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Lords Chamber

Volume 762: debated on Monday 29 June 2015

House of Lords

Monday, 29 June 2015.

A minute’s silence was observed in memory of the victims of the shootings in Tunisia on 26 June.

Prayers—read by the Lord Bishop of St Albans.

Disabled People: Access to Work Fund

Question

Asked by

To ask Her Majesty’s Government what assessment they have made of the effectiveness of the Access to Work fund and what plans they have to help people with disabilities into work.

My Lords, last year Access to Work helped more than 35,000 disabled people to work, including almost 2,000 into self-employment. Disabled people and stakeholders consistently tell us of the effective support that Access to Work offers. A wide range of employment support programmes underpins our success. We are building on this by launching specialist employability support, expanding the Disability Confident campaign, extending work choice and expanding the use of our Access to Work mental-health support service.

My Lords, an Access to Work grant is a lifeline helping disabled people to find a job and stay in work, so I am sure I was not alone in being surprised last week when the Minister for Disabled People seemed almost to boast about the fact that his department had underspent the fund’s budget by £3 million last year. In those circumstances, will the Minister tell the House why the Government are cutting the grant that disabled people can receive under the fund and why they have failed to publicise the fact that the fund even exists? How will this help the Government to honour their pledge to cut the number of unemployed people by 50%?

My Lords, Access to Work is not being cut. We are introducing a cap, which means that the resources available can support growing numbers of people. We are determined to reduce the disability employment gap by half and to spend more money on these programmes. It is a demand-led programme. The cap will ensure that we can reach far more people, and, indeed, we did just that over the past year.

Does the Minister accept that when the bulk of personal independence payment reassessments start in October, when thousands may lose their Motability cards, the Access to Work scheme is likely to be overwhelmed by disabled people trying to get to work, particularly in rural areas?

As I said, Access to Work is a demand-led scheme. Nobody has ever been turned away from it. The reforms to PIP are about taking money away, but not from those who need it. Therefore, the reforms will deliver a more dynamic benefit system whereby we can tailor support to meet people’s needs as they change over time, and Access to Work will be available to more people.

My Lords, as the Minister said, the Government aim to halve the disability employment gap so that hundreds of thousands more disabled people who can work, and want to be in work, find employment. This is an ambitious aim, and I wonder how far the Minister believes it will be assisted by capping the amount that an individual can receive from the Access to Work programme. A cap at one and a half times the mean average salary may sound generous, but it could limit the effectiveness of the scheme for those with the greatest obstacles to labour-market participation, such as deaf people who need the support of a sign-language interpreter. Will there be any flexibility in the administration of the cap to cater for cases such as these?

I reassure the noble Lord that the cap for existing claimants will not be introduced until 2018, and we will work sensitively with all those affected to ensure a smooth transition from the support they currently get to an alternative form of support under the new arrangements. More than 35,000 people are currently in the Access to Work programme and 200 will be affected by the cap. As I said, nobody currently receiving more than the cap will lose any of their support until we have worked through the programme of transition over the next three years.

My Lords, does the Minister agree that misconceptions about people with disabilities, particularly mental health problems, could cause them real difficulties in finding a job? What are the Government doing to help to remove this sort of stigma, particularly among employers?

I agree with my noble friend, and that is why the Government’s campaign to make Britain disability-confident is so important. For individuals with mental health conditions, we provide a wide range of support across our programmes—and there are many such programmes—targeted at supporting work for both employers and individuals. We are very conscious that all disabled people who wish to work have a right to support from the Government to help them to do so.

My Lords, perhaps I may press the Minister a little about the very real concerns of many people in the deaf community about the use of British Sign Language, not least because currently four-fifths of the highest-value awards are paying for BSL services. Indeed, the DWP’s own figures show that almost 90% of the users who will be affected by the cap that is to be brought in are deaf. How do the Government plan to continue to support and encourage deaf professionals on a par with the hearing community in the light of this cap?

I reassure the right reverend Prelate that we will continue to support deaf people and people with hearing loss. Specialist teams will help customers and their employers with advice on adjustments and technological support and with personal budgets so that users can manage their support flexibly themselves when the scheme is rolled out later in 2015-16. We are also in discussions with relevant stakeholders about how best to plan the implementation. As I said, existing customers will be protected until 2018 while we work through the transition.

My Lords, how will the department monitor the impact of the cap on Access to Work funding from the day it is introduced?

We will carefully monitor all our programmes. Access to Work is one of the many programmes that we have introduced and are planning to roll out to protect the disabled and help them to work if they want to, as many do. Last year, we ensured that nearly a quarter of a million more disabled people had work. That is a tremendous success, and our programmes are working.

My Lords, it has been rolled out. It is already out there, and the Government are limiting the budget. Will the Minister follow up on the questions asked by the noble Lord, Lord Low, and the right reverend Prelate? Of the 200 people affected, 90% are deaf. They will not be protected in the long run; they will lose the money to pay for their interpreters. Advice is helpful. Interpreters are essential. How will the Government protect them?

We are introducing a range of programmes. Access to Work was never designed to be an unlimited-cost programme. We will ensure that all those who are potentially affected by the cap will have more flexible support to help them as they require it.

Vehicle Excise Duty: Carbon Dioxide Emissions

Question

Asked by

To ask Her Majesty’s Government whether they plan to change the basis on which Vehicle Excise Duty rates for new cars are calculated by carbon dioxide emissions alone.

My Lords, the Chancellor keeps all fiscal instruments under review. Any changes are announced at the appropriate time.

I congratulate my noble friend on that Answer. The Budget will be with us shortly, but will the Chancellor bear in mind that the present system strongly favours diesel cars, whereas we now know that nitrogen oxide emissions are far more harmful than CO2 emissions? Will the Government consider moving to a system that takes emissions of both gases into the equation? While they are about it, will the Government look at the testing regime? At present, this is a laboratory-based system, which bears little relationship to what one actually gets out on the road.

