Monday, 24 March 2014.
Arrangement of Business
My Lords, I am required to make the usual announcement that if there is a Division in the House, the Committee will adjourn for 10 minutes.
Immigration and Nationality (Fees) Regulations 2014
Motion to Consider
That the Grand Committee do consider the Immigration and Nationality (Fees) Regulations 2014.
Relevant Document: 22nd Report from the Joint Committee on Statutory Instruments.
My Lords, in moving that the Committee should consider the draft Immigration and Nationality (Fees) Regulations 2014, I will also speak to the Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) (Amendment) Order 2014.
Members of the Committee will remember that I came to the Grand Committee on 28 January to debate the Immigration and Nationality (Fees) Order 2011, which provides powers to charge for visa, immigration and nationality applications and services. I am here today to debate the specific fees charged within the scope of that order. I am happy to take points on any of the fees proposals set out in the Written Ministerial Statement of 24 February 2014, both those contained within these regulations and those in the Immigration and Nationality (Cost Recovery Fees) Regulations 2014, which have been laid separately before Parliament.
The fees proposals aim to strike the right balance between ensuring that our visa fees compare favourably with other countries and providing sufficient income to fund the system and improve services. We have sought to limit most increases to 4%. It might help noble Lords if I now describe those fees which have increased by more than 4%, which include the following. The first is the fee for dependants applying to extend their leave. We propose to remove the concession on fees for dependants applying at the same time as main applicants in the UK so that all dependants will pay the same as main applicants. This is consistent with the charging policy for applications made overseas and with separate dependant applications in the UK. Each individual within an application may receive an independent set of entitlements and will involve additional administration costs.
The second set of fees are those for UK premium services. The in-person and the priority service are optional services for people who wish to have their application expedited. The in-person fee is increased from £375 to £400 and the priority service fee from £275 to £300. We have also looked at the two-year and five-year visit visas, which will increase from £278 to £300 and from £511 to £544 respectively in order that the 10-year visit visa may be held at the current fee of £737. Long-term visit visas offer good value for money for frequent travellers, since a long-term visit visa fee is less than the cost of multiple short-term visit visas to cover the same period.
We are also introducing further concessions to encourage tourism and promote economic growth. There is to be a fee reduction for those who transit the UK without passing through border controls from £54 to £40. The fee for a visitor-in-transit visa and for those who need to enter the UK for a short period pending onward travel remains unchanged at £54.
I turn now to concessions for tier 2 applications where the applicant has a job on the shortage occupation list. It makes sense to encourage skilled overseas workers to fill these important roles until we can improve the skills and employability of the UK workforce. Some fees have been reduced in line with unit costs, including those for sponsorship, the transfer of conditions, travel documents and settlement visas for refugee dependent relatives.
I turn now to some new fees which we are introducing. The proposed fee for tier 2 leave applications for up to five years, in line with new rules that allow a tier 2 (general) or tier 2 (intra-company transfer—long term) certificate of sponsorship for up to five years is £1,028 for applications made overseas and £1,202 for in-UK applications. That is equivalent to two tier 2 applications for up to three years’ leave but means migrants only have to apply once. There is a new fee of £1,093 for dependants of Armed Forces personnel applying for leave to enter for settlement. A registered traveller service will offer expedited border clearance to regular visitors from low-risk countries; after completion of the Border Force pilot, the service will be charged at an annual registration fee of £50 per year later this year.
Following a review of nationality fees, we are introducing a revised charging structure in line with the entitlements allowed by each route. The fee for naturalisation as a British citizen will increase by 4% from £794 to £826. Registration as a British citizen provides a similar entitlement to naturalisation but, in recognition of the fact that certain people would qualify by right to apply, the proposed fee is 10% lower at £743. Applications for other categories of nationality, such as British overseas citizen and British Overseas Territories citizen, will be charged at 20% less than the fees for those applying for full citizenship. Fees for children will be 10% cheaper than the equivalent adult fee.
Finally, we are bringing fees for optional premium services for visa applications into our charging legislation. Fees will be at a single global rate rather than set locally.
The second instrument for noble Lords to consider in this single debate is the Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) (Amendment) Order 2014. Noble Lords will be familiar with the civil penalty scheme to prevent illegal working from recent debates on the Immigration Bill. We are pursuing a broad package of reforms to tackle illegal working. The noble Baroness, Lady Smith, and I see a common objective in dealing with this scourge. Some measures are in the Bill, such as strengthening debt recovery and streamlining objections and appeals. Other measures concern changes to secondary legislation, including today’s proposal to increase the maximum penalty from £10,000 to £20,000 for each illegal worker.
We can only deliver a comprehensive response to illegal immigration if we work with UK employers to deny employment to those without the right to work in this country. Illegal working is the main incentive for illegal immigration and often involves exploitation and unfair competition. The civil penalty scheme encourages employers to comply with their obligations to check the right to work of all employees, without criminalising those who make a mistake. Under the scheme, an employer can establish a statutory excuse by undertaking specific document checks. The legislation provides a separate criminal offence for those who knowingly use illegal labour.
When an illegal worker has been identified and the employer has no statutory excuse, a financial penalty will be levied according to a statutory code of practice. Employers will have the right to object and, separately, to appeal to the court against the civil penalty. The maximum penalty was set six years ago at £10,000 for each illegal worker and has remained the same since. The Government are concerned that this penalty framework no longer provides a sufficient deterrent and does not reflect the full economic advantage derived from using illegal labour or the wider costs to society.
We intend to make the scheme tougher on rogue employers by increasing the level of the maximum penalty to £20,000 for each illegal worker. As is the case now, the maximum will be levied only on those who breach the legislation on more than one occasion.
We are also strengthening the penalty scale to ensure that higher penalties are applied where employers fail to conduct proper right-to-work checks. A revised draft code of practice that specifies the factors to be considered in determining the amount of the penalty will shortly be laid before the House. The scheme will continue to incorporate sensible penalty reductions for those employers who actively co-operate with the Home Office when failings in their recruitment processes come to light.
Legal migration brings economic, cultural and social benefits to the UK. We will continue to send a clear signal overseas that this country welcomes genuine visitors and the brightest and best migrants. I believe these instruments provide a basis for a sustainable immigration system that will command public support and I commend them to the Committee.
My Lords, I am grateful to the Minister for his explanation. In some ways the orders are fairly straightforward. The Minister will be pleased to know that we certainly support their principle and do not intend to oppose them. However, it would be helpful to have further clarification on detail. The Minister is smiling because he knows that I always seek further clarification and he would not expect me to do otherwise.
We have just finished the Committee stage of the Immigration Bill and it is helpful to have this debate against that backdrop. Many of the issues we have been discussing in the Bill have common themes with these orders.
On the first order, I understand that there is a flat 4% increase across the board. I tried very hard when the Minister was speaking to try to do some calculations in my head but the maths was beyond me at such short notice. It is projected that some increases will be more than 4% and some will be less. Is the Minister able to give me more detail? I do not expect it today; I would be happy with a more detailed breakdown in writing of the figures he gave for the percentage increases for different kinds of visas, given that it is supposed to be a 4% increase across the board.
I understand that this is an income-generating measure. I entirely agree with the Minister’s point that those who benefit should pay the cost; I have no difficulty with that. However, when reading the impact assessment I struggle to understand how much of this is to cover a shortfall in Home Office funding from the Government and how much is to cover the costs and ensure that this is self-financing. The impact assessment makes it clear that funding for the immigration system is going to reduce over the five-year period of the current comprehensive spending review. Over the CSR period financial planning requires the Home Office to deliver the maximum amount of fees agreed with the Treasury under the CSR. Any income above that amount is surrendered to the Treasury’s Consolidated Fund. I am trying to understand how much additional income the Minister thinks would be generated from the fees being proposed in this order today, as well as the impact of those increased fees.
I have already said that we support the principle. However, during the passage of the Immigration Bill the impact of the Government’s immigration policies on overseas higher education students has generated considerable discussion in your Lordships’ House. I would be keen to know what information is available to the Government and how robust the evidence is on whether foreign students are going to be deterred by the increase in fees. I know there are figures on applications in the impact assessment, but I am not sure how those are arrived at. More information about the process used and clarification of the figures would be helpful.
Two higher education representative bodies have raised concerns with the Government. One of the bodies—GuildHE—says that,
“proposals designed to generate more income from immigration services could serve to deter international students and staff and, ultimately, lead to reductions in income in these areas for the Government while inflicting serious damage both on the higher education sector and on the wider economy”.
It also asks the valid question why fees paid by applicants under tier 4 should be set anywhere above cost recovery level. It would be helpful to have more information on that. The figures for overseas students show that the number of visas issued to Pakistani students was down 55% on the previous 12 months, and that for Indian students it was down 21%. I know that the noble Lord has heard these arguments several times in Committee on the Immigration Bill but noble Lords are concerned that universities should not be disadvantaged by any other measures that the Government may take, given that they have already taken a bit of a hit with the falling number of overseas students. I would appreciate it if the Minister would address that point.
The Tourism Alliance’s response to the consultation called for tourist visas to be set at a competitive level to Schengen visa rates. I assume that analysis has been undertaken of the impact on tourist numbers, but if more information on that is available, it would be helpful to have it. The Employment Lawyers Association argued in its consultation response:
“Any increase in fees should only be implemented if it is certain that service standards can be maintained and/or achieved”.
This is also an issue we discussed in the debate on appeals in the Immigration Bill. If the Minister can give assurances about an improved level of service with an increase in fees, that would also be welcome.
I was interested in the Minister’s comments on illegal immigration. He referred to our concerns that the Government should take measures to tackle illegal immigration and those employers who abuse both British and migrant workers by not fulfilling the proper terms and conditions of employment, paying lower wages and trying to bypass health and safety provisions. When he said that we shared a common objective in dealing with this, I was somewhat surprised to hear him refer to a surge in numbers. If he can say something more about that, it would be helpful. He frowns at me but he used the phrase “a surge in numbers” when he talked about illegal immigration and illegal employment. It would be helpful to be given any figures he has on that, albeit it always seems to me that figures on illegal immigration are somewhat less than robust.
The Minister will not be surprised to hear that we support the order, but having read through it, the Explanatory Notes and the impact assessment, I have a few questions which it would be helpful if he could answer. My questions concern the same issues as I raised on the Immigration Bill—that is, the evidence base for decisions that are taken; the impact the measures proposed by the Government will have; and the practicalities of implementing them. The reason for increasing penalties on the illegal employment of migrants was originally to act as a deterrent to employers so that they would not employ illegal migrants, and to punish those who broke the law. As I said, this practice is bad for UK citizens and can often mean a race to the bottom in terms of wages and employment conditions. Therefore, it is in everyone’s interest that we tackle this issue.
The impact assessment was helpful. However, for the legislation to be effective it has to be enforceable and fully enforced. The impact assessment states that around 10,000 penalty notices have been issued from the introduction of the relevant legislation in February 2008 to the end of last year. Is it possible to have an annual breakdown of the number of penalty notices issued in each of those years from February 2008 through to the end of 2013? I anticipate that when the legislation was first introduced, there would have been a slow start but that the number of prosecutions would have picked up by 2013. If the Minister does not have the annual figures with him today, it would be helpful if he would write to me with that information. In those six years, the penalties levied amounted to more than £90 million. On appeal, that fell to £70.8 million. I would like some clarification on how that figure is broken down.
Less than £30 million of that money has been collected. According to the debate in the other place, as well as the impact assessment, £20 million has been written off. The Minister in the other place, James Brokenshire, when asked about it said that £7.2 million of the written-off money related to companies that had been dissolved. I should like an assurance that some work will be done on that because an issue in consumer law is that although no action can be taken when a company is dissolved, the directors or their wives can crop up as directors of other companies so that, in effect, the company continues but with different directors. Are directors of dissolved companies kept track of to see whether they go on to set up anywhere else where they may continue the practice of illegally employing migrants? When the Minister in the other place was asked about the remaining £12.8 million that had been written off, the only response he could give—I read this several times to make sure that I had it right—was:
“I am quite sure that there will be a number of different reasons”.—[Official Report, Commons, 12th Delegated Legislation Committee, 19/3/14; col. 11.]
What are they? Why has £12.8 million in penalties been written off? If it is not because companies have been dissolved, disappeared or broken down, what are the reasons? It was not helpful for the Minister in the other place to say that. If the noble Lord can enlighten us about what the reasons are, it would be helpful.
Mr Brokenshire also said that there were measures in the Immigration Bill to deal with this point on the collection of penalties but I am not sure what they are. It would be useful if the noble Lord could address how the Bill will address enforcement and the collection of civil penalties. We start with the £90 million, which was reduced on appeal; then £12 million was written off for other unspecified reasons; and, finally, less than £30 million has been collected. That still leaves over £20 million in penalties unaccounted for. The Minister in the other place said that the debts were being pursued. How long are they being pursued for before they are written off? How much more is likely to be written off? If it is the case that the money is being pursued and the full £20 million will come in, I would be very happy to hear that. However, I am concerned that we could be writing off large amounts of money when there is clearly an issue. If employers think that the law is not enforceable and they do not have to pay the fines—simply because they can shut down the firm, the fine will be written off or for “other reasons”, according to James Brokenshire—the law is not particularly effective. How long ago were those penalties which have been written off or awaiting collection imposed? How long do we have to wait before payment?
