city of people sleeping rough on the streets. Where is the help coming from? Is the Minister in contact with the mayor, or with other authorities that could help with this issue?

That said, this thought-provoking report—it certainly provoked me—seems to set London, despite the somewhat disingenuous claims that of course it is not a city state, on a course of morphing little by little into becoming such a state. That is not in the national interest, unless it is set in the context of whether we need more or less government in the United Kingdom as a whole.

The report proposes the transfer of the full suite of property taxes to London government, and the assignment of income tax in the same way. There is also a wonderful aside:

“London government should be able to introduce smaller new taxes”.

I look forward to that innovation. How dear Mr Livingstone would have relished having that power in his hands in the old days.

London can properly be viewed only as part of the kingdom as a whole. It will continue to develop apace without many of these proposed changes. It needs to govern better in the first instance. I wonder whether the powers of scrutiny that the London Assembly has are adequate.

In the mean time, the foreword to this report states:

“London is not a city state”.

If all the report’s proposals were implemented overnight én bloc, London would be more than half way to becoming a city state, and that would not be in the national interest.

My Lords, I welcome and support this report, and did not want to miss the opportunity of saying so from the Liberal Democrat Benches just because I had not had the opportunity I would have liked to produce a perfectly honed and intellectually challenging speech. Sometimes it is more important to say these things than to be proud and retiring.

It is always nice to find one’s prejudices confirmed. I was not surprised at the commission’s finding, or belief, that there would be more jobs and growth if London had more financial autonomy. It goes without saying that it would need to be used well. What is proposed does not seem to be so very extreme. Central government would retain about 88% of taxes paid in London, as against around 93% now.

Devolution in 2000 was very welcome—to me at any rate. The noble Lord, Lord Harris of Haringey, remembers it as well as I do. I declare an interest as a former member of the London Assembly and, some years ago now, a councillor in a London borough. It was welcome to the extent that there was devolution, as distinct from the hoovering up of powers from the boroughs. The noble Lord, Lord Patten, talked about more government, but normally one is talking about a rearrangement.

It would be disappointing if London government were not ambitious to do more—as are the Scots, leaving aside independence, and the Welsh. I am well aware of views from other parts of the UK about the London-centric nature of so much of our government. Non-Londoners might say, of the contents of this report, “Well, they would say that, wouldn't they?”. However, the noble Lord, Lord Harris, mentioned the membership of the commission—and they look to be a pretty independent-minded bunch of individuals.

What is good for London tends to be good for the UK as a whole because of London’s role in the wider economy. Knowing of the debate that is going on about HS2, I rather tremble about venturing that way, but, as regards infrastructure, one has only to ask not just any Londoner and not just any visitor but any company considering locating here.

Of course, housing is a hugely important part of the infrastructure and one about which, like other noble Lords, I feel very strongly, meaning that I support borrowing, including borrowing by the boroughs, to build housing within the prudential rules. That is not least because London’s government, representing Londoners and understanding what is going on in London, knows what is needed. Too often, the social housing element of bigger schemes seems a grudging add-on. It is easy for the developer and it is often identifiable just by looking at the development. Among other things, I think it is offensive.

In the foreword to the report, Tony Travers says that the message from the evidence was,

“clear and unanimous: London’s government needs to be given greater freedom to determine and use the resources raised from taxpayers”.

I read the subtext as including “clarity” and “transparency”. I suspect, too, that introducing new, smaller taxes may not have an entirely smooth path but, as someone who thinks that there is advantage in taxation, I do not dismiss that proposal.

Of course, the mayor should use his existing powers. It is not so very long since prudential borrowing was introduced in the form that it is now, and it does not advance the argument for new powers if the current ones are unused or underused. The mayor could fund a significant increase in affordable housebuilding.

The noble Lord, Lord Patten, referred to rough sleepers. I, for one, am not convinced that centralisation or the reduction of taxes would assist that.

If central government resists these proposals, it will not be the first time that any central government has grasped for arguments as to the importance of central control. I, too, lighted on the quotation from the Chancellor of the Exchequer. It begs the question of what the right conditions are, as the noble Lord, Lord Harris, said.