My Lords, the Government do not explicitly promote diesel cars. The current tax system, introduced in 2001, covers the purchase of cars with low CO2 emissions, regardless of whether they are petrol or diesel. I hope I can be a little more helpful on my noble friend’s question about testing. I am pleased to report that work has been going on for some time, at European and international level, to provide better testing. Although they will still be laboratory tests—so that they can be replicated around the world—a more accurate database will be included, which will more accurately simulate actual driving conditions.

My Lords, will the noble Lord reconsider the answer he gave on whether the Government promote the use of diesel cars? I drive a diesel car, which I am rather ashamed to admit now that I know about the particulates that are emitted by it. However, that diesel car pays no road tax and, currently, no congestion charge. That may not be active promotion but it is certainly implicit promotion.

I was referring to vehicle excise duty which, under the system introduced in 2001, simply addresses the amount of carbon produced. It does not promote one form of car over another: it just incentivises less carbon.

My Lords, given the goals of tackling climate change, getting clean air and developing an ultra-low-emission vehicle industry in this country, where we have a chance of becoming a leading manufacturer, would it not be wise to continue to make sure that VED benefits are targeted at the ULEV sector so that we do not lose the advantages we have gained, since we do not yet have a sustainable market?

The noble Baroness is correct that we should encourage vehicles that produce low emissions. The Government are investing in a wide range of measures to help improve air quality. Since 2011, the Government have committed more than £2 billion in measures to reduce transport emissions. These measures will address both nitrous dioxide emissions and particulates.

My Lords, perhaps I may suggest to the Minister a way round this. The Supreme Court has suggested that the Government should produce a national plan to fix our air pollution problem. Something on the vehicle excise duty could go very nicely into that plan and make quite a lot of headway.

The noble Baroness’s interest in this subject is well known and I agree with her that there are many things that could be done. However, it is about more than just vehicle excise duty—55% of nitrous dioxide emissions come from sources other than transport. However, I take the point about the Supreme Court judgment. We are committed to working towards full compliance with that and are reviewing the UK air quality plans, which will be finalised by the end of 2015. Consultations will take place before that.

My Lords, Defra, in its policy paper dated 8 May 2015, states:

“Air pollution, for example from road transport, harms our health and wellbeing. It is estimated to have an effect equivalent to 29,000 deaths each year and is expected to reduce the life expectancy of everyone in the UK by 6 months on average, at a cost of around £16 billion per year”.

Does the Minister stand by that statement and does he agree that all future government modelling of the economic impact of changes to vehicle excise duty must consider these very significant costs?

The noble Lord makes an important point. I agree with what Defra said; that is why the Government are investing more than £500 million between 2015 and 2020 to support the uptake of ultra-low-emission vehicles, with the aim of all new cars having no tail-pipe emissions by 2040.

UK: Number of Households

Question

Asked by

To ask Her Majesty’s Government what was the increase in the number of households in England and Wales between 2010 and 2014; and, over that period, what were the number and proportion of households where the head of the household was not born in the United Kingdom.

My Lords, the most recent statistics for England, published on 27 February, include an estimate for England of 22.7 million households in 2014 compared with 21.9 million in 2010. This represents an increase of 0.8 million households, equating to a 3.6% increase over that four-year period. Government data show that, in 2014, 15% of heads of households across England and Wales were born outside the UK.

My Lords, I declare an interest as chairman of Migration Watch. I thank the Minister for her reply, which suggests that we are now forming new households at the rate of about one million every five years. Does the noble Baroness agree that the proportion of new households that have an immigrant head is a major factor in housing demand? Is she aware that, today, the Office for National Statistics has published a table showing that almost all households in the last four years were headed by someone born overseas? Finally, will she make sure that future publications by her department make absolutely clear the impact of immigration on housing, a major concern to the British public?

My Lords, I thank the noble Lord for furnishing me with a figure beforehand of an increase of two-thirds. I have asked the ONS to look into this figure and if he is agreeable, I will confirm it in due course. In terms of supply and demand, we are focusing on both those things. We are doing many things to address the demand on housing in this country from overseas, including tightening the rules for family and student visas.

My Lords, does my noble friend agree that the country has benefited from both skilled and, to some extent, unskilled immigration, but that the appropriate measure of the extent to which this is so is not GDP growth but GDP per capita? Judged by that standard, the evidence is somewhat doubtful. Does she further agree that GDP growth reflects nothing but population growth, is of no particular economic advantage and, as the noble Lord, Lord Green, has pointed out, merely adds to the pressure on infrastructure and housing?

There is no doubt that there is pressure on housing demand from all sorts of sources, including immigration. The point that I was trying to make is that we want skilled people to come here to fill some of the skills gaps, but we do not want people simply coming here to look for work without having secured a job.

My Lords, would it not be a far more positive approach to stop blaming immigration for the lack of housing and to start building more homes?

My Lords, we are building more homes. In fact, nearly 800,000 homes have been built in this country since 2009. However, I agree that, yes, we are in danger of blaming immigration for everything.

My Lords, does the Minister agree that the term “head of household” was dropped in relation to the electoral register many years ago because it was often interpreted as meaning men? Secondly, does she agree that in looking at the figures of people who were born overseas, it is important to distinguish the multifarious reasons why people are in that category? For example, until 30 years ago a British mother outside the EU was not able to pass on British citizenship unless the child was born in Britain, whereas a British father could. Can we not have a great deal more accuracy when we are looking at this issue?

My Lords, I agree with the noble Baroness that we tend to look at things in rather a blanket way, that “head of household” suggests a certain person—namely, male—and that the reasons for immigration are many and varied. I am an immigrant myself: my family came here in the 1970s because my father got a job here. One reason may be to flee persecution. The noble Baroness is absolutely right.

My Lords, could the Minister answer my noble friend Lord Lamont’s question about whether GDP per capita is a more sensible measure of growth? In particular, what percentage of GDP growth is accounted for by immigration?