The point that I am trying to make is similar to one I made about the Immigration Bill. The law is effective only if it is properly enforced. If we are writing off huge amounts of penalties owed to the taxpayer, there is a serious problem with the effectiveness of the legislation before us. I hope that the noble Lord can reassure me on those points and I look forward to his response.
I thank the noble Baroness for her support and general welcome for these measures. I appreciate her comments and have, for me, a surprisingly large number of answers. I hope that the Committee will bear with me on them.
First, I must say that I did not refer to “a surge” but “a scourge” of illegal migration. I hope that the record shows that because that is what I meant to say. I do not want to get my notes muddled up and will therefore deal with the fees regulations first and then talk about the order on illegal working. I have a fair amount of information and will make sure that the noble Baroness receives details of the percentage increases, which actually were set out in the Written Ministerial Statement of 24 February. I am sorry that I do not have a copy of it to hand but will certainly make sure that I send it to her.
Secondly, the noble Baroness asked how much of the income generated is to cover a shortfall. She is quite right: we use this money to help support immigration services in general, which are quite expensive. If we want effective immigration control which efficiently delivers a speedy resolution of difficult cases, we have to make sure that we have the right resources to do it. The fee increases are expected to raise approximately £50 million per annum.
The noble Baroness went on to talk about that familiar subject: student visa fees and student numbers. If I appeared a little breathless when I came into the Committee, it was because I had been talking to a certain noble Lord about this very issue. I do not seem to be able to move around the House without talking about it. Our view is that there is no direct relationship between the visa fee and volume demand at this price level because the major costs are not visa fees or even the health charge that noble Lords have spoken about. Independent research suggests that visa pricing is only a marginal consideration for students and the UK is one of the most desirable places to come to study. This is an argument I have been making in the Immigration Bill. University applications are up 7% as of last September. We know that there is a problem in the Indian subcontinent as a whole, and that is reflected in the Australian experience. Elsewhere, numbers are almost the same. We have had a considerable surge in the numbers from China, which has more or less offset the decline from India. We are confident we have got the balance right.
Visas are not used as a method whereby we limit migration. We have not targeted tier 4 applicants. The 4% increase that applies to other fees also applies here, so it is a standard across-the-board increase. We set fees based on the value of the successful application to the migrant and, to that extent, it is a market-led calculation.
I think the noble Baroness welcomed the increase in fees as long as it was going to maintain or, if possible, improve service standards. We have put measures in place. There has been considerable organisational change in the old UK Border Agency. UKVI is now in-house in the Home Office, and our performance against service standards is improving. In the past year we have made great progress in reducing the stocks of in-country case work and backlogs. A straightforward application made today would be dealt with within service standards.
The noble Baroness asked whether we have considered joining Schengen or have considered our relationship with the Schengen visa system.
I was not suggesting that we join Schengen. I was just taking about the comparative costs of visas.
Our visa product is competitive with Schengen in price and entitlement. We are running a pilot in China trialling ways to encourage tourists to apply for a Schengen visa and also to travel to the UK. This allows selected travel agents—that is fairly straightforward in the Chinese experience—to make offline applications for tour groups using the same form as they use for Schengen. We are trying to facilitate the use of Schengen applications in China and are monitoring that because some people say that having to make two applications for separate visas is a deterrent. However, I am pleased that the noble Baroness is not suggesting joining Schengen. In fact, I have to say that I did not think that she had said that, either—but my papers suggested that she might have done.
On the question of illegal working, I have the figures, which show an increase in particular years. They started off at 1,722 in 2008-09; the next year, they were 2,339, while in 2010-11 they were 1,898 and in 2011-12, 1,342. In 2012-13, they were 1,270 but last year, up to 28 February—we are still in 2013-14—the number was 1,862. I shall make sure that the record has the figures available.
I did not quite catch them, but I shall read the record in Hansard. Does that suggest that from 2010 until last year, the figures for actions against those who employ illegal workers went down?
Yes, that is certainly the case. They dropped in that period and they have now increased markedly, so the latest figure is on track to be the second highest since the scheme was introduced.
We are taking steps to increase our focus on illegal working. With the creation of the Immigration Enforcement Directorate last year, we have already seen a significant increase of 47% in illegal working operations in 2013, compared with 2012, and a corresponding increase in civil penalties involved. Around 10,000 civil penalty notices were issued to employers since the start of the scheme until the end of 2013. The gross value of penalties levied during that time is in excess of £90 million, but the net recoverable value is £70.8 million. During the period from 2008 to 2013, almost £30 million was collected. Civil penalties to the value of £20 million were written off. The noble Baroness is right to draw attention to that factor. That happened during the previous Labour Government as well as during this Government, often because the companies evade the penalty by dissolving their business. The remainder is still subject to recovery; we are still pursuing some of these people—but we are using the Immigration Bill to make it easier to enforce civil penalty debts in the courts. The change will accelerate the process of enforcement, reduce costs and provide clarity.
I wanted to clarify one point. What consideration has been given to how to implement the penalties on small employers whose sole income may not be as much as the penalties being introduced of £20,000?
Whether you are a small or large employer, it is clearly illegal to employ people who are not entitled to work here. The penalty regime is designed to provide the enforcement authorities with flexibility in how they apply the scheme. The whole point of the exercise is not to drive people out of business but to prevent businesses that gain an economic advantage by employing illegal workers from gaining that advantage and to discourage them—and to make sure that they have proper checks in place, small or big business, to make sure that they have proper records in these cases.
I would argue that in some ways it is easier for a small employer to have a rigorous regime, because people are more likely to be working alongside each other in small businesses than in larger organisations. We are trying to work with business. I hope that my noble friend will agree with me that the employment of illegal labour is a scourge that needs addressing and that, whether it is in large or small businesses, we are right to deal with it. They are treated equally, and we allow payments in instalments to reflect the impact on the business. I should just mention that.
If the Minister has other points to make on the questions I asked about the penalty notices then I may be jumping the gun, but so far he has only repeated the information that I spoke of and has not given any of the information that was asked for in the debate. One question was about the money written off. The Minister in the other place said that £7.2 million was written off when companies were dissolved. I asked in particular whether we did any checks on the directors of those companies to see whether they set up other companies. I also asked what the £12.8 million remaining out of the £20 million written off was for. In the other place, the Minister, James Brokenshire, just said it was for “different reasons”. When we are writing off £12.8 million, I do not think that that is an adequate reply.
I cannot really add directly to the information that the noble Baroness already has but will certainly write to her on the matter. We are tackling phoenixism—the arrangement whereby a business is here today, gone tomorrow and there again the following week. We are intervening to prevent companies dissolving to evade penalties, which is a common enough phenomenon, and we act with the Insolvency Service to disbar directors who are clearly not prepared to abide by the law in this area. As I said earlier, the Immigration Bill accelerates debt recovery by enabling us to register the penalty as an order of the court. This avoids lengthy court processes, as we can insist on payment on a much easier basis than by having to use the court.
I have tried to answer a number of the questions but may not have answered them all. To the extent that I have failed to do so, I will make a point of writing to the noble Baroness and to my noble friend so that they are in the loop on this matter. I beg to move.
Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) (Amendment) Order 2014
Motion to Consider
That the Grand Committee do consider the Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) (Amendment) Order 2014.
Relevant Documents: 22nd Report from the Joint Committee on Statutory Instruments
Combined Authorities (Consequential Amendments) Order 2014
Motion to Consider
That the Grand Committee do consider the Combined Authorities (Consequential Amendments) Order 2014.
Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments
My Lords, I am pleased to introduce the draft Combined Authorities (Consequential Amendments) Order 2014, which was laid before this House on 10 March. In speaking to it I shall also speak to the other three orders in my name on the Order Paper relating to the three proposed combined authorities.
The orders we are considering this afternoon, if approved, will bring about the establishment of combined authorities in three major metropolitan areas: across Merseyside and Liverpool, around Sheffield and South Yorkshire and in West Yorkshire. The purpose of these combined authorities is to enable the councils and their partners in each of these areas to work together more effectively to promote economic growth, to secure more investment and to create more jobs. These combined authorities will be central to delivering the outcomes in the city deals that the Government have agreed with each of the areas. They will also provide the governance needed for any future growth deals drawing on resources of the local growth fund.
Each combined authority will be responsible for economic development, regeneration, and transport across the functional economic area. All the councils in each area have agreed that their combined authority will be able to exercise their functions on economic development and regeneration. The combined authority will also have the transport functions currently exercised by the area’s integrated transport authority. That integrated transport authority will be abolished when the combined authority is established.
The process for setting up a combined authority is set out in the Local Democracy, Economic Development and Construction Act 2009. Crucially, all the drive and initiative has to come from the places involved. It is what we call a bottom-up process. It is a process where the first steps are taken by the councils involved. The first step is for the councils to undertake a governance review in their area looking at how decisions are taken on economic development and regeneration, and on transport. This review will allow the councils to decide whether the combined authority approach is the most effective way for them to work together and with their public and private partners, particularly the local enterprise partnership for the area concerned to promote economic growth and prosperity. All the councils concerned have followed this process and concluded that a combined authority is the right way to work together and with their partners to drive growth.
This Government’s approach is one of localism, which reflects our belief that residents and their representatives are best placed to decide what happens in their area. Where councils come forward with a proposal for a combined authority—like the three before us—which commands wide local support and we consider that the statutory conditions have been met, we invite Parliament to approve a draft order to establish the proposed combined authority. If, in the future, local councils decide that changes are in the area’s best interest—perhaps another council joining, or one leaving—and statutory conditions have been met, we would bring an order back to Parliament for approval to enable the change to take place.
As the 2009 Act requires, each group of councils concerned have provided the Government with detailed information about how they wish the combined authority to operate, to take decisions and be open, transparent and accountable. The Government have consulted on each proposal, and each proposal has been considered in the light of relevant statutory conditions to make sure that the proposal: is likely to improve the exercise of statutory functions relating to transport, economic development and regeneration in the area; is likely to improve the effectiveness and efficiency of transport in the area; and is likely to improve the economic conditions in the area. In each case I can tell the Committee that the Government consider that these tests are unambiguously met. The Government have also had regard to the need to reflect the identities and interests of local communities and to secure effective and convenient local government. Furthermore, we are clear that in each of these areas the combined authority would command wide local support—from local businesses, other public bodies and from local people and their democratically elected representatives.
I turn to the draft orders themselves. Three of them provide for the establishment respectively for combined authorities across the areas of Greater Merseyside, South Yorkshire and West Yorkshire. Each of these three orders specifies the formal, legal name for the combined authority, to which all the councils concerned have consented. But—and I know that this is an important matter and one of great interest to many noble Lords in the Grand Committee today—how that authority will brand itself, including the use of any brand name, will be entirely a matter for the combined authority.
Each of these three draft orders also makes provision for the abolition of the integrated transport authority for the area, about the transport and economic functions the combined authority will have and about its membership and constitutional arrangements. A combined authority will be governed by its members and subject to scrutiny by one or more overview and scrutiny committees with a membership drawn from members of the councils concerned to hold the combined authority to account. Good governance practice will mean that such committees will be politically balanced, enabling appropriate representation of councils’ minority parties in the governance of combined authorities.
Combined authorities are also subject to the same transparency and audit requirements as local authorities, so they will be audited by an external independent auditor. Meetings of the combined authority are open to the public in the same way as local authority meetings, and in future people will have the right to film and use social media to report on council meetings. This applies equally to meetings of combined authorities.
Finally, the fourth draft order simply makes amendments to transport legislation which are applicable to all combined authorities.
In conclusion, these draft orders will enable the councils concerned and their partners to work together more effectively to deliver economic growth across their areas. Establishing these combined authorities is what the councils and their partners in these areas want. They want this because they believe it is the most effective way for them to promote economic growth. In creating their combined authority, they are putting the promotion of economic growth at the heart of all that they do. This is a priority for them. It is a priority for the Government. I commend the draft orders to the Committee and beg to move.
I am very grateful for the comments from my noble friend. I am also delighted to hear the Minister address a number of issues that have caused concern among Members. We are very much in favour of combined authorities—they are an important economic opportunity for local areas. However, the thing that concerned us most was the citation. The word “region” is apparently no longer acceptable, and when in my area there was discussion about what name would be acceptable, it was not possible to come up with an agreed name. The notion of trying to market and get external investment into the Liverpool region using the citation “Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral”, would be rather difficult. I was going to ask my noble friend whether that was purely a legal name and whether these areas could choose whatever name they wanted to get this external investment and marketing which has been so important, certainly in my area, for the past 10 or so years, and she has said—it is quite important—that they can have whatever brand name they choose. That is hugely important.
My Lords, I am sorry: we now have to interrupt proceedings. We shall reconvene in 10 minutes.
Sitting suspended for a Division in the House.
I was just turning to the issue of transparency, having dealt with the issue of branding and flexibility. I was delighted to hear my noble friend talk about the issues of scrutiny and independent audit. I assume that the minutes of the proceedings of the combined authority are,
“kept in such form as the Combined Authority may determine”.
I presume that that therefore means that they would be open to press and public for scrutiny as well. That is quite an important matter. The same will be true of the role of transport, which will now be part of the combined authority. The Minister in the other place got it completely wrong when he suggested that Merseytravel had purchased £1 million worth of Beatles memorabilia which are worth only £300,000. Actually, it was the transport authority that did it, not the council. With transparency, issues like that will be dealt with and we will know which council or organisation is responsible. I am delighted with the orders and I thank the Minister for her helpful replies.