A Government who believe in entrepreneurship should apply the same thought—that freedom facilitates creativity and success—and apply that to finances, with the raising and spending of taxes. The dynamic in a wider context is towards more financial autonomy. I welcome the Raising the Capital report and I thank the noble Lord, Lord Harris, for the opportunity to say so.

First, I declare that I am chief executive of London First, a not-for-profit membership organisation for businesses based here in the capital. I am also a board member of Peabody housing association.

I congratulate the noble Lord, Lord Harris, on securing this debate today. The London Finance Commission and its report on local government finance might sound arcane but its analysis is in fact at the heart of how we can stimulate growth, not just in London but across our country as a whole.

The commission’s starting point is that the Mayor of London should have a long-term, high-level capital investment plan for the city—a position that manages to be banal and radical at the same time. It is banal because surely every great city ought to have such a plan, and it is radical because local government in the UK just does not do that sort of thing, not least because it does not have the powers or the cash to finance and fund it.

So let us pause for a moment to consider London’s starting point. As the report politely puts it, London, in fiscal autonomy terms, is an,

“outlier compared with other cities”.

Nearly three-quarters of the GLA’s income is through grant, compared with roughly a third in New York and less than 10% in Tokyo. The core competence for a London mayor, therefore, must be good lobbying skills with central government, and particularly the Treasury, to try to get some of our money back at every spending review. This is no way to run a world city and it needs to change. That need is becoming ever more urgent as London accelerates towards a population of 10 million, and maybe more, by 2030.

The commission recommends, in essence, that London government takes ownership of a suite of property taxes raised in London—council tax, business rates and stamp duty land tax—and uses them to create a stable funding stream to support a long-term infrastructure investment programme. This does indeed have the potential to create a virtuous spiral for both the city and the Treasury. New infrastructure will support private sector investment, which creates jobs, adds to private consumption and leads to greater tax revenues for City Hall and Whitehall. This, in turn, supports further, future investment. It is, in my view, a powerful analysis, persuasively made, and a conclusion that could equally be applied to other great cities.

It is also important to emphasise that this is not a bid for more cash for London. The commission’s modest proposal is that the property taxes I referred to earlier simply substitute, pound for pound, existing government grant. However, this simple change has two merits. The first is that it gives much greater certainty to London government that it will have the revenue, over time, to fund investment. This means that it can plan into the long term and, potentially, borrow against that funding. This is substantially more efficient than annual, or even five-yearly, spending settlements. The second is that London government then has a share in growth. If its investments generate prosperity, it has an automatic share in that prosperity. It does not have to go back to the Treasury to haggle.

Those changes would be good, too, for central government in at least three ways. First, it could focus on driving the big policies such as—dare I say?—high-speed rail, which only national government can do, rather than fiddling around with local matters that can best be done elsewhere. Secondly, local government would have a real incentive to support growth. This goes with the grain of the Government’s localism agenda—and puts it on steroids. While London would keep the growth in London’s property taxes, the Exchequer would get the growth on the really big-ticket items such as income tax, national insurance and VAT. Thirdly, local politicians would no longer be able to blame all their ills on the Treasury. If they want more cash, they can make the case for taxing their voters more, or not.

As ever, some details require further analysis—for example, the mechanism to align business rates with council tax and the need to review the levels and banding of the latter. We cannot rationally or credibly base our property taxes on 1990 house prices. There also needs to be a more effective and formal mechanism through which London government consults and listens to business over its budget plans. This is particularly relevant to London, where many of those responsible for generating the city’s wealth do not have a vote on its governance.

However, those important points do not detract from the fundamental strengths of the commission’s conclusions. London, like our other great cities, needs greater freedom from central government if it is to generate the growth, jobs and prosperity that we all wish to see. The Government have recognised this in their localism agenda; the noble Lord, Lord Heseltine, confirmed it in his growth analysis; and the London Finance Commission brings yet greater depth to the arguments. It is time to stop talking about devolution and wrest the cold, although all too alive, hand of the Treasury from the management of our great cities.