My Lords, I do not have those figures to hand but I am very happy to write to the noble Lord and furnish him with them.

My Lords, are the one-third of hospital doctors who were born overseas considered when heads of household are calculated? Surely that would transform our whole idea of the value of people coming to this country.

The noble Lord makes a very valid point about acknowledging the contribution to this country that immigrants make. As I said in my previous reply, my father came here as a doctor from Ireland. People who come to this country to fill those sorts of highly skilled jobs make a very valuable contribution to our economy.

My Lords, how do the Government think that the sale of housing association homes is going to assist with the housing crisis?

My Lords, the sale of housing association homes is going to assist in the sense that for every one that is sold, a new one is going to be built.

My Lords, on the value of migrants to the health service, does the Minister not think it bizarre that the 2012 Immigration Rules now state that unless nurses from other countries who come to work here earn more than £35,000 a year, after six years they will have to go back home? Is that not, as I say, a bizarre change for the Government to make when we are crying out for nurses both from overseas and from this country?

My Lords, nurses, doctors and other health workers are vital to keeping the NHS going and we would not want to do without them.

Advertising Standards Authority

Question

Asked by

To ask Her Majesty’s Government what is their assessment of the performance of the Advertising Standards Authority.

My Lords, the Government support the system of co-regulation for broadcast and self-regulation for non-broadcast advertising enforced by the Advertising Standards Authority. Overall, we believe that this regulatory system has worked well for both consumers and advertisers, and I support the Government’s assessment in the 2013 digital communications policy paper that it is an exemplar of successful self-regulation.

My Lords, I declare an interest as a partly successful recent complainant. The Minister will know that the ASA is a self-regulating body and is funded at one remove by the industry. In those circumstances, does she think that it is acceptable for such a body not to have to observe the rules of natural justice when hearing complaints? There is no obligation to share material with both sides. The authority sometimes fails to seek expertise and evidence when necessary, fails to give adequate reasons for its judgments, fails to follow precedents and makes its own appointments. What assurance can she give us that the governance of this body will be brought into line with that of other complaints-handling bodies? Should it not be on a statutory basis, ensuring that justice is done to both sides?

My Lords, the system has been proven to work well for more than 50 years, and of course the ASA Council is chaired by the noble Lord, Lord Smith of Finsbury, who after a review in 2014 put in place a new strategy aimed at being more proactive and efficient. I think that that has improved the speed of response and customer satisfaction. ASA rulings are subject to review by the Independent Reviewer of the Rulings of the ASA Council, and if an interested party remains unhappy, they have recourse to the courts through judicial review. There are pluses and minuses to this type of system, but I believe that the advantages outweigh the disadvantages.

My Lords, what is the policy of the ASA on getting expert advice when an advertisement has been complained about, particularly when the matter involves difficult scientific or political issues?

My Lords, the ASA can engage external expert advice on a case-by-case basis. I think that it is on occasions when claims are capable of objective assessment and the evidence provided would merit such external expertise. Of course, the ASA itself has a bench of experts, but it is possible for it to bring in extra scientific expertise if it needs to do so, and no doubt advisers on political issues, although the make-up of the council probably means that it is quite experienced in these matters.

My Lords, as chairman of the ASA, can I ask the Minister if she agrees that, taken as a whole, the ASA’s work is a good and effective example of self-regulation and co-regulation? Last year the authority dealt with 37,000 complaints about 17,000 advertisements, and its work resulted in almost 3,500 ads being changed or withdrawn. While of course we will never get absolutely everything right, we have a strong and independent review process in place which in fact worked very effectively in relation to the case brought by the noble Baroness herself.

I am very grateful to the noble Lord for setting out these facts so clearly and succinctly. I would add that the flexibility of the ASA, which he has not mentioned, is a big advantage—the way it was able to jump in in the 1990s and take on online ads and look at those showed that. It also ensures a strong industry stake in maintaining the system, ensuring high levels of consumer trust and, of course, good enforcement, because the industry is involved in making this a success.

My Lords, the Minister has given details about what has been done. Can she tell us that they are satisfied that the ASA meets the criteria of the EU Directive 2006/114 which, as I am sure the Minister knows, requires the UK to provide,

“effective means … to combat misleading advertising”,

with recourse to the courts. Despite the eloquent responses of other noble Lords, the ASA is not a court.

Yes, my Lords, EU Directive 2006/114 concerns misleading and comparative advertising to traders in the UK, and by agreement the ASA administers the UK advertising codes. The system works well. It is a good, collaborative arrangement, with good back-up.

Does the Minister agree that one of the problems here is that the ASA is called the Advertising Standards Authority, when it is not in fact a statutory body at all. As we have heard, the ASA is a body funded by the advertising industry, which rules on complaints against the advertising industry. I am a great fan of the noble Lord, Lord Smith, but surely not even he can change the fact that self-regulation rarely works. Does not its lack of statutory independence fatally undermine whatever credibility the ASA may have?

My Lords, I cannot agree with the noble Baroness. The system works well for all the reasons that the noble Lord, Lord Smith, articulated. We should stick with it and make sure that it continues to improve—which, I understand, is exactly what the Council is trying to do.

I wonder whether my noble friend would agree—and certainly the noble Lord who is in charge—that gambling is still a big problem. As someone who could easily be on the verge of becoming a compulsive gambler in the middle of the tennis season, I point out that there is an advertisement that says, “If you know whether the person who won the first set is going to win the match, press the button. It’s a free vote and we will pay you if you win”. I can only confess that my finger is starting to itch when they do that. Other people must be in the same position; they must go the whole hog and stay there, losing more money than they possibly can afford. Please would they pay special attention to the gambling advertisements?

My Lords, the noble Baroness is right. Of course, this is not a matter for the ASA alone. Regulations governing gambling, marketing and advertising are shared with Ofcom and the Gambling Commission. The Government are committed to ensuring that people, particularly the young and vulnerable, continue to be protected from being harmed or exploited by gambling—and also, of course, people in the later stages of life.