My Lords, it is a great pleasure to follow the noble Lord, Lord Storey, not least because in the 1970 general election, what seems like a million years ago now, we were both students and friends, and I sent him out on his first election day experience. Sad to say, he returned later that day minus the wheels of his car. I thought that that might put him off politics for the rest of his life, but it did not do so. On this occasion I am happy to be able to concur with what he has said, and I thank the Minister for the way that she introduced the orders.
Personally, I entirely approve of and agree with the decision to allow local authorities to create combined authorities. I think that they will encourage strategic cohesion and be a catalyst for economic development, notably job creation and transport, as we have just heard. It will allow the regions to speak to central government with a more united and stronger voice. It will create partnership between boroughs, in this case referring specifically to those on Merseyside where it will create cohesion and partnership between six boroughs, and it does not give disproportionate power to any of them. It is worth saying in this context that some 84% of those living within the city region work there.
I was struck by a report for Liverpool City Council produced in August 2013 by the Mayor of Liverpool, Joe Anderson OBE, which he has been good enough to share with me. He states:
“A Combined Authority is not a merger or a takeover of existing local authority functions nor would be a ‘Super-Council’. Instead it would seek to complement local authority functions in economic development regeneration and transport and enhance the effectiveness of the way they are discharged”.
I was struck when reading that report and an earlier one produced in July 2013 by the reasons given by the mayor why a combined authority would be so worth while. In the earlier report he states that,
“current governance is not helping rebalance the”—
Liverpool city region—
“economy quickly enough; the structural issues highlighted remain issues; a more collaborative approach is required for change; and there is a lack of coordinated delivery structures at present”.
In the August report I see that he points out some of the other challenges facing the Liverpool city region and talks about the opportunities that would be created if such a body was to be set up.
As a one-time member of Merseyside County Council and Liverpool City Council and as a Liverpool Member of the House of Commons for 18 years, I was saddened to see the title of the Liverpool combined authority as it appears on the order which has been laid before the Grand Committee. The Minister said by way of a curtain raiser to her excellent speech that she thought that this was one of the issues that was most likely to be raised. Whatever else might be said in its favour, the title, “Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral Combined Authority”, hardly trips off the tongue. This nine-word title is not just clumsy, it is a missed opportunity. This is not just about nomenclature or that ugly word “branding”, which has been used. In the early 1970s when Merseyside County Council was established, it puzzled me then that while Greater Manchester capitalised on a name that immediately told everyone in the world where it was, we were not to be known as “Greater Liverpool”, but as Merseyside. It was a decision based on petty rivalries and parochialism rather than on what was in the best interests of the common good. That lost opportunity weakened Liverpool and actually played into the hands of some of those who were agitating against the city and were exploiting some of the problems in the community during the 1980s, and which disfigured Liverpool’s reputation. Liverpool is at the very heart of the conurbation, and if a body’s heart is not well cared for, all the other organs will fail, too. During the past two decades the regeneration of Liverpool has become a sine qua non for the regeneration of surrounding boroughs. That success story is something that everyone in the six boroughs should be proud of and celebrate.
I am always struck that wherever I have travelled, even in remote parts of Africa, Latin America and Asia, Liverpool’s name immediately elicits a response. It is synonymous with sport, music and culture. Just think of the extraordinary success in which the noble Lord, Lord Storey, was involved in 2008—the Capital of Culture. I do not think that anywhere that has been designated a Capital of Culture has been able to rival the success of that year. Think of the city’s maritime legacy and its world-class universities. I declare an interest as holding an honorary chair at Liverpool John Moores University. Liverpool’s international reputation is further enhanced by the extraordinary work of its school of tropical medicine. I know from my time as chairman of the Merseyside Special Investment Fund that the city’s economy is in good shape, while its directly elected mayor is proving to be a good ambassador for the city and its interests. He has also been chair of the better-named Liverpool City Region cabinet for the past three years. That post of elected mayor was created as a result of the Liverpool Democracy Commission, which I helped to found and served on. It has proved to be a great success for the city of Liverpool.
In 1207, King John gave Liverpool its royal charter. Since then, there never has been a time in which Liverpool has not been the engine room for the region. It correctly describes itself as “the whole world in one city”. I agree with the Liverpool Echo’s assessment that the city is working,
“at a pace we’ve not seen for, arguably, the last 100 years”,
“it’s growing, it’s exciting and it’s the envy of most of its rivals”.
It is important to underline how vibrant the surrounding boroughs remain. In my professional life, I worked in two of those boroughs and, through the good citizenship award scheme that I founded at my university, I have been able to spend a lot of time in those neighbouring boroughs. The award scheme underlines what wonderful young people are emerging all over the region. It is their future that is at stake here, and it is their talent that the combined authority has to harness.
The new authority needs to be instantaneously recognisable. It needs a name that carries clout. It needs a name that exudes confidence and strength. People might mistakenly ask, “What’s in a name?”. “Everything” is the answer. A tongue-twisting piece of gobbledegook is no substitute for a name that would command immediate recognition, and I therefore hope that what the noble Baroness has said this afternoon—that it would be within the discretion of the authority to choose a name that resonates—will be heard loud and clear by the leaders of those six boroughs.
My Lords, I strongly welcome these draft orders, and the fact that the north-east draft order is on its way, making four orders in total, with the potential for more to come in the months ahead. As we have heard, combined authorities are important on the grounds of geography and scale because they reflect natural regions and travel-to-work areas. In terms of scale, so many councils are comparatively small that investment and risk management are much more difficult for them, so pooling with neighbours is a much better way in which to proceed.
I noted that the leader of Manchester City Council has said that this Government have devolved more in three years than the previous Government did in 13 years. He is right. The importance of this devolution is that it is essential to help to drive growth outside London and the south-east effectively. Combined authorities, working closely with their LEPs, will be responsible for regeneration and economic development, and for strategic transport investment and management, as the Minister confirmed. That is a hugely welcome change. I have been involved in the first and second waves of city deals, which have been very important in increasing the understanding that councils have with their LEPs in terms of their leadership role in promoting economic development. I have no doubt at all that the creation of combined authorities will help enormously with that process.
I would like to raise one important issue of principle with the Minister, which concerns the membership of the combined authority. I listened carefully to what the Minister had to say earlier. I understand that the overview and scrutiny committees will be politically balanced so that minority parties in councils will have representation in the governance of the combined authority. Can the Minister say, either now or at a later date in writing, a little more about how proportionality will work, whether an opposition member will be required to chair them and how agendas will be constructed to ensure that debate is not stifled by individual party political interest? That is a very important issue and there have been a lot of discussions around it.
There is a strong case for saying that minority parties should have access to the main deliberations of the combined authorities. However, it would help significantly to know now that the Government understand the issue and are prepared to ensure that the rights of minority parties are guaranteed in the orders when they are finalised, either now or at a later date. In terms of principle, it is important, as my noble friend Lord Storey said, that the public have confidence that this is not to be the creation of a one-party state.
My Lords, I thank the Minister for introducing these important orders in a clear and comprehensive way. As the noble Lords, Lord Shipley, Lord Alton and Lord Storey, said, and as would have been clear from the debate in the House of Commons, we thoroughly support these orders. Indeed, why would we not, given that the authorities involved are largely Labour and that the primary legislation from which they spring—the Local Democracy, Economic Development and Construction Act—was legislation of the previous Government? We acknowledge that the work of the noble Lord, Lord Heseltine, has spurred the coalition Government to take the opportunities that that legislation offers, and we acknowledge the Government’s current commitment to localism. I am bound to say that those of us who spent many hours ploughing through the Localism Bill and its detail will recall that it seemed to us then to be as much about power for the Secretary of State as about freedoms for local government, but it would be wrong to be too churlish on this occasion.
As for growth, of course we welcome the improvement in the economy. We will have to see how sustainable it is and how much of it genuinely comes from a rebalancing of the economy, a point touched upon by the noble Lord, Lord Alton. We agree that local authorities working together in the interests of their communities can be a real engine for growth, particularly outside London. As my honourable friend Andy Sawford put it when this matter was debated in the Commons:
“The new combined authorities will bring many benefits, including the strong and visible collective leadership of an area with democratic accountability and an influential and unified voice. That leadership will be able to have a single conversation with the Government, national agencies and business leaders and to align decision making and economic growth at a strategic level”.—[Official Report, Commons, 18/03/14; col. 707.]
As the noble Lord, Lord Shipley, said, combined authorities should enable more effective engagement with LEPs and facilitate delivery of city deals.
The issue that York is currently a non-constituent council in the West Yorkshire Combined Authority was the subject of some discussion in the other place, particularly following an earlier intervention from my right honourable friend Hilary Benn. We took it from the Minister’s reply in another place that the current problem is that combined authorities require whole local authority areas that share the same boundaries. The Minister undertook to consult in the next few weeks about how the legislation could be changed to address that problem. Perhaps the Minister could add a little more about the propositions that are being developed in that regard.
We welcome the commitment to see the combined authorities brought within the VAT refund scheme, which is another matter that was discussed in the other place.
From the comments in the Explanatory Memorandum, it is clear that these propositions were forged from consensus. Indeed, we heard that from noble Lords today. The formal names of the combined authorities seemed a particular bone of contention, and when I first read this, I wondered whether they were a bit of a nit-picking issue, but I have been convinced by the discussion in the Committee this afternoon, particularly from what we have heard about all the accolades delivered for Liverpool, that they are not. They are clearly an important issue. It seems to me that how the combined authorities address this and reach a consensus will be a test for them.
I understand that the combined authorities’ borrowing powers are limited to their transport functions. Will the Minister say why this is so? Presumably the levies that the authorities impose on constituent authorities now have to feature in the determination of whether each is raising an excessive level of council tax. This is a change in the legislation which we debated in the Local Audit and Accountability Act. Will the Minister confirm that there are no adverse tax or otherwise consequences for the ITA, the passenger transport executives or the constituent councils from their transfer of functions, properties, rights et cetera to the combined authority?
We are pleased to support these orders. We await further such developments, particularly—in support of the noble Lord, Lord Shipley—in relation to the north-east; we would be happy to support that order when it emerges.
My Lords, I am very grateful to all noble Lords for their strong words of welcome in support of these orders. I shall start by acknowledging a point made by the noble Lord, Lord Alton. He quoted a report stressing that a combined authority is not a merger. I agree with that. These combined authorities open the way for more effective collaboration between the councils and their partners to promote economic growth and secure investment for their area. This is about collaboration. It is most definitely not a merger.
My noble friend Lord Storey again flagged the question of the naming of these combined authorities. The noble Lord, Lord Alton, went into greater detail about his concerns and said that the statutory names on the orders do not trip off the tongue. The most important thing for me to do is to be absolutely clear in restating what I have said and to answer directly the noble Lord, Lord Alton, that the decision about what a combined authority might want to call itself will be a matter for that combined authority. The names on the orders are the legal names, but we feel that it is right for these combined authorities to decide the best way to—I know the noble Lord did not like the word “brand”—present themselves and their local people to the rest of the country and indeed the world. As the noble Lord said, there is widespread awareness of Liverpool around the world. On that, I can be absolutely clear, and I hope I have reassured noble Lords on that point.
My noble friend Lord Storey asked for some assurances around accountability and transparency. I am happy to confirm that these orders and other existing legislation place robust requirements on the combined authorities. To the point made both by him and by my noble friend Lord Shipley, I can say that the combined authority will be governed by its members and subject to scrutiny by one or more overview and scrutiny committee, with membership drawn from members of the councils concerned, to hold the combined authority to account. Good governance practice will mean that such committees will be politically balanced, enabling appropriate representation of councils’ minority parties in the governance of combined authorities.
My noble friend Lord Shipley asked some specific questions around how proportionality will work, who would choose the chairman of the committee and how agendas would be decided. I understand why he raises these questions and certainly acknowledge to him the importance of these points. However, what he has outlined is what I would describe as, and what would be commonly described as, good practice. What we are clear about is that it is for the individual councils and the combined authority itself to decide how they will put in place their arrangements. I urge them to take the good practice approach that we would all expect and want them to follow, not least because of the strong welcome that we all have for this new governance structure.
Can the Minister clarify further how it will be possible to see minority representation when in a combined authority there is only single-party representation—and, therefore, only leaders of that party are part of the combined authority? Is it not therefore particularly important that there should be some specificity when it comes down to the openness of meetings, and some requirement that meetings should be able to be accessible by the public and the media?
The noble Lord raises a couple of points there. The point that I am getting to with the overview and scrutiny committee is that it would be made up of representation from the various authorities that make up membership of the combined authority. The scrutiny committee that will hold the combined authority to account will be made up not of the chairman or the leaders of the different local authorities but of people from the different parties represented in that local authority. So there will be a variety of political parties represented on the scrutiny committee that holds the combined authority to account.
As to access to meetings of the combined authority, I was going to come on to that, because it was a point that my noble friend Lord Storey also raised. They will be subject to exactly the same transparency requirements as local authorities. So, yes, the meetings of combined authorities will be open to the public; this is a statutory requirement. Their minutes will be published in exactly the same way as local authority minutes will be published—and, indeed, they will be subject to the requirements of the Freedom of Information Act in exactly the same way as local authority meetings are at this time. I hope that before I sit down I will be able to confirm that the scrutiny committees will also be open to scrutiny in the same way.