This report sets out the role that financial autonomy can play in driving economic growth. A greater tax base for London means a greater incentive to promote growth and, as the report’s conclusion states, this would be good news not just for London but for the whole country. It is amazing to consider that New York keeps over 50% of taxes levied there, yet London keeps only 7%. London needs to be freed up to compete with the other leading global cities.

On the whole, it is fair to say that I am not a huge fan of this Government’s economic policy—it seems to have almost pushed us into a triple-dip recession—and therefore I am not known for quoting its key architect, George Osborne, but perhaps I may change the habit of a lifetime and quote him very approvingly. The Chancellor of the Exchequer stated that,

“under the right conditions, fiscal devolution has the potential to increase the financial accountability of local government and promote additional growth”.

I was also very impressed by the three tests the Chancellor of the Exchequer set the commission, which my noble friend Lord Harris has already quoted. His proposal was that whatever the commission came up with, its recommendations should be judged against three tests; namely, whether they were evidence-based, whether the proposals had cross-party support and whether they were without detriment to the rest of the UK. Those are excellent tests and I am sure that we would all like a lot of legislation to be benchmarked against them, especially in the current climate.

However, the real issue is how we are going to deal with a huge and growing city, and support growth in London. It is estimated that the infrastructure spend required to support London and allow it to thrive will need to be about £75 billion by 2020. Like the noble Baroness, Lady Hamwee, I feel strongly that housing is one of the most important aspects of infrastructure, although it is not always technically considered to be infrastructure, along with transport and so forth.

As regards housing, the London Finance Commission states:

“Measures to shift public funding from personal subsidy to investment in built assets should be further explored”.

I have argued for that since I became an MP many years ago. The London Finance Commission has put that in very polite terms but the lack of affordable housing in London presents a massive, ongoing crisis. London workers need somewhere to live. Not everyone can commute into London, especially those on modest incomes which do not allow for the cost of the commute. If we do not have that investment in bricks and mortar, only the very rich, or the very poor in whatever social housing is left available, will be able to live in the capital city. That will inhibit growth for our capital, and that is putting aside for one moment the moral obligation that I think is there as well. Therefore, as has been stated, one way in which to resolve the issue is to move from individual subsidy to bricks and mortar. I trust that the Minister will press the Government to look at this issue with urgency.

While I am on housing, I cannot help but comment on what the noble Lord, Lord Patten, said. He decries the concept of more government but is concerned about rough sleepers. The biggest drop in the number of rough sleepers was under the leadership of Louise Casey who was tasked with reducing rough sleeping. Although she is one of the most innovative civil servants you will ever come across, even she would admit that a lot of her success was down to the fact that investment was quadrupled. A laissez-faire approach is the last thing that will reduce the number of rough sleepers on our streets. This cross-party report clearly argues that such an approach is also the last thing that will deliver a high-level investment plan for London.

The report essentially argues for a more grown-up relationship between London and central government. It argues that London needs greater freedom to borrow. Most critically, that would be subject to London’s own self-discipline. It is only where that self-discipline is proven that such freedom should be granted.

In summary, we do not want a city state. We want a world city which will support the growth of the whole of the UK. I believe that that is what this report sets out. It provides the framework for that and I sincerely hope, notwithstanding the politics between the Mayor of London and the Prime Minister, that this report will be acted upon.

My Lords, I thank the noble Lord, Lord Harris, for initiating this debate. He said right up front that London is the greatest city in the world and I could not agree more. It is the greatest of the world’s great cities. He congratulated the London Finance Commission on its report, Raising the Capital. I had the privilege of serving on mayor Boris Johnson’s Promote London Council, which was a great experience. It came up with what ended up being London & Partners and had huge success. It really understands London and looks at its competitiveness.