Cities and Local Government Devolution Bill [HL]

Committee (3rd Day)

Relevant documents: 1st and 2nd Reports from the Delegated Powers Committee, 2nd Report from the Constitution Committee

Amendment 42A

Moved by

42A: Before Clause 8, insert the following new Clause—

“Access arrangements to combined authority meetings for the press and public

(1) The Secretary of State shall, by regulations, provide that, where a meeting is held—

(a) between a mayor established under the provisions of this Act and the relevant combined authority;(b) by the leaders of a combined authority;(c) by an overview and scrutiny committee of a combined authority,arrangements must be made, so far as is reasonably practicable, to allow reasonable access to the meeting for the public and the press.(2) For the purposes of this subsection (1) “so far as is reasonably practicable” means to the extent possible to allow transparency of proceedings and decisions, while taking into account—

(a) the need for unencumbered advice from officials, and(b) the need to protect commercial confidentiality.(3) For the purposes of subsection (1), “reasonable access” may include but is not restricted to—

(a) attending and viewing the meeting,(b) taking notes of the meeting, and(c) taking a visual or audio recording of the meeting.”

My Lords, Amendment 42A concerns media and public access to meetings, addressing issues around the right of the press and the public to have access to the meetings of combined authorities. Existing statutory requirements enable the press, the media generally and the general public to attend, view or listen to council meetings, council committee meetings and council sub-committee meetings. These regulations are well understood in terms of their requirements and their spirit. Alongside the right to attend meetings, there are rights to receive advance notice of meetings, to see agendas in advance and to inspect relevant documents.

This amendment seeks to ensure that those rights of access cannot be diminished in the case of combined authorities. It requires reasonable access to be ensured and, in subsection (2), acknowledges the need to ensure that commercial confidentiality is protected and for officials to feel able to give essential advice to those who are charged with making decisions. Both criteria are, of course, within the existing regulations for local government.

Why, therefore, does the Bill fail to make any mention of an obligation on the mayoral authorities which it creates to meet in public? Members of the public and the media currently have a general right to attend council meetings, including those of the local authority executive or the cabinet and their committees. They also have the right to film, audio record, tweet or blog from those meetings. These rights are primarily set out in the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012 and the Openness of Local Government Bodies Regulations 2014. Given the freedom that the Secretary of State will have to set up the new authorities by ministerial order, there is great potential for them to be watered down unless the rights of the public and the press are protected by being placed firmly in the Bill.

Given the importance of overview and scrutiny committees, will the Minister tell us the intention behind Schedule 3, which contains an enabling power allowing the Secretary of State to block disclosure of information to an overview and scrutiny committee and to determine what material it, in turn, can put into the public domain? This amendment seeks to address these concerns. I look forward to the Minister’s confirmation that there will be no diminution of the right of the press, the media generally and the public to attend meetings of combined authorities as they currently do within local government.

My Lords, we are fully committed to openness and transparency in the proceedings of local government and have already moved amendments to that effect. However, as the noble Lord, Lord Shipley, said, we need to be sure that nothing in or arising from the Bill could dilute or disapply existing public rights of access to meetings, records and related documents. The noble Lord has also posed a pertinent question on Schedule 3.

There may be a lack of clarity over the precise circumstances envisaged in subsection (1)(b) of Amendment 42A concerning,

“leaders of a combined authority”.

Presumably, the provision applies when they are meeting as members of that combined authority rather than otherwise. Perhaps that needs clarification. We have generally argued for dealing with matters on the face of the Bill, so we look forward to assurances from the Minister that the issues raised here are already covered. To the extent that they are not, we will work with the noble Lord, Lord Shipley, to fill any gaps on Report.

My Lords, this amendment is in my name as well. Yes, it is important to have powerful leadership in metropolitan areas, and yes, it is important that we have transparency. In my own local authority in Liverpool, the elected mayor, in his infinite wisdom, has decided to do away with scrutiny, so there are no scrutiny committees at all. That should not happen in this case, so it is very important to clearly make the point that not only should there be transparency in all actions under the new arrangements but, where papers are relevant, the papers should be freely available to the general public—to the electors—and, where possible, those electors should be allowed to attend those meetings if they wish. If we do that it will give people real confidence about the new arrangements. They will feel that the arrangements are transparent and democratic and, above all, that nothing is being hidden from them behind closed doors.

I, too, support the amendment tabled by the noble Lords, Lord Shipley and Lord Storey. I declare an interest. As I am sure Members of your Lordships’ House may know, I was leader of Norwich City Council, but also I was a member of the Press Council for a number of years under Louis Blom-Cooper. So I come at this from both ends.

At no stage in my time on the Press Council do I recall receiving a complaint about the regional press because it was accountable to its local community for everything from advertisements to news, from fetes to weddings, funerals, baptisms and the like. All the complaints that were sensitive or difficult were about the national press, which was essentially promiscuous in the 19th century sense of the term as it was not accountable to a readership, which fluctuated from day to day and of which it had no intimate knowledge. So the regional press served its community in a way that the national press did not, and served it faithfully.

When I was leader of Norwich council an issue started boiling up while I was in Australia. The Eastern Daily Press would not run with the story until it had contacted me in Australia to get a countervailing view. That would have been unthinkable with the national press. That is why the amendment is so important. If we do not support the amendment and encourage the regional press to scrutinise mayoral and other meetings, as it does meetings under the existing local government structure, I fear that reportage of local government, much like reportage of court proceedings, will die on the vine. Twenty years ago we could expect our court proceedings, local council meetings and some of the important committee meetings to be reported. The press would expect to be briefed on them in advance. What we get now—in national newspapers as well—is sketches rather than reports of debates.

Political coverage is shrinking in this country because it is not regarded as sufficiently amusing for people with only 30 seconds’ attention span. The regional press has held on, trying to make both Westminster and local authorities accountable and transparent to the members of their community, to whom it also feels accountable.