The noble Lord, Lord McKenzie, referred to West Yorkshire and York in particular. He acknowledged there that we are seeking what we describe as a legislative reform order to amend primary legislation on combined authorities to enable a council that is not contiguous with other members of the combined authority but which is in the same functional economic area to become a constituent council of that combined authority if it wishes. As a first step, we will be consulting on proposals for such a legislative reform order, which will be an opportunity for those with views on this to put them to government.
The noble Lord, Lord McKenzie, also referred, I think, to the combined authorities’ ability to reclaim VAT. I confirm that they will not be disadvantaged by VAT legislation. Last week, the Government launched a consultation on the proposal to add Greater Manchester and these proposed combined authorities to the existing VAT refund scheme for local authorities, which can be achieved through secondary legislation. The consultation closes on 18 April and, following that, if the Government decide to proceed, parliamentary approval will be sought to give effect to this and to enable established combined authorities to recover VAT, just as the constituent local councils can.
The noble Lord, Lord McKenzie, also sought confirmation that local authorities and the ITAs that will be abolished would not be subjected to any disadvantage around tax arrangements. I will see whether the answer to that emerges, but if it does not, I will write to the noble Lord. I can confirm that there will be no disadvantage. I am nearly at the point where I might be able to avoid a letter, which would be great.
Going back to the point that I was talking about previously, I confirm to the noble Lord, Lord Alton, and all noble Lords, that the scrutiny committee will be open to the public, as will be the combined authority meetings.
Several noble Lords mentioned devolution and localism more generally. The Localism Act 2011 devolved powers not only to local authorities but to local communities. We are interested in discussing with local authorities what more can be done to empower them to deliver economic growth and take their communities forward. We certainly hope that more of the combined authorities will come forward. As my noble friend Lord Shipley said, the combined authority covering local authorities in the north-east will be with us very shortly. I hope that I have been able to address all the key issues that have been raised.
I may be able to avoid the Minister having to write. I am not sure that she dealt with the point about funding and whether the opportunity runs beyond the existing opportunities in relation to transport funding. In particular, given what is effectively a recent change, as levying bodies, presumably these are the very sorts of levies that have to be taken into account by individual local authorities in judging whether or not their council tax increases are excessive. Within the overall constraints—whether we agree with them or not—that the Government have imposed, there is an effective cap, subject to referendums, on what the combined authorities would charge in their constituent authorities. Should that not be an argument for perhaps some relaxation in relation to prudential borrowing for so long as it could be funded through the levy mechanism?
The noble Lord is right to say that I had omitted to respond to him on that important point. We are absolutely clear that levies should be included in the regime for the consideration of council tax levels. Levies will therefore be caught by the council tax referendum policy. We are absolutely clear that local people should be able to have their say on any proposed excessive increase in council tax, whether caused through a levy on the council or by any other reason. Certainly in Leeds, where this has been a particular debate, we are confident that the measures proposed in that area would be possible without an increase above 2%. If a combined authority wanted to propose an increase above 2%, it would be open to it to conduct a referendum.
The noble Lord asked specific questions about borrowing. There is no intention or plan to extend the powers of the combined authority to borrow beyond those powers that already exist for the ITA and will be transferred to the combined authorities. The funding of combined authorities outside of transport will be provided by the membership local authorities. The level at which each local authority makes its contribution will be decided by the members of that combined authority, with the default position being that the level of funding would reflect the size of the local authority.
I hope that I have been able to address all the points that have been raised today. I think we are in general agreement that establishing these combined authorities will support these councils in driving their commitment to deliver growth and prosperity for their area. That is a priority which should be at the heart of everything councils across the country do, and I commend these orders to the Grand Committee.
Will the Minister give further guidance on the overview and scrutiny structure? She referred to good practice. Will she write to the councils that form combined authorities about what that good practice might entail? In particular, will she advise that having an opposition chair of scrutiny, which anyway is common practice in many councils for the overview and scrutiny process, might be recommended by the department? Will she also advise on whether all members who are appointed to serve on an overview and scrutiny panel are able to place items on the agenda? I am seeking to avoid a situation in which the majority party on the combined authority chairs the overview and scrutiny panel and then controls the items placed on the agenda. Good practice is what I would expect to happen, and I am sure that in the case of the combined authorities orders we have today, and get in the future, that would be deemed to be good practice, but it might help if the Minister defined clearly what good practice actually means so that everybody can be aware of it, including those authorities that are yet to put in their proposals.
My noble friend raises some very important points. As a point of principle, I or one of my ministerial colleagues would be happy to write to the combined authorities, and I will discuss with them the precise detail to put in such a letter.
The exchange has prompted a thought. Presumably the combined authority will have to have an audit panel, subject to the constraints or requirements of the recent Act.
Yes, it will. I commend these orders to the Grand Committee.
Barnsley, Doncaster, Rotherham and Sheffield Combined Authority Order 2014
Motion to Consider
That the Grand Committee do consider the Barnsley, Doncaster, Rotherham and Sheffield Combined Authority Order 2014.
Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments
Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral Combined Authority Order 2014
Motion to Consider
That the Grand Committee do consider the Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral Combined Authority Order 2014.
Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments
West Yorkshire Combined Authority Order 2014
Motion to Consider
That the Grand Committee do consider the West Yorkshire Combined Authority Order 2014.
Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments
Urban Development Corporations in England (Area and Constitution) Order 2014
Motion to Consider
That the Grand Committee do consider the Urban Development Corporations in England (Area and Constitution) Order 2014
Relevant documents: 22nd Report from the Joint Committee on Statutory Instruments
My Lords, I am pleased to introduce to the Committee the Urban Development Corporations in England (Area and Constitution) Order 2014, laid before this House on 10 February 2014.
The order formally revokes the statutory instruments under which the West Northamptonshire Development Corporation, London Thames Gateway Development Corporation and Thurrock Thames Gateway Development Corporation were established in 2003. The former urban development corporations of London Thames Gateway and Thurrock Thames Gateway closed for business on 28 February 2013 and 31 March 2012 respectively. The corporations were subsequently formally dissolved. West Northamptonshire Development Corporation will close on 31 March 2014 and be formally dissolved on 31 July 2014. These three urban development corporations were set up to promote and enable growth in their areas, unlock economic potential and drive local regeneration to deliver new homes, businesses and jobs. Their role was always intended to be time-limited, with a planned lifespan of up to 10 years. The purpose of this order is to make the necessary legislative changes to the statute book by revoking the statutory instruments that set up these three urban development corporations and provided them with their powers.
This order is linked to another two orders specifically related to the West Northamptonshire Development Corporation. The first of these is the West Northamptonshire Development Corporation transfer order, which transfers the corporation’s property, rights and liabilities to relevant local authorities in the area and comes into effect on 27 March. That is a negative SI that is not the subject of today’s debate. The second is the West Northamptonshire Development Corporation dissolution order, which formally closes down the corporation but allows for any residual winding-up tasks, including the preparation of the final report and accounts by a skeleton team and board members on the audit and risk committee. That dissolution order is not subject to any parliamentary procedure and will come into effect on 31 July.
The three urban development corporations achieved much in their lifetimes, but their lifespans have reached a natural end. They leave a legacy that local authorities and other public sector bodies can build on as we enter a different phase. Their achievements allow us to pass responsibility to locally led delivery bodies that are already rooted in their areas and can be responsive to the needs of their local communities.
Urban development corporations are only one of several ways in which we can support major developments, and this Government intend to use them only sparingly, when they are the appropriate model to deliver growth. For example, as the Chancellor announced last week, we will set up a new urban development corporation that will work with local communities and has been welcomed by them to drive and accelerate progress at Ebbsfleet and deliver up to 15,000 homes along with new jobs and infrastructure.
This order is the final step to fulfil the legislative requirement to revoke the respective area and constitutions that established the three urban development corporations. I beg to move.
My Lords, I thank the Minister for moving this order. When I first looked at the Explanatory Memorandum, I assumed that we were in effect dealing with two orders because the negative order as well as the affirmative order is covered in it. I hope that the Minister will therefore allow me to raise one or two questions about the West Northamptonshire Development Corporation (Transfer of Property, Rights and Liabilities) Order 2014. As we have heard, the urban development corporation order would appear to revoke the order which established three further development areas. The Thurrock Development Corporation was dissolved in 2012 and the London Thames Gateway Development Corporation was dissolved in 2013. In each case, the property, rights and liabilities were transferred to other bodies. However, in the case of the West Northamptonshire Development Corporation, it appears that some assets and powers have already been transferred to successor bodies. One of the orders completes the transfer and enables the revocation of the third urban development order.
As a general point, if each of the development corporations is devoid of assets and has been dissolved, is the revocation order just a tidying-up exercise to prevent them being revived at some stage in the future? I think the noble Baroness said that they have a 10-year life, so no wonder if they expire anyway. Given that there will be nothing in them, why is there a need formally to deal with them in this manner?
Specifically in relation to the West Northamptonshire DC transfer order, a reference is made to a dissolution date, being a dissolution by an order made under Section 166(1A) of the Local Government, Planning and Land Act 1980, so presumably that order will be laid in due course. I think that that may have been what the Minister referred to when introducing the order. Can she say why paragraph 2 of the West Northamptonshire DC order is being revoked separately from the residual revocation which is to take place with effect from 31 July 2014?
On paragraph 4.1 of the transfer order, can the Minister say what remaining property rights and liabilities are to be transferred to the Secretary of State? Also, what is the final destination of the property, rights and liabilities which are on the retained list? Similarly, what is the position in relation to contracts of employment and pension schemes under paragraph 3(3)(b), given that the import of those arrangements is obvious? What is the position of West Northamptonshire DC if it has not completed the winding-up of its affairs by 31 July 2014, or is there an inevitability about that? Paragraph 8.3 of the Explanatory Memorandum indicates ongoing discussions between Northampton Borough Council and the Department for Communities and Local Government. What are the points at issue and have they now been dealt with satisfactorily?
More generally, can the Minister confirm that there will be no adverse financial consequences for any of the local authority transferees from these arrangements, including their prudential borrowing power and capacity? Will that be affected in any way by these transfers? It is presumed again that there are no taxation consequences for the West Northamptonshire DC, but perhaps the Minister can confirm that. I ask the question simply because if an entity is transferring a range of assets to another entity, typically if it were a private sector entity, valuations and capital gains tax would have to be dealt with, as well as other issues. I presume that that does not come into play with the sort of body we are dealing with here, but it would be good to have that confirmation. Lastly, what measures are the Government putting in hand to estimate whether the successor arrangements are delivering on regeneration?
My Lords, I am grateful to the noble Lord, Lord McKenzie, for his remarks. I thought that he might have some questions about the orders that are referred to in the Explanatory Memorandum but are not before the Grand Committee for debate today, so I have some information which I hope will be helpful to him.
One of the first points he made concerned why we are introducing the order formally to bring these corporations to an end. Although there was an expectation that they would be time-limited when they were set up, no specific time was fixed for them at the point of their creation. Therefore, it is necessary to draw them formally to a close.
I may have to write to the noble Lord on some of the specific questions that he raised. However, I can respond to the questions he posed on Northamptonshire, which relate more to the transfer order than to the one before us. The proposal to transfer the corporation’s assets has been subject to consultation, as required by the statute under which the transfer is made. We consulted Northampton Borough Council, Daventry District Council, South Northants Council and Northamptonshire County Council as the authorities within the West Northamptonshire Development Corporation’s geographical area of operation which are directly affected by the closure.
All four councils participated in the consultation, which took place from 26 November 2013 until 2 January this year. My officials worked closely with the authorities before the consultation for some time, so the proposals did not come as any surprise. Indeed, the successor local authorities are eager to take on their new responsibilities. Quite a bit of work has taken place between all the interested parties.
Three out of the four local authorities formally responded to the consultation, all of which supported the proposals. In the main, they were seeking clarity on the arrangements—for example, confirmation that the assets would be transferred to them for nil cash consideration. We were able to confirm that this would be the case, as it was with the transfer of assets from London and Thurrock corporations.
Northampton Borough Council queried the adoption of a bridge on one of the sites, but we were able to give it sufficient additional information to resolve this concern. To help it with sufficient resource capacity to manage the assets and liabilities going forward, we have provided £1 million of funding to Northampton Borough Council, which will be taking on the vast majority of projects. In the case of London and Thurrock, similar capacity funding was also provided to the GLA and Thurrock Council respectively. Therefore, we have ensured that any costs involved will be covered and that local authorities will not be disadvantaged.
It might be worth my telling the noble Lord what assets we are talking about. The majority of assets are in Northampton. The major assets being transferred are St Peter’s Waterside, land at South Bridge Road and land at Avon Nunn Mills. That has all gone to Northampton Borough Council. A former railway line between Coton Road, Northampton and Great Houghton is transferred to Northamptonshire County Council.
In Thurrock, all the assets and liabilities of Thurrock Thames Gateway have been transferred. London Thames Gateway’s development assets on the fringes of the Olympic Park were transferred to the new London Legacy Development Corporation. This was followed in January 2013 by a transfer of further land in the Lee River Park. In April last year, the remaining development assets of the London Thames Gateway Development Corporation were transferred to the Greater London Authority. As I say, funding has been provided to cover any costs.
The noble Lord, Lord McKenzie, asked about pension rights and retained pension liabilities. They revert to the DCLG. He also asked about a retained list and human resources, I think. That, again, comes back to the DCLG.