It struck me that few cities in the world—the report did not really touch on this—are a political capital, a government capital and a financial business capital. London is one of them: think about Washington, New York, Delhi and Mumbai. We have a huge advantage. But for London to develop I think that autonomy would help. Although Crossrail is going ahead and will make a huge difference to London and the country, we still have the problem of the third runway at Heathrow being delayed and delayed. Our airport infrastructure is creaking. We are losing our competitiveness.

Although tourism brings in well over £100 billion to the economy of Britain and London brings in a huge proportion of that, the most photographed building in the world is the Eiffel Tower. The second most photographed building in the world is our wonderful Houses of Parliament. Why is that? Is it because we do not belong to the Schengen scheme, which would advantage this country so much? Does the Minister agree that we should join the Schengen scheme? That would bring into this country even more tourism, business and investment which would benefit London.

The other aspect that the report did not really touch on was the whole relationship between the City of London and London. Of course, we all know the joke that the lord mayor of London makes the money and the Mayor of London spends the money. We have the richest and most important square mile in the world. Even after the financial crisis, the City of London is still the number one financial centre in the world and we are proud of it. But are the Government really clear about the relationship between the City of London and London? Is that a fair relationship? The report does not address that and I would be very interested in the Minister’s view.

As regards devolution, the future of London and its success is a prize for the whole country. However, in the latest results on productivity, when London was compared with other countries in Europe for example, its productivity was average at £58,000 per worker. Cities such as Paris, Frankfurt and Brussels were higher. Stockholm was number one on the list. Yet London’s productivity is 44% above the UK average. That is a serious issue. We really need to get the productivity of this country up in a big way and London’s productivity could be so much more.

The other point is that cities are the engines of growth for an economy. The noble Lord, Lord Patten, said that we are the most dominant city. In the United States, the Olympic Games did not take place in Washington or New York. Another city was chosen. Here, the Games took place in London and we are very proud of that.

We have not spoken about Europe and the European Union. In my role as the founding chairman of the UK India Business Council, I always see Indian businesses looking on the UK as a gateway into Europe, although in fact they are looking upon London as a gateway to Europe. Again, that would help London in its competitiveness. We must remember that outside London there are other great cities in Britain. Recently, I was in Liverpool where I spoke at the Accelerate Conference. Next year, the International Festival for Business will take place in Liverpool, showcasing the whole of Britain. It is important that in promoting London and giving autonomy—I will come to that later—there is also autonomy for other cities, which will unlock the UK’s economic potential.

The other thing that the report does not really emphasise enough is that we have the best of the best in the world in professional services in London when it comes to lawyers, accountants, insurance and banking. We need to enhance that competitiveness. However, the Financial Times states:

“The Greater London Authority has just one tax—the council tax—from which it receives a precept alongside the other local authorities within its boundaries, while Tokyo raises 16 separate taxes and New York has an array of levies, including property, sales and income taxes. Berlin wields a wage tax, among others, while Frankfurt receives a share of VAT. The drive by London’s authorities for greater leeway on tax is taking place amid a wider devolution movement in Britain”.

City deals are about to take place and incentives will be given to eight large urban centres in Britain. Can the Minister say why those incentives have been given to all those cities? Should they not also be given to London?

I chose London as the headquarters for my business because I think it is the best place in the world to have a global headquarters. I think what the London Finance Commission suggested would without doubt help London and our whole country. More flexibility and more autonomy would unleash London’s potential.

My Lords, like other noble Lords, I start by thanking my noble friend Lord Harris of Haringey for initiating this debate on the London Finance Commission's report, Raising the Capital. It touches on matters which spread across a range of policy areas and which have broad implications, not least for macroeconomic management of our country. Noble Lords may understand, therefore, if I forgo the opportunity of making new policy announcements this evening—however tempting—but say that we view this report as a serious piece of work that requires proper consideration and analysis. We recognise that it has strong cross-party support and, as the report suggests, its recommendations have potential application for cities beyond London.