At the moment, the leader of a local authority will be monitored by his or her group, the opposition or the press and also by the chambers of commerce and local pressure groups and lobby groups such as the local branch of Age UK, the National Rheumatoid Arthritis Society or whatever, for example, on access to buildings. There must be stringent protection of the right of access of the press. We must not accept one person’s view of what counts as confidential or private, or what he or she would rather was not made public because it might be faintly awkward or embarrassing. Without that protection, I fear that the regional press will continue to opt out of the coverage that we absolutely need if we are to grow a healthy democracy in our localities.

My Lords, as the speeches so far have come from the opposition Benches, I gently remind your Lordships’ House that the first legislation to allow the general public to attend council meetings in committee was introduced by my late noble friend, Baroness Thatcher. I would not wish my noble friend the Minister to feel lonely at this moment. It is a notable piece of history to which I allude. The Minister for Housing and Local Government at the time was my late noble kinsman, Henry Brooke, who encouraged the new Member of Parliament for Finchley to become involved at an early stage in introducing legislation. It was her first legislative achievement, and he sat on the Front Bench throughout when she took the Bill through the House. I would not wish the metaphor to be misunderstood, but it was a good case of picking out a dark horse before it got into the limelight.

My Lords, Amendment 42A seeks to insert a new clause regarding access for the press and public to combined authority meetings. Whatever the whys or wherefores of the press’s engagement with council meetings, I am happy to confirm that legislation already exists on these issues. As my noble friend Lord Brooke has pointed out, the Local Government Act 1972 provides that all meetings of a combined authority must be open to the public except in limited, defined circumstances.

A meeting of a combined authority, as with other council meetings, may be closed to the public in only two circumstances: if the presence of the public is likely to result in the authority breaching a legal obligation about the keeping of confidential information; and if the authority decides, by the passing of a resolution of its members, that exempt information—for example, information relating to the financial affairs of a particular person—would likely be disclosed.

The Conservative-led coalition Government made new regulations in 2014 to make it absolutely clear that a combined authority is required to allow any member of the public or press to take photographs, film, audio record and report on all public meetings. This openness helps to ensure that combined authorities are genuinely accountable to the local people they serve. It also ensures genuine transparency in this digital age, where our democracy can be enhanced by the use of social media and blogging to communicate widely and, as the noble Baroness, Lady Hollis, said, to capture the market that does not want to spend more than 30 seconds reading such matters.

These requirements apply equally to any committees or sub-committees of a combined authority, including any overview and scrutiny committees. Subsection (1)(a) of the proposed amendment refers to a meeting between a mayor and the relevant combined authority. I should clarify that the mayor will be a member of the combined authority—indeed, will be the chairman—so such a meeting would simply be a meeting of the combined authority and is covered by these rules. Similarly, a meeting of the leaders of a combined authority, if I understand the noble Lord’s meaning, will be a meeting of the members of a combined authority, who are most likely—although not always—to be the leaders of the constituent councils.

The noble Lord, Lord Shipley, asked about Schedule 3. This is an enabling provision which ensures that there is flexibility to decide which information can be appropriately disclosed or must be discussed. For example, certain information may be commercially confidential or contain sensitive personal information.

I hope that, with these reassurances, the noble Lord will agree to withdraw his amendment.

My Lords, can the Minister explain what the Government plan to do if all the members of a combined authority are members of the same political party and hold informal pre-meetings prior to the meeting of the combined authority which is being held in public? Let us say that the meeting of the combined authority ends up being a short meeting and the private meeting beforehand ends up being a long one. What steps do the Government plan to take to deal with such situations should they arise?

The noble Lord raises an important point, but it has always been thus—informal meetings between people are not obliged to be held in public. The point on transparency is that the decision-making has to be in public and the public can be there to see it. However, informal meetings have never been subject to those rules.

I thank the Minister for her reply. We may need to revisit this issue on Report but, for the time being, I beg leave to withdraw the amendment.

Amendment 42A withdrawn.

Clause 8: Funding of combined authorities

Amendment 43

Moved by

43: Clause 8, page 10, line 2, at end insert—

“( ) The Secretary of State may by order make provision for conferring on a combined authority, upon the request of that authority in relation to its area, the full retention of business rates, business rate supplements, council tax, stamp duty land tax, annual tax on enveloped dwellings, capital gains property disposal tax, and multi-year finance settlements.”

My Lords, I wish to speak to Amendments 43 and 44. I know that the Bill is important to local government. Coming as I do from the city, I urge everyone to think of the world-class cities we have in our country and how we can make them even more competitive internationally.

The raising of funding locally is important. The developments in the Greater Manchester Combined Authority and the deal that has been agreed are a good step forward. I hope the Bill is the start of a journey in building capacity in our city and county regions, in order to have local economies that flourish due to the their leadership. I have looked at some of the written material on this subject, which the London Finance Commission took evidence on. One marker it looked at is how much money central governments give to capital cities, particularly London. One report tells us that Madrid gets 37%, New York 30.9%, Berlin 20.5% and Tokyo 7.7%, but that 73% of London’s budget comes from central government, as the Mayor of London made clear. I think Boris Johnson said that in this country we are comparatively “fiscally infantilised”—his quotes are fairly unique.

That shows the gap between the self-sustaining nature of other international cities, particularly capital cities, and our own. The Minister has been the leader of a council and I am sure she has had the same experience as many of us: when we meet the mayors of our twin cities or attend international gatherings, the feeling from that contingent is one of shock at the very few powers that leaders and mayors in this country have in comparison with others. We must look at this issue. When we discussed the local government bond last week, it did not receive as welcoming a response as we had all hoped. I recognise that the Government feel that they must be cautious and satisfied with the capacity of local government to take on these greater responsibilities, but the Bill’s vision needs to include something on what the future may be and what is desirable. There is plenty of evidence. The City Growth Commission fully recognises in its report that not all cities, counties and regions are ready for full powers. Indeed, many are not as ready as the Greater Manchester Combined Authority is. Nevertheless, we must be ambitious and aspire to giving our regions and cities greater powers.