On ensuring the successor arrangements are delivering in line with the principle of localism, we will not be formally monitoring local authorities’ performance but, as I have already said, we have provided capacity funding for them and have confidence in Northampton Borough Council on the specific points for which it is going to take responsibility.
The noble Lord asked about winding up affairs by 31 July. If any issues are outstanding, they return to the department. It will be dealing with issues such as final accounts between March and July, so we are now in the period where we are dealing with all the minor remaining issues, and we have no reason to believe that they will not be completed by 31 July.
I hope I have responded to at least the vast majority of the points that the noble Lord raised. If there is anything that I missed, I will come back to him in writing.
I am very grateful to the Minister for a very full reply. There are a couple of points that we might just have in writing. In relation to prudential borrowing by the transfer-in entities, if they are going to get a bunch of assets for a nil value, some of those assets are presumably quite valuable and some may be very valuable. Routinely you would expect that potentially to influence what prudential borrowing that entity might be able to undertake. The answer may be that that is not how the rules operate, but I would be grateful for further clarification on that.
In relation to pension arrangements, I was not quite sure what was transferring to CLG. Presumably employees will be TUPE-ed to the new transferee councils. What pensions is CLG picking up?
I have just been handed a note. I understand the words on it but not how they relate to the question the noble Lord has just asked me. If he will allow me, I will write to him on that matter and on borrowing capacity against assets because I do not think that the note that I have been handed quite answers the specific point he raised so I will not take up your Lordships’ time by reading it out.
I am grateful to the noble Lord for his broad support for this order, and I commend it to the Committee.
Prevention of Social Housing Fraud (Power to Require Information) (England) Regulations 2014
Motion to Consider
That the Grand Committee do consider the Prevention of Social Housing Fraud (Power to Require Information) (England) Regulations 2014.
Relevant documents: 22nd Report from the Joint Committee on Statutory Instruments
My Lords, the power to table these regulations is contained in the Prevention of Social Housing Fraud Act 2013, which your Lordships may recall was originally a Private Member’s Bill which was very ably introduced in and steered through your Lordships’ House by my noble friend Lady Eaton, and I am pleased to see her in her place.
Social housing is one of the most important resources we have as a nation, providing as it does so many hard-working people with the safety and security they need. While the vast majority of social housing is being used as intended, statistics show that around 98,000 of these homes are being occupied unlawfully, including those that are being sub-let without permission or that were allocated following a fraudulent application. Encouragingly, an increasing number of social landlords are recognising the importance of tackling this abuse of their stock. Yet, while the recovery rate is going up and has gone up about 50% since 2008, in 2012-13 only around 2,600 unlawfully occupied local authority-owned homes were recovered. It is clear that social landlords need more powers to tackle the problem. What they have told us is that they really need better access to data, and, when an offence is suspected, this is what these regulations will give them.
When investigating social housing fraud, it is important to be able to link the tenant or applicant to another address. I am about to explain what I mean when I say access to more data. This can show, for example, that an applicant for social housing owns a property that they have not declared on their application form, or that an existing tenant is actually living elsewhere, suggesting they are sub-letting the property that they were allocated in good faith. However, social housing fraud investigators cannot always get hold of the data that they need to prove their case. Currently, they can ask for information, but cannot compel it to be given. This means that in many cases their requests to holders of key data such as banks, building societies and utility companies are refused. These regulations will give local authorities the power to compel certain data-holders to supply them, for social housing fraud investigation purposes, with information that they hold. Local authorities already have such powers in relation to their social security fraud and council tax reduction scheme fraud investigations.
Clearly, the list of bodies that can be compelled to supply data should not be any longer than is necessary. When considering which types of organisation to include, we wanted to strike a balance between giving landlords access to the data that they have told us they need and not including those who we felt would be asked for information only very rarely. We will keep the list under review, so if it proves to be longer or shorter than is necessary we will seek to rectify matters. This Government are keenly aware of the need to protect individual freedoms, and a privacy impact assessment for this new power has been published.
The power comes with a number of safeguards. For example, requests may be made only if it is reasonable to do so. In practice this will mean that investigators must have made efforts to obtain via another route the data they need; this power will not be the first port of call. Information may be required only if there are reasonable grounds for believing that the person in question or a member of their family is committing, has committed, or intends to commit a social housing fraud offence. The protections set out in the Data Protection Act will continue to apply. These include requirements that the information obtained must be: fairly and lawfully processed; processed for limited purposes; adequate, relevant and not excessive; accurate; not kept longer than necessary; processed in accordance with the individual’s rights; and kept secure.
The intentional delay or obstruction of someone authorised to obtain data, or the failure or refusal without reasonable excuse to provide information when required to do so, will incur a maximum penalty of a fine of £1,000. Thereafter, continuing non-compliance will incur a penalty of up to £40 per day.
The Bill introduced by my noble friend Lady Eaton received generous cross-party support in both Houses before it became an Act. It gives landlords the tools they need to clamp down on the abuse of their stock. I therefore commend these regulations to the Committee, and I beg to move.
My Lords, I am delighted that we are here today to see this stage in the process of tackling social housing fraud. My noble friend the Minister explained to us the amount of fraud that is still taking place, so the necessity for these powers to be made available is a very important factor. I am someone who is very much in favour of individual freedom, so I do not fit comfortably with lots of legislation forcing people to give information, but I am reassured by the safeguards that my noble friend described and the fact that the investigator should have tried all other possible routes before we get to the demand for data—and that the data protection legislation still applies.
I fully recognise the need for a penalty for those who still refuse to comply with the regulations as they are drafted and tabled. This is a really important move and I look forward very much to seeing the number of fraudulent lettings decrease enormously. As we are to have a review of what is needed and which lists of data are going to be necessary, I am sure that we will have more of an idea about how successful we have been in stamping out this unnecessary fraud.
My Lords, I again thank the Minister for introducing these regulations, which, as we have heard, are focused on facilitating investigation into social housing fraud. We support that focus and support these regulations. The Prevention of Social Housing Fraud Act 2013 introduced deterrents, additional to the right to terminate a tenancy, relating to unlawful subletting and recovery of profits. As we have heard, it was a Private Member’s Bill and was very ably steered through your Lordships’ House by the noble Baroness, Lady Eaton—we should again congratulate her on that effort.
We have common cause in tackling social housing fraud. Cheating on the system and denying those whose housing needs are thereby frustrated can in no way be condoned. This would be the same in any era, let alone that which faces us currently, with a housing crisis with, simply, too few new homes—private and social—being delivered; and notwithstanding also that those to whom social housing is unlawfully let may themselves be faced with appalling housing situations. We have heard the Audit Commission estimate that some 98,000 of the 4 million social homes are unlawfully occupied—4% of the stock in London and 2% elsewhere. Other estimates put it even higher. Whatever the actual numbers, we know that unlawful occupation prevents tens of thousands of social homes being allocated to the people who need them most. For many who let unlawfully, there are profits to be had: the difference between private sector rents and social rents. The inexorable rise of private sector rents make such letting potentially very lucrative. There is also the cost to the public purse of families being displaced into the private rented sector, with increased housing benefit bills.
As the privacy impact assessment makes clear, and in tune with what the noble Baroness, Lady Eaton, has just said, compelling certain private sector organisations to provide data to local authorities for social housing fraud investigation purposes raises important issues around privacy and data protection. It is asserted that although the key task of the social housing fraud investigation is to link the tenant to another property, through evidence of the receipt of rental income from a sublet or mortgage payments suggesting ownership of another property, the information reasonably requested should not include sensitive personal data. That analysis is one that we agree with. We accept that the powers sought in these regulations are based on the well established procedures for social security fraud and, indeed, are not as extensive in that levels of income, for example, are not needed. We understand that the fact that subletting is now a criminal offence itself enables organisations to lawfully disclose certain information but does not compel them—hence the need for new powers.
There are express safeguards surrounding these powers, which the noble Baroness, Lady Stowell, spelt out. I will not repeat them now. There are obviously, at least theoretically, robust safeguards but the issue is how they are being monitored in practice. The expectation is that local authorities will publish information through their Freedom of Information Act publication scheme—for example how often they use the gateway. There is also the expectation that they will comply with data protection principles around processing and handling the relevant data et cetera. Perhaps the Minister can just say a little more about what is expected in this regard and what local authorities’ records have been in relation to their powers in this regard to date. We will expect the Government to keep Parliament updated on how effectively the regulations are working in ensuring that social homes are reallocated, and on whether the anticipated savings are materialising, before the official departmental review in 2018. We are pleased to support these regulations.
I am very grateful to the noble Lord, Lord McKenzie, for his warm support for these regulations. I am also grateful to him for describing in some detail how the impact assessment on privacy has been carried out and what it contains. He is right—as, indeed, is my noble friend Lady Eaton—that we have to be careful that the relevant privacy issues are properly taken account of.
On that particular point, the noble Lord asked whether there was any evidence of misuse of these new powers. We certainly expect local authorities to have strong systems in place to prevent misuse. We would expect disciplinary action to be taken against an authorised officer who misused the power to require information because it is an offence to obtain unlawfully or disclose personal data. The Information Commissioner will be able to investigate complaints about the use of data by a local authority, and it will be for the Information Commissioner’s Office to investigate such claims. Should it find any failings in this area, it can, and will, give out fines for the misuse of data.
On the noble Lord’s questions about publication of the use of this power, that issue will be coming through to me and I will respond before I sit down. More generally, as I have already said and as we have acknowledged, social housing is an extremely valuable asset. While the vast majority of social tenants play by the rules, it is vital that social landlords have the tools they need to root out those who do not. Along with the other measures in the Prevention of Social Housing Fraud Act, the new power introduced by these regulations will help free up much needed homes for many of those on the waiting list who are in genuine need.
We talk a lot about the need to build more new homes but we are mindful also of the need to ensure that the existing social housing stock is being used as intended. Reducing fraud will mean that more households in genuine need will enjoy the security and stability that a decent home provides. Cracking down on that fraud will reduce the benefits bill by moving households on the waiting list from expensive temporary accommodation into the newly freed up social homes.
It is worth saying that about 90% of responses to the government consultation were in favour of the new data access power. Councils already have similar data access powers for social security and council tax fraud reduction schemes. As well as tackling fraud that is already in the system, these regulations will help to prevent fraud by stopping cheats getting into the system in the first place. The Government want social landlords to tackle fraud in their housing stock and we must give them the tools that they need to do that. I am very pleased that this power will enable them to do so.
Sadly, it does not look as though I am going to be able to provide the noble Lord with any more information at this time about how we will ensure that local authorities place their use of these powers in the public domain. However, I will ensure that I follow up that information in writing. I am slightly frustrated that I cannot find it in my brief because I know that I read something over the weekend about providing information of this kind to allow for proper accountability and scrutiny. However, I am confident that I will be able to send the noble Lord forthwith a comprehensive letter in reply.
Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2014
Motion to Consider
That the Grand Committee do consider the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2014.
Relevant document: 22nd Report from the Joint Committee on Statutory Instruments
My Lords, this order will enable billing authorities in Wales to continue to contract out certain additional functions relating to the administration and enforcement of council tax, following the making of new regulations in relation to council tax reduction schemes for 2014-15 onwards.
I will first provide a brief overview of the legislative background. The Council Tax Reduction Schemes and Prescribed Requirements (Wales) Regulations 2012 and the Council Tax Reduction Schemes (Default Scheme) (Wales) Regulations 2012 introduced council tax reduction schemes in Wales for 2013-14. Schemes introduced under these regulations are now being successfully operated by local authorities as part of the council tax system.
However, as the 2012 regulations are limited to 2013-14 by virtue of a sunset clause agreed with opposition parties in the National Assembly for Wales, a new set of regulations has been brought forward to govern the operation of the council tax reduction schemes from 2014-15 onwards. These are the Council Tax Reduction Schemes and Prescribed Requirements (Wales) Regulations 2013 and the Council Tax Reduction Schemes (Default Scheme) (Wales) Regulations 2013.
It is now therefore necessary to update the references within the numerous pieces of interrelated subordinate legislation to take into account the new set of regulations that will govern the operation of council tax reduction schemes in Wales from April 2014 onwards. This work includes making the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2014. The purpose of the 2014 order is to enable billing authorities in Wales to continue to contract out certain additional functions relating to the administration and enforcement of council tax following the making of the 2013 regulations, which will operate from 2014-15 onwards.
This time last year the Committee approved the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2013. The 2013 order enabled local authorities in Wales, under the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) Order 1996, to contract out functions connected with the administration and collection of council tax. We wish to ensure that local authorities in Wales continue to have the freedom to contract out these administrative functions. The order being considered today amends the 1996 contracting-out order for Wales by substituting references to the 2012 regulations with references to the 2013 regulations.
The 2014 order will enable local authorities to continue to contract out the following administrative functions: the issuing of council tax reduction decision letters; the payment of a reduction amount under certain circumstances where the billing authority is of the opinion that it would be appropriate; the serving of a penalty notice in connection with an offence committed with a reduction; and the repayment of an amount paid in connection with a penalty related to a local scheme that has been subsequently quashed.
Although this order does not expand on the provisions that are currently in place for the administration of council tax reduction schemes, if it is approved by noble Lords it will carry out an essential function by enabling local authorities in Wales to continue to choose how to deliver their local schemes, whether that is by using internal resources, external providers or a mixture of the two. It is important that we provide local authorities with the tools they need to deliver a cost-effective council tax system. I commend the order to the Grand Committee and I beg to move.