The central proposition of the report is that London can grow faster and create more jobs if it has greater autonomy in managing its own affairs, particularly when it comes to planning infrastructure. That autonomy would come from relaxing some of the borrowing rules applicable to local authorities and from devolving certain tax revenue streams. The report’s recommendations are underpinned by research that demonstrated that, compared to other major cities, London has very little fiscal autonomy, although the report recognises that academic research is inconclusive on whether increased fiscal autonomy has a measurable effect on growth.

We recognise, as does the report, that London is an economic powerhouse, one of the strongest growing regions in the UK and one of the world’s greatest cities —indeed, the greatest city, as my noble friend said. That success must be sustained not just in the interests of Londoners but in the interests of us all. It is, after all, our capital city. We should look to it for help to drive our national growth.

We also recognise the case that has been made for investment, which is needed as a direct consequence of population growth to provide housing, schools and primary healthcare. It is also needed to sustain economic growth through improved transport, skills, innovation and research. This case is not unique to London, and we have long been arguing the case for a proper plan for growth and for jobs.

The question is whether the scale and complexity of London's economy and communities mean that they can be addressed only by London government rather than by—as it has been put—23 Whitehall departments. We support a localist approach but, of course, London government is not a homogeneous entity. The 32 boroughs, the GLA and the mayor collectively comprise a vast range of different communities, economic and social circumstances and political make-up. The report recognises that the different interests that the formula funding system exposed in local government could re-emerge at London level should there be greater financial devolution. There is a clear risk that this may be so.

There is an acceptance that, should there be greater financial devolution to London, existing governance arrangements would have to change. The proposition is advanced that it would require new governance systems and structures that are sufficiently robust to cope with a variety of possible situations but sufficiently simple to be efficient. That is a goal worth having, but one more easily stated than achieved, we suggest.

The report bemoans the dramatic budget reductions suffered by local government, reinforced just last week, and makes the point that revenue constraints are inhibiting capital spending. It highlights that the Treasury is imposing additional capital controls over and above the prudential borrowing code and that these could be scrapped. We have debated this issue especially in relation to housing, and it also is not an issue just for London. I believe we had a common recognition that local government had adhered to the prudential borrowing code in a responsible manner, and we were not convinced of the Government’s position that it needed two tiers of capital control. As the noble Baroness, Lady Hamwee, said, local government should make full use of the headroom that the system offers.

We agree that it is time to consider the possible removal or relaxation of the housing capital limits, but only on the basis that prudential rules would continue to apply, as would the rigour of long-term HRA business plans. Measures to shift public funding from personal subsidy to investment in built assets, referred to by my noble friend Lady King, is also something that we consider should be further explored.

The proposal to devolve or assign to London taxes that are currently collected and paid to central government is more problematic. The focus is on property and property-related taxes, so potentially it is easier to establish the locus—in or out of London. Any new boundary lines are likely to open up avoidance possibilities and there would surely be a resource issue to administer these taxes.

Retention of 100% business rates raises issues of how the arrangements would be unpicked from the newly introduced business rate retention scheme and, within London, what needs and resources mechanisms would be required. The more radical tax reforms considered have even greater technical challenges, as the report acknowledges. However, the big question underlying all of this is what it means for the rest of England. Promoting and facilitating growth in London does not have to be at the expense of growth in other parts of the country. Indeed, quite the reverse, and other cities could follow suit. However, there will be a need to ensure that other parts of the country are not left behind, particularly rural areas.

Specifically on fairness, it is proposed that the devolution of tax streams to London could be counterbalanced by adjusting grant levels at the start of the process. However, this will do nothing to stop growing inequality after that. We should consider the effects of devolution of stamp duty land tax in a buoyant property market in London, with revenues going to London not to HMRC.

There is much else to be considered and the report has provided valuable food for thought. I thank my noble friend for bringing it before us and seeking from the Minister a practical way to examine the important issues that it raises.

My Lords, I, too, thank the noble Lord, Lord Harris, for introducing the debate. Perhaps more importantly, I thank the people who produced the report, not least Professor Tony Travers, who is known to us all and who has been very influential on the London local government scene for—I had better not say a number of years, he might be offended by that—certainly some time.