If we look at what is happening in Scotland and Wales, it is understandable that many people in England, particularly in our cities, feel that powers are being given away which are not available to them. The national economy could benefit from more financially independent cities leading their own economies. I urge the Government to give some thought to including something in the Bill—even if it is not as explicit as the amendments—to show what the scope, potential and ambition could be. I hope to hear some more encouraging remarks from the Minister.

I am perhaps not as hopeful about that after previous days, but I hope we can all see the potential of fiscal independence for some of the great cities and counties of this country, and that we will see as a result improved local accountability, and improved ownership and participation from the people living in those regions. Having finance and powers meted out from the centre is not a good recipe for local participation or for pride in one’s area. The leaders and mayors of those international cities will have ample evidence of why we need to set some of our cities and regions free. I beg to move.

My Lords, we agree with the noble Baroness, Lady Janke, that we should give some thought to this issue, although I hope she will understand if we are unable to support the amendment as it stands. I will spell out some of the technical issues in a moment. But it does provide an opportunity to probe the Government’s intention on the devolution of fiscal resources to local authorities, including combined authorities—that is, where they are going on their journey.

My noble friend Lord Beecham will set out shortly the policy position we reached before the election on the growth of business rate retention. It accords with Amendment 43 in supporting multiyear finance settlements, for the obvious reason of enabling more effective long-term planning. However, we might consider fiscal devolution over three areas. First, we should look at the current funding arrangements: business rates, council tax, revenue support grants and specific grants. Secondly, we should look at how devolution budgets are to be made available—if functions are being transferred, what is happening to the money? Thirdly, we should look at whether any national taxes are to be devolved to local authorities and combined authorities. We seek to understand the Government’s policy on each of these matters.

National taxes are the thrust of Amendment 43, which appears to focus on property taxes, which have an unambiguous attribution to a specific area. This would appear to be perfectly possible for stamp duty land tax, which is levied on the purchase of residential and non-residential land and property, and for the annual tax on enveloped buildings, which applies to UK residential property put in a corporate wrapper. But capital gains tax appears to be more problematic because a tax liability could arise from netting off losses against gains—for example, a loss on a building in Birmingham against a gain on a building in Manchester—and making it more specific would be difficult. Similarly, the use of an annual allowance that is available generally against gains, and the taxation of corporations in relation to capital gains and how that is identified within an overall assessment, could also be problematic.

It would doubtless be possible to introduce rules to govern all of this, but with further significant complications to the tax system. On compliance, these taxes are geared to a national system and it would be necessary to disaggregate such matters. What is the rationale for attributing these taxes to a combined authority: is it the practicality of a ready additional source of revenue being made available, or because the focus of the combined authority’s activity can positively influence the tax outcome? It is presumed, of course, that the proposition is not to change the tax rates.

Nationally, stamp duty land tax raised just short of £10 billion in 2013-14 and capital gains tax just shy of £4 billion. I do not have the figure for corporation tax on capital gains. But these taxes can be volatile. Stamp duty land tax increased that year by 36%. Of course, it is not easy to predict. Is the growth in stamp duty land tax a good thing? The volume of property transactions in an area might be indicative of a thriving local economy—which could attract investment—but in so far as it is attributable to rising prices, it might simply reflect a failure to tackle supply.

We know the total spending power of local authorities in 2014-15 was in the order of £49 billion, including—though we do not have the precise figure—£10 billion-plus in revenue support grant. If the revenue support grant were, effectively, to be at least replaced by directly accruing property taxes and all business rates were to be devolved, what would be the mechanisms for dealing with the differing needs and resources of the local authorities? Presumably, business rates would continue to have tariffs, top-ups, levies and safety nets, which would help, but it is a little unclear whether the proposed full retention of business rates would be at individual authority or combined authority level. Is the noble Baroness suggesting that this could be done by pooling or by another mechanism? I think it could be done by pooling. The amendment refers to “business rate supplements”. Do these not already accrue to the relevant county or unitary district councils? Does the noble Baroness’s amendment contemplate that additional, erstwhile national revenues would substitute for devolved budgets, or eliminate the revenue support grant?

The Independent Commission on Local Government Finance set out the reasons why local government in England and the services it provides are no longer sustainable in the current form. It called for urgent devolution of powers, funding and taxes to groups of local authorities. We know from the Manchester agreement and our debates the main policy areas that central government appear to be willing to negotiate deals on for transferring functions, but we do not know whether they are willing to do anything on fiscal devolution. Is anything being contemplated, particularly with regard to existing national revenue streams such as stamp duty being devolved to local government? To what extent do the Government plan to adopt the recommendation of the noble Lord, Lord Heseltine, in brigading key national budgets and passing these as single parts to combined authorities, to do with as they see fit? In his No Stone Unturned report, the noble Lord argued the need to bring together separate funding streams which support the building blocks of growth into a single funding pot for local areas. He said that the model could be applied across England, but could not be introduced before 2015-16. We are now there. What are the plans? Is the noble Lord’s advice being rejected?

Will the Minister also tell us whether, as part of the devolution agenda, any fundamental change is contemplated to the current business rate and council tax regimes? Will the reset of the business rate retention scheme not happen until 2020? What is the latest position on the revaluation, which had already been deferred by the previous Government?

On fees and charges, it is estimated that local authorities raise some £10 billion a year. Some of these are locally determined and some are not. Is work under way to remove central government’s control over some of these? What scope would there be for a combined authority to seek increased freedom in this regard as part of a devolution deal? Addressing these fiscal issues is a test of how much central government trust local authorities and combined authorities.

My Lords, this is a brief intervention. One of the most attractive features underlying this legislation is the restoration of local pride up and down the country in the communities and neighbourhoods involved. I have always regretted from my time as Higher Education Minister that the relationship between universities and their surrounding communities, which had been very strong in the 19th century, gradually declined as the years went on and were not nearly as effective as they had historically been.