I thank the Minister for that explanation. It is probably worth dwelling on the fact that this is not just needed because of the sunset clause. We need to go back further than that and think about why this needed to be done in the first place. It was necessary because in 2012 the UK Government abolished council tax benefit as part of the coalition’s Welfare Reform Act 2012. The responsibility for replacement schemes was passed on to local authorities in England and to the devolved Governments in Scotland and Wales. However, when it was handed over, there was of course then a cut of 10% in the funding that had previously helped people pay their council tax.
The IFS warned that 320,000 council tax benefit recipients in Wales would lose, on average, £74 a year and that this would hit the poorest the hardest, as 80% of council tax benefit spending in Wales went to those households with the lowest incomes. Unlike in England, where the IFS says that this approach has left 2.5 million households worse off by an average of £160 a year and has resulted in 500,000 people receiving summonses for non-payment, the Welsh Assembly has thankfully stepped in to protect this entitlement for those 320,000 people in the poorest households through a council tax reduction scheme. As the Minister has described, councils in Wales need to be able to contract out council tax services, as they do other services. For that reason it is important that the draft order is passed as quickly as possible, and the Government have our support in that.
What we have seen this week is a concerted effort—the start of an attack—by the current Government, pointing out problems in Wales. We have seen Grant Shapps come to Wales talking about problems we have had there and a concerted effort by the Daily Mail and the Times. This is an example of Wales understanding the needs and problems of the people and standing side by side with the most vulnerable. I do not suppose we will see any coverage of that in our newspapers in the next few days.
My Lords, I thank the noble Baroness for her support for this order. I would point out, in relation to her detailed comments, that my introduction referred to the 1996 scheme on which this is built. This is not a new system. It was introduced all that time ago and it has been adapted to the new council tax reduction schemes.
I make no apology for the fact that the Government have devolved responsibility for this to the Welsh Government. It is my view and that of the Government that this responsibility should lie with the Welsh Government and local authorities. It is right because council tax is levied by local authorities, and arrangements for reduction schemes should therefore also be made at that level.
In relation to the latter part of the noble Baroness’s comments, I would point out that fewer people are this year claiming for council tax reduction than in the previous year. In other words, fewer people are in the difficult circumstances that would ensure that they needed to make such a claim. That is part of the general series of symptoms of an upturn in the economy. The situation in Wales is getting very much better; some indicators suggest that it is doing so at an even faster rate than in the rest of the UK. Council tax is one of the areas of which the previous Labour Government lost control, and I make no apology at all to this Committee for the fact that the Government stepped in to take control. I commend the order to the Committee.
Whistleblowing at Work
Question for Short Debate
To ask Her Majesty’s Government whether they will implement the recommendations of the Commission established by Public Concern at Work on Whistleblowing.
My Lords, 100 years ago, the great American, Justice Louis Brandeis, said that electric light is the best policeman. The merits of transparency have long been recognised, and so too has it long been recognised that whistleblowing—making a disclosure in the public interest—is crucial to the promotion of transparency in public organisations. Almost 20 years ago, the Nolan committee said:
“All organisations face the risks of things going wrong or of unknowingly harbouring malpractice. Part of the duty of identifying such a situation and taking remedial action may lie with the regulatory or funding body. But the regulator is usually in the role of detective; determining responsibility after the crime has been discovered. Encouraging a culture of openness within an organisation will help: prevention is better than cure. Yet it is striking that in the few cases where things have gone badly wrong in local public spending bodies, it has frequently been the tip-off to the press or the local Member of Parliament—sometimes anonymous, sometimes not—which has prompted the regulators into action”.
We have seen the value of whistleblowers demonstrated over and over again, most recently in the revelation of scandals in the NHS. The Government recognise this and the Prime Minister has said:
“We will always back whistleblowers when they challenge poor standards, particularly in large organisations”.—[Official Report, Commons, 26/2/14; col. 257.]
He has also said that,
“we should support whistleblowers and what they do to help improve the provision of public services”.—[Official Report, Commons, 24/4/13; col. 882.]
And yet we are still some way away from a situation in which whistleblowers are adequately protected, and we are still further from the creation of a comprehensive culture in public institutions in which whistleblowing is encouraged.
Whistleblowing reveals wrongdoing in great public institutions and those carrying out functions in the public interest, but such institutions are always powerful, usually driven by a potent internal culture, and often inward-looking. Every case of whistleblowing challenges the powerful vested interests that run such institutions. After every scandal is revealed, after the abuses have been tackled and the guilty punished, and after the fine words about whistleblowers have been spoken, it is all too easy for those dominant interests to revert to carrying on much as they did before. The powerful never like being challenged.
The inward-looking culture that dominates so many of our great public institutions discourages whistleblowing. Repeated failures within the NHS have highlighted not only how important whistleblowers can be in protecting the public, but also how very difficult they find it if they try to expose incompetence and wrongdoing. These problems are not confined to the NHS. For all the police wrongdoing after the Hillsborough disaster that has now been exposed, for 20 years no one blew the whistle. No one blew the whistle on the scandal of MPs’ expenses, even though the Fees Office was well aware of the scams that were going on. There is clearly a need to do more to encourage and protect whistleblowers. Just this month, the National Audit Office made a series of recommendations for improvements, including the creation of a strategic lead within central government, a series of clarifications, and more effective communication of existing arrangements and protections. I hope that the Minister will consider those recommendations carefully.
The Public Interest Disclosure Act 1998 was a landmark piece of legislation providing statutory protection for whistleblowers, but it is now nearly 15 years old and it has never been reviewed officially. But the whistleblowing commission set up by Public Concern at Work and chaired by a retired Court of Appeal judge, Sir Anthony Hooper, has done so. Following a public consultation and research produced by Public Concern at Work, Ernst & Young and the University of Greenwich, the commission has made a number of recommendations aimed at changing culture and extending, simplifying and improving the processes for delivering protections for whistleblowers. If we are to give whistleblowers the protection they need, the Government need to address these recommendations and, if they are not willing to adopt them, at least give the reasons why.
I would be grateful if the Minister could give his response to the following key recommendations made by the commission. To help change workplace culture, the commission has recommended the introduction of a code of practice on whistleblowing that would set out best practice for employers, workers and whistleblowers. Similar to ACAS codes of practice, this code should be rooted in statute, taken into account by the courts in whistleblowing cases, and included in the inspection regimes of regulators. Will the Minister pursue this?
Next, legal protection for whistleblowing in the Public Interest Disclosure Act needs to be extended to prevent the blacklisting of job applicants, which is such a potent disincentive to whistleblowing. Protection also needs to be extended to those working in sensitive positions in organisations that could benefit significantly from encouraging and protecting whistleblowers. The definition of “worker” needs to be clarified—and there is some doubt about the current definition under the recent Enterprise and Regulatory Reform Act—so that it includes without doubt student nurses, doctors, healthcare professionals, social workers and general practitioners. It should also be clear that the term “worker” includes volunteers, interns, non-executive directors, professional partners, including partners in LLPs, priests and ministers of religion. These are all categories of worker listed under the Equality Act 2010 but not currently protected, or at least it is not clear that they are, under the provisions of the Public Interest Disclosure Act. Overseas workers raising concerns about their UK subsidiaries need protection as well. I would therefore be grateful if the Minister could confirm that the Government will find the first available legislative opportunity to extend such protections.
Whistleblowing protection needs to be extended to allow individuals seeking advice from trade unions to be more easily protected. Whistleblowing protection needs to be simplified to ensure that everyone understands that gagging clauses are illegal, to make the causation tests for dismissal and detriment the same, and to make sure that whistleblowers can easily raise concerns with regulators. Will the Minister undertake to do this?
At present, it is possible for wrongdoing to be buried in settlements as there is no open register of claims under the Public Interest Disclosure Act. In 2008, the then Government introduced a process whereby claimants could request that their claims be sent to the relevant regulators, but this process is not mandatory. Not all such claims were sent forward, and it should be mandatory. The employment tribunal process needs to be improved for whistleblowing claims, a register of claims under the Public Interest Disclosure Act should be made available to the public, and the referral of such claims to regulators should be made mandatory. Again, I would be grateful if the Minister could confirm that the Government intend to make progress in these areas.
There are also complex issues around extending whistleblowing protection to members of the armed services and those involved with national security. At the moment, national security whistleblowers enjoy no protection, even if the concerns they raise have nothing to do with national security but are about other issues such as human rights abuses, bribery, procurement and corruption within the chain of command. I should be grateful if the Minister would agree to look at these issues and write to me with proposals for extending protections in this area. Perhaps he could also copy the letter to those noble Lords who are taking part in today’s debate and place a copy in the Library.
Finally, the Public Interest Disclosure Act does not protect disclosures by workers, primarily in law firms, of information that is subject to legal professional privilege, even where the worker raises the concern with a senior colleague in their firm or with the client. This appears to be an anomaly as in both cases such communication would not be a breach of the privilege or of confidentiality, even though the information itself is privileged. There would therefore seem to be no good reason to deny the protection to such whistleblowers. I would be grateful if the Minister would agree to bring forward an amendment to that effect at the first available legislative opportunity.
I recognise that this is a long agenda for the Minister to address, but it is still not comprehensive. This is such an important area of public policy, with the potential to transform the way public services are delivered, that I hope the Minister will be able to engage constructively with it and make significant progress on all the issues I have raised today.
My Lords, I commend the noble Lord, Lord Wills, for bringing the Committee’s attention to and providing the opportunity to debate, the document that we have all received from the Whistleblowing Commission, which was initiated by Public Concern at Work. As I was a Member of Parliament for 18 years, I am very familiar with the charity Public Concern at Work. I have recommended it to many constituents who have come to me with problems because, as whistleblowers, they found themselves under pressure for trying to do what they saw as the right thing and becoming the victim. In some recent very high profile cases, we have seen appalling results that have happened to whistleblowers who have tried to do the right thing, particularly in very severe cases to do with the health service.
I support the request by the noble Lord, Lord Wills, to the Government to look at this and see if they can use this as a blueprint—that is what is being asked for—to implement and tighten up not only the way in which the public sector works as far as whistleblowers are concerned but to help prevent the need for people to feel that they have to whistleblow in the first place.
I shall focus on two aspects of the report in its summary of recommendations. As the noble Lord, Lord Wills, said, recommendation 1 is for a code of practice, which is outlined in detail at the back of the report. One of the points in the proposed code of practice, at section 8, is:
“Where an organisation publishes an annual report, that report should include information about the effectiveness of whistleblowing arrangements”.
It goes on to show that this should be incorporated as a normal part of what we would all regard as the essential reporting of governance of any organisation. It applies to the corporate sector as well as to the public sector.
This recommendation should be adopted because if an annual report is produced it should also show who at the top on the board of directors of an organisation—whether public or private sector—is responsible for overseeing that this happens, if that is what has been agreed. As a Member of Parliament, I was involved in cases in which potentially there could have been whistleblowers who might well have prevented some tragic happenings. Many that we started to investigate resulted in suspensions. For example, in the case of a hospital, staff were interviewed and asked why they had not said something earlier. A certain culture has developed in recent years, particularly in the public sector.
I am very pleased to see that the noble Earl, Lord Lytton, is in his place because in a similar debate a while back he gave me a quote that sums up this culture and why whistleblowing is so essential, so that people feel strong and secure enough to come forward. The noble Earl said that collectivisation of risk equals abrogation of individual responsibility.
I have experienced this culture myself. Where several people now share the risk and make collective decisions, that sounds all very well; but it often results in people asking, “Who is in charge and who will actually take a decision?” One often finds this culture in what I can only describe as process-driven organisations that are looking at processes rather than outcomes. That needs to be looked at that. If we can change it and if—as in this code of practice—there are people who have to take responsibility and publish what the outcome of that responsibility is, that should trickle down through the organisation and there should be less need for people to feel that they have got to blow the whistle. I believe that systemic problems will be identified in a much more structured way and before crisis point is reached. I therefore commend the code of practice.
The other area I particularly commend to the Minister is in recommendation 2, concerning regulators, in the summary of recommendations in the report. It is essential that regulators have a much more hands-on role in their inspections. We have heard of far too many cases lately in which regulators in different areas of the public sector have significantly missed huge, life-threatening problems, despite the fact that they have been into a premises, inspected its processes and interviewed people; and still tragic consequences have come about as a result of those regulators not asking the right questions or picking up on the really serious issues. Again, this is a really important area in which regulators should have a much more hands-on role in making sure they are involved, not just in identifying problems but in dealing with the policy of the organisation as far as whistleblowers are concerned, so that they can help prevent the need for whistleblowers in the first place.
Sometimes there is a little cynicism about people who whistleblow. Of course, occasionally one comes across a person who one might describe as a vexatious complainant. The noble Lord, Lord Wills, has been a Member of Parliament and he and I have had our fair share of vexatious complainants. However, most people who see what is happening in a workplace or in the organisation they work for and can see that it is causing harm to others should be supported, and know that the law is on their side and that there is something they can do about it.