The Government recognise the importance of this report. The London Finance Commission set up by the mayor has clearly carried out an in-depth study of what it thinks should be done. However, all I will say at the moment is that its potential impact on both London and, as the noble Lord, Lord McKenzie said, the wider country requires a great deal of thought and consideration.

The report was produced by a distinguished and wide membership, which I was glad to see included people who were not from London but from what we now call the core cities, where devolution is beginning to happen. So they had an understanding of what would happen outside London, which again we need to hold on to.

The proposals would have wide-ranging effects, not only on London but on government finances and the United Kingdom. Given the legal, constitutional and fiscal questions raised, this is clearly a matter that is not going to be decided today and may not even be dealt with in the short term. We need to look forward to see how practical the proposals are not only for London but for the country. The report is London-centric, as one would expect, but, as the noble Lord, Lord Bilimoria, pointed out, there is a lot to London—not just London government but a whole edifice underneath London which supports its financial position in the world.

There are innovative proposals for a further devolution of powers, particularly in regard to finance, and well articulated reasons for this; it is a very well written report, as I would have expected. However, the recommendations have to be considered against the background of the current and perhaps future financial situation.

As to its impact on the London boroughs, I know they were represented on the commission but there is a wobbly bit in the report between London and London government, the mayor and the GLA. It nips in and out of London government and, after reading it quite closely, I came to the conclusion that London government was London and the boroughs, and that London was the mayor. Everything else—London and government and the mayor—was very clear. It is not totally clear where the main emphasis lies except, pretty clearly, with the mayor and the Greater London Authority. Any changes to the way in which the finances are delivered, controlled, measured and administered will affect London boroughs as well.

It would not be appropriate for me to anticipate the Government’s response. I accept that the Chancellor laid out the conditions of what he would want in backing this report. I have no knowledge of his view now of where to go from here but, as I have said, the Government will consider the full implications of the proposals very carefully.

We are already seeing devolution and enormous changes in governance in this country and we cannot ignore the fact that places such as Liverpool, Glasgow, Newcastle and Manchester are all beginning to develop their own core cities along devolved and different paths.

We must not forget that there has been already significant devolution to London through the mayor and, through him, the Greater London Authority. That took place in the spending review of 2010. London recently has received a fair settlement despite the necessity for the deficit reduction. It is worth remembering that as a result of the Localism Act London has gained responsibility for housing. The noble Baroness, Lady King, raised the aspect of affordable housing. London now has responsibility for housing, economic development and the Olympic legacy as well as already having responsibility for transport, planning and the police. That is quite a big raft of local government life.

The London settlement, issued in February 2012, provided the mayor with about £3 billion in unring-fenced grant for 2011-12 to 2014-15. London also has a pretty broad range of financial levers, including business rates supplements—I think Crossrail is the only supplement that has been raised so far, but it has been done—infrastructure levy and tax increment financing. I know the latter is still constrained, and we have discussed this on many occasions, but the possibility of using tax increment financing is not only available to the mayor, but to the London boroughs. London also has, of course, its own enterprise zones.

The Treasury has agreed to provide a guarantee to allow London to borrow £1 billion from the Public Works Loan Board at a preferential rate to support the Northern Line extension to Battersea. Some of the infrastructure work, therefore, is already being done.

The Government are going to create a new enterprise zone in the Battersea and Nine Elms area. Anybody who was watching the news last night will have seen that being laid out, and what a large area it is. That will supplement London’s existing enterprise zone at the Royal Docks. My department has also transferred its assets in London to the Mayor to provide an important and financial growth lever. The Government have also contributed £25 million towards the costs of the Olympic stadium transformation.

London will also benefit from the flagship Francis Crick Institute for translational research which will open in 2015. That follows £650 million investment from the Medical Research Council, Cancer Research UK, the Wellcome Trust, University College London, Imperial College and King’s College. Finally, on the list of this there are three new catapult centres designed to commercialise new and emerging technologies, and they will be based in London.

London is not being ignored in any way at all. It is developing all the time with what it is able to do, and what there