In the light of the amendment which has been moved, I wish to make a generic remark rather than a technical one. I can recall the circumstances in which decisions were taken at national level to reduce the amount of money retained by a local authority in terms of the resources raised within it. The local authority’s powers to have that retention were diminished. I recall that those circumstances arose because of the view of local business that it was perfectly possible for the economic situation in which it had to work to be changed overnight by a large switch in the power of an authority. I shall therefore be interested in what sense emerges from the Government, when my noble friend comes to reply, of not going backwards on that consequence of the circumstances which they replaced.

My Lords, our intention is to devolve far-reaching powers where strong, accountable and transparent governance, delivery and capability can be demonstrated. We are open to discussing proposals from all places, including towns and counties, where there are clear lines of accountability and decision-makers can properly be held to account. Amendments 43 and 44 suggest giving mayoral combined authorities access to a wide range of important taxes and charges. We have always said that we are interested in hearing proposals from authorities, and that nothing is off the table. We have also included provisions in the Bill for a council tax precept to meet the costs of functions undertaken by the mayor. This will be subject to the normal referendum principles as part of the council tax for the area, ensuring that not only will the mayoral combined authority be properly resourced but local council taxpayers will be protected.

Moreover, the Bill will mean that, in future, mayoral combined authorities will become major precepting authorities for the purposes of the local government finance regime. This means that through the existing powers that govern the rates retention scheme, to which the noble Lord, Lord McKenzie, referred, we will already be able to give mayoral combined authorities their own share of local rates income and ensure that they benefit from local growth. We do not need powers to put in place multi-year settlements for authorities; we can already do this administratively, as part of the wider local government finance settlement. Of course, any decision to make use of the existing powers to extend the rates retention scheme or put in place multi-year settlements would be taken alongside part of the wider transfer of powers and functions to mayoral combined authorities.

To devolve the wider basket of taxes referred to in Amendment 43, however, goes further and would represent a significant change to the existing tax landscape, with potentially significant legal, economic and fiscal implications. The other taxes mentioned play an important part in reducing the deficit and restoring the nation’s finances to a more secure footing, so it would not be right to include in the Bill powers to direct these taxes to mayoral combined authorities.

Additionally, such far-reaching powers would have potential consequences not just for the combined authorities but for other authorities, large and small businesses, and taxpayers up and down the country. Given the importance and fiscal character of such matters, we would need to consider whether any proposals would receive the correct level of scrutiny if provided through secondary legislation. I am not convinced, therefore, that it would be appropriate for these matters to be the subject of powers in the Bill or considered outside the Government’s normal fiscal and budget-planning cycle. Nevertheless, we are open to proposals for the transfer of resources as well as power and would give detailed consideration to any scheme that strikes the right balance between encouraging growth and protecting taxpayers.

The noble Lord, Lord McKenzie, asked about any proposals to remove central Government influence on local fees and charges. It would depend on individual deals. The noble Lord also asked about brigading national budgets. I cannot read the writing—

I would not dare. What part of budgets is devolved and how devolved budgets might be handled are all matters for the discussion in reaching each devolution deal. What is clear is that in all cases where powers are devolved, there will be an appropriate devolution of budgets.

In conclusion, and in respect of the other amendments in this group, I assure noble Lords that we will consider all proposals for devolution deals involving the transfer of both resources and powers and that the framework that would allow for funding from business rates retention is already in place, if needed, in addition to the existing powers for a council tax precept.

My Lords, I suspect I may know the answer to this. Would it be possible for a local authority in the negotiations with the Secretary of State for devolution and financial arrangements to, for example, have the right to include extra tiers of council tax bands when raising their council tax for their area?

Given everything the Minister has said, that proposal, which has had a fair degree of support in this Chamber in the past, would be one way in which a local authority could raise funds within the existing structure in a way that most of us would think was fair and progressive.

My Lords, it could indeed and it would be a matter for discussion between that group of local authorities and the Secretary of State.

I know that we deal with situations where the best can happen in the best of all possible worlds, which is where we are on the Bill. However, could the noble Baroness confirm that in a whole range of functions being devolved to a combined local authority and the budgets to go with it, the prospects of those budgets being aggregated—with freedom for the combined authority to spend as it wishes, given those particular functions, and not have to follow the Bill above those amounts—would be perfectly possible, feasible and welcomed?

My Lords, the noble Lord gives a theoretical example, which I am not in any position to stand at the Dispatch Box and confirm. I know I have reiterated this during the course of the Bill, but it really would be for a group of local authorities to prove that whatever proposal was put forward would result in growth and be fiscally neutral.

I thank the Minister for her response. I am perhaps not as discouraged as I thought I might be. However, I hope that the complexity of the tax system will not be a barrier to giving local powers and local accountability to achieving local projects. Transport is a particular issue in this country. To give a practical example, we in Bristol had to wait something like 15 years to be told that we were not going to get a tram whereas our twin city of Bordeaux not only conceived of its tram but built it and had it in operation within a fraction of that time.

I understand from the Minister’s remarks that should a combined authority wish to make proposals that might include a tourist tax or differentiated VAT or some kinds of local tax, these would all be considered. At the moment, while there is a central allocation determined by government, there is not a great deal of incentive for those who are more entrepreneurially minded in local authorities to create revenue streams to pay for important projects. That is what I have understood. Equally, the equalisation element would need to be looked at. We have very different circumstances in different parts of the country but, again, it should not be a barrier, and we need only look at our international competitors to know that this is the case.

I hope that we can pursue this a little further and that we might revisit it on Report. In that case, I beg leave to withdraw the amendment.

Amendment 43 withdrawn.

Amendment 44 not moved.

Amendment 44A

Moved by

44A: Clause 8, page 10, line 2, at end insert—

“( ) The Secretary of State may by order make provision for conferring powers on a combined authority to set multi-year finance settlements and retain business rates revenue in relation to its area.”