My Lords, I should declare an interest in that 20 years ago I set up the charity, Public Concern at Work. I think it took me five or six years to persuade the Charity Commission that it should be given charitable status, but we got there in the end and it has done a wonderful job ever since. I commend the PCaW commission on this report. It is led by my old friend Tony Hooper—the right honourable Sir Anthony Hooper and a former judge in the Court of Appeal, I should say. There is no point in pretending that this is anything other than an incredibly vexed set of issues and that there is a great deal of fear where whistleblowing is concerned. There is also no point in disguising from ourselves the fact that we live in an age of collapsing standards. Over the past few years our own proud City of London has been embroiled in tragic and scandalous behaviour of all sorts. Great banks have completely lost their way. However, it is not just about us because this is a predicament across the developed world, and probably the underdeveloped world. The need for whistleblowing is therefore ever greater.
It is an extraordinary fact that in the LIBOR and PPI scandals and the foreign exchange rigging, apparently no whistleblowing went on. Those corrupt scandals lasted for years and involved hundreds of people—in the PPI case tens of thousands of people—all of whom knew that what they were doing was wrong. Most of them knew that it was unlawful and some knew that it was corrupt. The need, therefore, to act on the central provisions of this report certainly seems to be quite plangent. In saying that, I am not deluding myself, because I agree entirely with the noble Baroness, Lady Browning, that without an underlying moral cohesion of our society in the minds and hearts of ordinary people, no amount of law and regulation will succeed. The one can only buttress the other, but we need to buttress more effectively.
The Public Interest Disclosure Act 1998 was good as far as it went but, first, it did not go far enough. Some of the areas of insufficiency are set out in the commission’s recommendations. Secondly, I want to emphasise strongly that there is a total insufficiency of enforcement, a point that I hope the Minister will take back with him. Given the choice of putting much more effort into enforcement and making no changes to the law, I would go for the former every time. How many cases of fraud have been prosecuted on the back of evidence given by whistleblowers? The Minister may not know—it is not fair to spring it on him.
Perhaps I may mention Paul Moore of Halifax Bank of Scotland, who 10 years ago was dismissed for blowing the whistle on a state of affairs within that massive entity that was wrong and completely unsustainable. To give him his full title, Mr Moore was the head of Group Regulatory Risk and the good practice manager. After a great deal of in-depth inquiry, he reported to the main board, as he did at every board meeting, that the bank’s system was not sustainable. Indeed, one senior employer told him that to meet sales and marketing targets, the bank had to act unethically and that it could not be done ethically. That man has been blackballed in the City from that day to this. He never got an interview for any job he applied for and he was not offered a job. We have to understand, too, that we have a culture whereby people involved in certain aspects of our economy are themselves corrupted by all this, and who view anybody who tries to uphold the law as a traitor. Noble Lords would not believe what this man has been called in the intervening years. I have spoken to him about this at length and in depth and have his consent to mention these facts today.
I know that this is a difficult area of enforcement—I make no bones about it. It requires sensitivity, extreme tenacity of prosecutorial effort and a detailed knowledge of the law. Whoever takes this on will be met by legions of expensive lawyers and accountants because that is another feature of our times—the total disparity of resources in trying to uphold the law in relation to fraud and so on.
I commend recommendation 21 which asserts that tribunals dealing with the Public Interest Disclosure Act should be presided over by someone with specialist training in this field. We should look at what the Americans do, as they have a public authority with responsibility for dealing with whistleblowing. I think that is right. We need to go that way and have an authority—it may be small, but strong—which can uphold and enforce the law in conjunction with the prosecutorial authorities.
Finally, I believe that the most important body of recommendations in the commission’s report are those which beef up the role and the duty of the regulators in all aspects of our economy so that they have the power to require large companies to do something effective to enable whistleblowing to thrive to the benefit of companies, the economy and the country. That is the point, is it not? I wish well the Minister, the Government and all who have to take these important matters forward.
My Lords, I am particularly grateful to the noble Lord, Lord Wills, for securing this debate because I took quite an interest in the legislative framework on whistleblowing when the Enterprise and Regulatory Reform Bill was going through the House last year; and because I argue there are reasons for believing that the need for that framework to be as positive and supportive as possible grows ever greater by the day. Indeed, that point was made by the noble Lord, Lord Phillips. Some themes are beginning to emerge—that is just one of them—but I hope that it will do no harm if I underline one or two of them.
Research commissioned by the charity, Public Concern at Work—the organisation which commissioned the report whose implementation we are debating—has shown that in recent years, at least, attitudes to whistleblowing and whistleblowers are positive. However, it was not always so. This led to a series of Private Members’ Bills in the Commons during the latter half of the 1990s, sponsored by the then MP, Tony Wright, and the noble Lord, Lord Touhig, which finally culminated in the Public Interest Disclosure Act 1998, steered through by Richard Shepherd MP, which sought to give legal protection to whistleblowers against the negative reaction their conduct attracted from fellow workers and employers.
There are good reasons for keeping this legislation under review so that it remains fit for purpose. The commission whose report we are discussing makes a compelling case in its own terms for saying that it could do with updating and simplifying in a number of respects. Indeed, Public Concern at Work is much to be commended for commissioning this report, and the commission itself is to be congratulated on producing a report which is both comprehensive and lucid, and all within a modest compass.
I hope that nobody imagined that I was trying to pour cold water on any of its recommendations by upsetting my glass of water when the noble Lord, Lord Wills, was in full flood. He was in full flood and I am glad to say that I created only a minor one over here.
The report argues that PIDA is not working as intended, and that it could benefit from some amendment. Whistleblowing may be viewed in a positive light at a societal level but this is not commonly how it is experienced by the whistleblower at a local level, where whistleblowers are typically regarded as trouble-makers by their employers and traitors by fellow workers. Blacklisting of workers who raise concerns about health and safety issues is thought to be commonplace in the construction industry and is also found in other sectors. Lisa Martin, for example, who exposed serious abuse at the Orchid View care home revealed that she had been unable to get a job in the care sector ever since reporting her concerns to the police in 2011. Some workers have even had death threats. It is little wonder then that in such a climate, workers fail to speak up because of their concern that they will not be listened to or that nothing will be done at best, or from a fear of reprisals at worst. The report makes a number of sensible recommendations for dealing with the current legislation’s shortcomings in dealing with these abuses. I hope very much that the Government will look at them very seriously.
However, as I have hinted, the reasons for welcoming this report and urging its rapid implementation in full go wider. Such is the decline of trust in many of our key institutions—politics, the police, the NHS, the press and even the BBC—that whistleblowing now assumes a strategic significance, outstripping anything that it had before. There has been a succession of scandals, such as the Savile affair, Orchid View, which I have mentioned, the system of care homes in north Wales, the rigging of LIBOR and the foreign exchange market, price fixing in the energy industry, Hillsborough, the Mid Staffordshire NHS Foundation Trust and phone hacking at the News of the World. All those scandals show that once where we thought we could rely on the corporate culture to ensure that organisations behaved properly, and that if they did not, wrongdoing was brought to light and malefactors were brought to book, we now have to rely on the whistleblower as our last defence against the corporate culture which thrives on malfeasance. As the report says in its foreword:
“Effective whistleblowing arrangements are a key part of good governance. A healthy and open culture is one where people are encouraged to speak out, confident that they can do so without adverse repercussions, confident that they will be listened to, and confident that appropriate action will be taken”.
The commission makes a number of recommendations designed to promote this strategic role of whistleblowing and it is to those that I particularly want to draw attention. Recommendation 1, on which the noble Lord, Lord Wills, spoke at some length, says that,
“PIDA be amended to authorise the Secretary of State … to issue a code of practice on whistleblowing arrangements, and provide that such a code of practice must be taken into account by courts and tribunals wherever it is relevant to do so”.
The report contains a draft code of practice which is recommended to the Secretary of State as a basis for consultation. Recommendation 8 states:
“The Commission recommends a simplification of PIDA”.
Recommendation 10 suggests that,
“the Secretary of State uses the powers set out in Section 20 of the ERRA”—
Enterprise and Regulatory Reform Act—
“2013 to add”,
a number of categories of workers to PIDA, including job applicants who are victims of blacklisting.
Recommendation 25(d) suggests that the Government “undertake research” to assess, inter alia,
“whether a state sponsored agency could carry out strategic litigation and give legal support to whistleblowers (similar to the model of the Equality and Human Rights Commission and its work in discrimination cases)”.
The Government have given a commitment,
“to ensuring a strong legislative framework to encourage workers to speak up about wrongdoing, risk or malpractice without fear of reprisal”.
In their national action plan for open government, the Government have agreed to take into account the findings of the Whistleblowing Commission and to consider legislative change, statutory or non-statutory codes of practice, guidance and best practice measures. I look forward to the Government delivering on those commitments.
Finally, the Government launched their own consultation on the whistleblowing framework last July. It would be good to hear from the Minister about the progress of that call for evidence and when we are likely to get the Government’s response to the evidence received.
My Lords, I, too, congratulate the noble Lord, Lord Wills, on securing this debate, Public Concern at Work on setting up the commission into whistleblowing and the commission itself on writing what is an absolutely excellent report. Noble Lords will know that my interest stems in particular from police conduct and crime recording. Given the systemic fiddling of the crime figures, it is surprising how few internal questions were being raised, and as we now know, the problems of widespread cover-up went much deeper. I pay tribute to the many people who have put themselves at risk to blow the whistle. Were it not for them, many very serious cases would never have come to light. Even so, we know that bad practices continue and, indeed, that lives are at risk, so we have no reason to be complacent. Thank goodness that, in retirement, some former police officers have retained a conscience.
The report identifies problems with bullying, harassment and blacklisting of whistleblowers. Some are seen as troublemakers, as we have heard, and have been unable to secure further employment in their chosen field. My analysis is that blacklisting would be to no purpose if it were not for senior people still in post whose policies and activities might yet be exposed by that same whistleblower being restored to their position. Weak, if not actually corrupt, management protects them. That is a sign of a great deal of unfinished business.
Under the Public Interest Disclosure Act, whistleblowing comes within employment law. As any business knows, employment issues are a nightmare even if there is a fully fledged HR facility. Separating terms and conditions of employment from the objective reporting of corporate wrongdoing is almost impossible. The whistleblower must go to the line manager, but there is an obvious conflict of interest for the manager, to add to the confusion between employee conditions of work on the one hand and reporting of behaviour contrary to public interest on the other. Whistleblower protection is thus inadequate, and the current system is ineffective as well as the process being divisive.
At paragraphs 79 and 80, the commission explains one paradox where an employee claims a genuine belief that disclosure was in the public interest, but the employer can dispute this without first addressing the primary issue of whether there was corporate wrongdoing. Recommendation 12 specifically highlights the issue of workers “wrongly identified” as whistleblowers. I do not believe that the necessary change in corporate attitudes will happen on its own without some sort of push. However, information about corporate misdeeds is not confined to employees. It may be an outsider—a family member, business associate, subcontractor or even an observant bystander—who sees things and cottons on to the fact that something is amiss, possibly something not affecting employment at all. These people have no reliable avenue for raising concerns, so I maintain that the current construct is too narrow and that its scope needs to be widened substantially.
Follow-up for both employee and non-employee categories can be extremely patchy, as we have heard. There are numerous instances where an employee has gone to their line manager or people outside have gone to the police with their worries only to find that nothing happens and the evil persists. It is a failure of corporate social responsibility.
Where a systemic culture of cover-up and large-scale complicity exists, management can, quite literally, close ranks and kill the issue. This also happens in hierarchical bodies and in uniformed services, where the concept of not grassing on your mates is a particularly potent bond. The other concept of noble purpose—perhaps public order, saving lives, curing disease—may even override all other considerations, including decency, proportionality and justice. The scandals of some police-on-police internal investigations in response to whistleblowing are an example.
The noble Baroness, Lady Browning, quoted me, but in fact I am not the origin of the comment. It comes from a 2008 article in Policing by Barry Loveday of the University of Portsmouth. He links some of these aspects with the construct of performance management. He says that when applied to public sector bodies as opposed to manufacturers with measurable outputs of widgets and sales, the results are often this collectivisation of risk, avoidance of individual responsibility and abrogation of leadership. Mid Staffordshire NHS Foundation Trust had precisely that generic problem.
These mutually reinforcing factors mean that we have to be particularly vigilant in the choice of mechanisms that enable people to speak out when they feel a compelling need and protect them from reprisals when they do so. My suggestion would be to follow recommendation 25 in the report, in that we need a completely independent, sector-by-sector whistleblower ombudsman—I use the term broadly—in other words, a totally confidential, external and objective mechanism with enough expertise to distinguish personal employment issues from plain mischief making, and both of those from genuine public interest disclosure. It would need powers to act on the findings.
The question will be asked: how do we fund this? To which my answer is that if there was proper assessment of the distress to families and individuals of miscarriages of justice, the damage to employee prospects, the dereliction of public interest and even the deaths, then it would happen. Today’s press coverage of fraud in the NHS tells us that the present situation is, frankly, unaffordable.
However, the final problem may be at the top. I refer, of course, to the reluctance of Governments to countenance anything that discloses unsavoury reactions by the state, often for long periods afterwards. The unnecessary use of the Official Secrets Act and of public interest immunity certificates in judicial proceedings are examples of the same corporate lockdown as confidentiality clauses and gagging provisions that are used to protect guilty people and prejudice innocent public interest whistleblowers. These factors should be subject to judicial scrutiny, even if by closed session.
There is also a dangerous belief that some areas of endeavour are above suspicion. They are not and must not be. We can, if we wish, make provision in an organised way, or we can leave it to default through the court of the press, the web and social media. There is a choice, and I suggest that we get ahead of the curve. The commission has helpfully fired the starting gun in a report that covers a wealth of issues. I hope the Government are listening.
My Lords, I, too, congratulate my noble friend Lord Wills on initiating this debate. Contributing at the end, I find that the waterfront has been covered so well that I am almost tempted to say “ditto”. However, given my position as Front Bench spokesperson, I probably need to say a little more than that.
I went on to the website to look at the call for evidence and I noticed that it finished in November last year. However, I did not find a report. It may be that I missed it but perhaps the Minister could say whether any summary of the evidence has been published as yet. I can see a head shaking so it looks as though the answer is no. It has been quite a long while but no doubt we will be informed why. If the call for evidence finished in November, I would have thought that by now we would have had at least a summary, if not a complete report.
I concur with much of what my noble friend Lord Wills said. He made the point that the PIDA is now 15 years old. It may not be whiskery but given all the analysis we have heard today and the tributes we ought to be paying to Public Concern at Work—I was fascinated to learn that the noble Lord, Lord Phillips, was the instigator of that organisation—
I am terribly sorry. I should not mislead your Lordships. I was only the mere lawyer who set the thing up; I was not the impetus for it.
Okay. He played a significant role, we will say. It is not often that I dare to disagree with him, and his analysis is usually good, but when he said that if he had to make a choice between reform and enforcement he would go for enforcement, I did feel that that is not the advice we ought to be giving the Government. It is a 15 year-old piece of legislation and a very significant and comprehensive report—it ought not to be an either/or choice; it should surely be both. Reform is pointless without ensuring that we have adequate enforcement, as we have heard, with regard to all the difficulties that whistleblowers face.
I have to be careful how I comment on an issue that I was personally involved with recently as a school governor, when I saw what happened when somebody tried to deal with a difficult and sensitive issue. They were not exactly congratulated by all those concerned and it led to the individual feeling that they did not want to continue in their role as governor. The point has been made time and again: the pressures on people who try to blow the whistle are enormous.
I could not help but reflect on the comments made by the noble Lord, Lord Low of Dalston. He listed a whole range of organisations, in construction, care homes, the BBC, the police—the list goes on and on. We have heard so much of this. It was actually the noble Lord, Lord Phillips, who mentioned the E-word—ethics, although I heard it only once. I am always fascinated when people talk about what goes on in MBA syllabuses and business schools and I am constantly reminding them of the importance of ensuring that ethics is a part of training.
Someone else—I think it was the noble Earl, Lord Lytton—talked about corporate social responsibility. It is there in every annual report. In theory, it is in companies’ own interests to encourage whistleblowing. If you think of the cost when organisations fail—whether it is health and safety or PPI, for example—the payouts are enormous. Companies ought to have a strong vested interest in ensuring that all their procedures are right but we know that, time and again, whether it is the hierarchical resistance referred to by the noble Earl, Lord Lytton, or the sheer fear whistleblowers feel about the reaction from their colleagues—whether it is higher up in the organisation or, as we saw in Mid Staffs, your own work colleagues—it takes a brave person to become a whistleblower. There is no guarantee that what you are doing, even if it is deemed to be in the public interest, means that you will be seen as a hero. The reverse can happen: not only can you lose your job but you can then fail to get employment elsewhere.
Without going through every single recommendation of the report—I do not think that I need to do that because so many of them have already been highlighted—there was one that I wanted to draw out, which was mentioned by the noble Earl, Lord Lytton: the question of whether workers who are wrongly identified as having made disclosures should be protected. I was interested in that because the Public Interest Disclosure Act says that the protection provided by the Act is not subject to any qualifying period of employment, so it is referred to as a “day one” right in employment law. Yet here, Public Concern at Work was saying, “Well, where the worker is wrongly identified as a whistleblower, there is a possibility that they will not get that ‘day one’ right to protection”. I hope that the Minister will be able to cover that in his response.
As regards all the points that have been made on regulation and being clear about what we mean by a worker—my noble friend Lord Wills was absolutely right when he gave us a long list of workers where it is doubtful whether they are necessarily included—I do not need to go through those again because they have already been adequately made. However, I look forward with interest to the Minister’s response, especially to the point I made about the call for evidence.
My Lords, I am grateful to the noble Lord, Lord Wills, for initiating this important debate. As we have heard, whistleblowing is a sensitive issue which continues to be in the spotlight, bringing public matters of concern to our attention.
The noble Lord, Lord Wills, my noble friend Lord Phillips and the noble Lords, Lord Low and Lord Young, highlighted some examples—in the case of the noble Lord, Lord Young, a personal example—of incidents or tragedies that may well have been avoided if those people who had spoken out had been heard and some action taken. The noble Lord, Lord Wills, raised a number of questions, and I will certainly attempt to answer them all during this debate. If I fail to do so, I will write to the noble Lord and copy in all noble Lords who have contributed today.
As noble Lords will be aware, the Public Interest Disclosure Act was introduced in 1998 to provide protection in the workplace to individuals who make a disclosure which is in the public interest. The noble Lord, Lord Wills, described it, correctly, as “landmark” legislation. Where disclosures are made in good faith and in the specified way, the law protects the whistleblower from unfair dismissal, from being victimised by the employer or from otherwise suffering a detriment at work.
Last July, the Government renewed their position in support of the important role whistleblowing can play in a workplace by further strengthening the legislation. Through the Enterprise and Regulatory Reform Act, we made a number of changes to the whistleblowing framework. We introduced a public interest test, which requires an individual who brings a claim at an employment tribunal to show that they had a reasonable belief that their disclosure was in the public interest. That brought the law back in line with its original intention.
We made an amendment to the good faith test so that it is relevant to remedy and not liability, meaning that it affects the compensation an individual may get if they win their case rather than the outcome of the case itself. Previously, if an individual was unable to show they had made their disclosure in good faith at an employment tribunal, their case could fail. Now, even if an individual is unable to demonstrate good faith, they can still win an employment tribunal claim. However, any compensation awarded in respect of that claim may be reduced by up to 25%.
We also introduced vicarious liability, which ensures that an individual who has suffered a detriment from a co-worker as a result of blowing the whistle can bring a claim against both the co-worker and the employer, who may be vicariously liable for the actions of the co-worker. We made an amendment to the definition of “worker” to include certain contractual arrangements in the NHS to ensure that certain NHS workers, including GPs, would qualify for the whistleblowing protections. We also inserted a power enabling the Secretary of State to make further changes to the definition of worker by secondary legislation, so that the law can be kept current in this respect. To echo the words of the noble Lord, Lord Low, many of those changes are a result of the hard work of groups such as Public Concern at Work—which the noble Lord is speaking for today—that bring important issues to the attention of the Government.
During the passage of the Enterprise and Regulatory Reform Bill, the Government also committed to reviewing the whistleblowing framework through a call for evidence to identify whether further changes were required to improve the effectiveness of the legislation. The call for evidence was held between July and November last year, and officials in the Department for Business, Innovation and Skills are currently analysing the submissions. It involved a thorough process where discussion sessions were held, meetings with interested parties took place and responses were submitted by 81 individuals or organisations. My noble friend Lady Browning stated that she hoped this would be a blueprint for the future, and I hope so too. As part of its analysis, the department is taking into account all the submissions, including the recommendations made by the PCaW commission. I have had sight of the initial analysis produced by officials. Many of the issues raised here today by noble Lords and by the PCaW commission’s report have been taken into consideration.
My noble friend Lord Phillips spoke passionately, focusing particularly on enforcement. I do not wish to pre-empt the Government’s response, which I believe will be published before the Easter Recess—which I hope answers the question from the noble Lord, Lord Young—but it might be helpful if I outline for your Lordships today some of the key issues that have been established through this process.
First, we have established that there is a level of basic misunderstanding in relation to the provisions acting as a protection against detriment rather than providing a remedy once that detriment has occurred. Secondly, there is a high level of concern that the issues that are raised by whistleblowers internally to employers rarely become the focus of the employer’s attention. The focus tends to be about the existing working relationship between the worker and the employer. For example, if a concern is raised with an employer about inconsistent safety practices witnessed on a worksite, the expectation of the individual would be for the employer’s focus to be on the concern that they have raised, not on scrutinising the individual’s employment history as a way of deflecting attention from the concern itself. As my noble friend Lady Browning said, the focus should be on the issue, not just on the process.
Thirdly, the culture around whistleblowing seems to be the driving force behind negative responses to disclosures and the resulting victimisation or detriment that the whistleblower may suffer. Fourthly, it is of concern to the Government that practices and standards for handling whistleblowing disclosures made externally—to regulators, for example—are inconsistent across organisations, with a disclosure often negatively received. My noble friend Lady Browning made a particular point of this issue, while my noble friend Lord Phillips spoke about beefing up the power of the regulators.
I want to say a few words about regulators, because the Government recognise that there is more that the regulators could do to reassure the whistleblower that the disclosure is being dealt with, given that the whistleblowing legislation is designed to deal with the detriment that a whistleblower may suffer rather than the issue of the disclosure itself. There is a challenge here for the Government to identify an appropriate solution in this area, but I assure the Committee that efforts will be made to do so.
This is not a new issue to us and we are considering how to address it in practical terms. The answer here will most likely fall to addressing cultural behaviours—the noble Lord, Lord Young, mentioned the important point that there is a close link between cultural behaviours and ethics—as well as through the legislative framework itself. Obviously we want to ensure that the level of understanding is correct and that individuals are willing to speak out without fear of reprisal. However, we also want to help business to understand the benefits that whistleblowers can bring to an organisation through helping to tackle corruption and malpractice by aiding the early detection of issues so serious that they can destroy businesses or even threaten life. The Government believe that the most effective way to do this is by setting direction and sharing best practice while giving employers the space to get it right in the way that works best for their organisations. Mandating best practice through statutory measures is not necessarily the best means to achieve the cultural change that is needed.
As I have already said, it would be imprudent and inappropriate of me to pre-empt the government response. However, I assure the Committee that a thorough review of the framework has taken place through the call-for-evidence process and that the outcome of the exercise will be available shortly. That is as far as I can really go in answering the question about timing from the noble Lords, Lord Low and Lord Young. We will continue to work with organisations such as PCaW to implement any changes that may come about as a result of the response to the call for evidence.
My noble friend Lord Phillips asked how many cases of fraud have been prosecuted. We have statistics for how many claims have been brought at employment tribunals by those who have suffered a detriment as a result of blowing the whistle. However, we are unable to confirm the number of fraud cases that have been prosecuted as a result of those disclosures. I will be very happy to try to establish the number and to write to the noble Lord on that point.
The noble Lord, Lord Wills, who has been very patient, raised a number of points that I will address. First, on the matter of codes of practice, the Government agree that guidance on best practice needs to be improved to drive up standards and consistency across all organisations. Indeed, there are many examples where non-statutory guidance is an effective tool for ensuring certain standards within industries or sectors. For example, there is the fair access protocols advice that the Department for Education has developed to provide advice to help local authorities and schools understand their obligations and duties in relation to the schools admission code.
Furthermore, there are industry codes of practice, such as those used in the oil and gas industry, which are an effective means for self-regulation within a sector. Those examples demonstrate that statutory codes and guidance are not always required to drive certain behaviours, compliance and standards. However, as this is a matter that has come up in the call for evidence, I can assure noble Lords that the Government are currently deciding the best approach for ensuring that standards for whistleblowing are consistent.
The noble Lord, Lord Wills, and my noble friend Lord Phillips asked if the Government will do anything to address the issue of whistleblowers becoming blacklisted as a result of making disclosures, which was an important point. The Government are clear that blacklisting is a totally unacceptable practice and do not support it. Individuals who believe that they are being excluded from employment because of a blacklist should seek redress in the county courts in England and Wales, or Court of Session in Scotland, under the Employment Relations Act 1999 (Blacklists) Regulations 2010. While there are protections in place for this type of treatment, there is more to be done than just leaving individuals to rely on a legal protection.
The noble Lord, Lord Wills, asked about adding additional groups to the definition of worker. We are aware of some of the groups of people; noble Lords have raised groups that have been identified as not qualifying for whistleblowing protection in the event that they make a disclosure. The provisions do not definitively exclude some members of those groups. However, the Government are again looking at this issue and hope to strike the right balance to include those where there is clear detriment suffered and the appropriate remedy for address.
The noble Lord, Lord Wills, asked about the anti-gagging clause. The Government believe that the legislation on the invalidity of the gagging clauses is clear. However, these are not applicable in respect of a disclosure. The guidance around that issue will be updated to make it clear. In addition, he asked whether the Government will consider adding trade union representatives. The answer is that any further changes to the prescribed persons list will be considered at a point when the list is next revised.
The noble Lord, Lord Wills, asked about claim referrals. The Government are looking at the system of referrals in the employment tribunals as part of the call for evidence and will report on that in due course.
I fear that I am just out of time. There are a couple of questions that I certainly will endeavour to answer by letter to the noble Lord, Lord Wills, and, indeed, any other noble Lord who asked a question.
I hope this reassures noble Lords that the Government have been listening to a wide range of views on this important matter and that they will be taking steps to address these issues where possible.
Finally, I will be happy to send a copy of the government response when it is published—and I have said that that will be soon—to all those taking part in this important debate.
Committee adjourned at 6.53 pm.