My Lords, I find myself in the somewhat unusual position of agreeing with the Minister in her analysis of the impact of what the noble Baroness, Lady Janke, proposed in Amendment 43. As my noble friend Lord McKenzie pointed out and as the Minister implicitly confirmed, the impact of allowing the combined authorities to retain money on what is essentially a nationally based taxation would be formidable and difficult for the Wigans and Kirkleeses of this world as compared to the Westminsters and Kensington and Chelseas, and I was very glad to see her not adopting that position.

Having said that, I must say that there is a certain synergy between the amendments that we have just debated and the one that I am now moving, particularly in relation to multiyear finance agreements, which must be common sense, and to business rates growth. However, I am in another unusual position in having to confess that Amendment 44A as printed is actually in error, because it should have referred to the growth in business rates rather than the implicit retention of an entire business rate. In that way, we are agreeing again with only a part, but an important part, of the amendment that we have just debated. However, the critical factor here is that of the fairness or otherwise of the distribution of the funding. That is the subject of Amendment 44B. Of course, if we had suggested, as it appears on the Marshalled List, that the entire business rate would revert to individual councils, it would be disadvantageous. Even the 50% retention rate is inequitable, unless there are other measures to compensate those authorities in need.

The Independent Commission on Local Government Finance has illustrated this position by comparing Hillingdon, which currently collects £101 million of business rates, and Wigan—and my noble friend Lord Smith will be conscious of the fact that Wigan collects just one-third of that, at £34 million a year in business rates. If we had a more equitable system, and if it was based on need, that would result in Hillingdon receiving £42 million and Wigan £62.9 million. That was the finding of the independent commission. That is an illustration in respect of only that one area of financing, because action is desperately needed across the whole system of local government finance. Local authorities have suffered massive cuts as a result of government policy, which singled out the sector for the biggest cuts in public expenditure in the last five years, a process that is far from complete—and we may hear more next week about what is in store. In any event, even the cuts that are still inchoate and beginning to take place will lead to substantial further difficulties.

What is particularly galling is the unfairness of the way the burden has fallen on those areas with the greatest need. The 10 most deprived councils in the country, as defined by the department’s own measure, have suffered cuts 10 times greater than the 10 least deprived. Liverpool, the authority with the highest deprivation score of all—I repeat that these are on the department’s own measure—has suffered a loss just under 30 times greater than Hart District Council, the least deprived authority.

Interestingly, 14 councils were lucky enough to receive an increase in government funding over the past few years, and by sheer coincidence all but one of these have Conservative MPs, including Michael Gove, Chris Grayling, Philip Hammond and Jeremy Hunt. Some of us think that one or two of those have been lucky to have been in the Cabinet for these past few years, but certainly their constituents have been lucky to have received this benison from the Government.

If the Government’s ambitions for cities in the context of devolution are to be carried out and are not to suffer the same signal failure as their northern rail transport policy, as was revealed last week, or, in the light of last week’s belated disclosure of a three-year-old report, the fate that may be awaiting HS2, their philosophy about devolution must be accompanied by a needs-based funding formula and not rely on a continuation of the present system, which is so damaging to so much of the areas that could most benefit from the Government’s well-intentioned approach to devolution. That is why Amendment 44B calls, initially at any rate, for a report on the fairness of the distribution of funding, taking into account the cumulative cuts so far—and, indeed, those that are pending—in spending power and resources per household. I beg to move.

Will my noble friend read into the record, if he happens to have the information to hand, the 10 most rewarded local authorities and the 10 most deprived, in terms of grant, and their political complexion?

I am afraid that I am going to have to follow the usual ministerial procedure and say that I shall have to write to my noble friend. I do not have the information. I copied the report to my noble friend this morning and I think it runs to 163 pages. I do not have it immediately to hand, or anything big enough to contain it, but I will communicate with my noble friend.

My Lords, I am grateful to the noble Lord, Lord Beecham, for clarifying the wording of Amendment 44A: that it is about the growth of business-rates revenue. I was slightly disappointed that these two amendments were degrouped from the two amendments moved a moment ago by my noble friend Lady Janke, because they are all in the same area. They all relate to the question of whether we are dealing with decentralisation or with devolution. I have heard the Minister say that this Bill is primarily to do with decentralisation, but there is an overall context that is to do with devolution. However, I do not think that fiscal powers are about decentralisation where they can be varied from a national norm, so we are talking here about fiscal devolution.

I agree with the noble Lord, Lord Beecham, that this is set in the context partly of multiyear financial settlements, which I think all parties would benefit from, but also, crucially, of fair funding. It is therefore in part about the level of cuts that have been imposed on poor authorities, but it is also about the absolute level of funding. The issue of needs-based allocation will not go away, however much fiscal devolution we have, because even with the powers that we have set out in Amendments 43 and 44, there would clearly need to be some needs-based reassessment of the total sums involved. That is why, of course, Amendments 43 and 44 use “may” rather than “shall” in relation to the powers of the Secretary of State, as clearly there would need to be significant flexibility in those powers.

I have talked previously in your Lordships’ House about the difference between powers and responsibilities. It is one thing to give local authorities and combined authorities increased powers, but this is about them using those powers to take on additional responsibilities. We have heard the suggestion a number of times in your Lordships’ House that there should be a local government finance commission. I have come to the conclusion that that is the right thing to do, because I do not think that we would get full agreement otherwise about what the devolved powers of combined authorities might be compared with those in other levels of local government. We also need to think about how we ensure that the money from central government is fairly distributed on a needs-based allocation, the basis of which everybody understands.

I hope very much that we will return to this issue on Report. Perhaps in the next two weeks we can look more broadly at this area to see what might be possible for all parties to agree on. I hope that it might be possible for the Government at least to think again about whether the issue of fiscal powers should be in the Bill. There is not much willingness to put things into the Bill. I think there should be something in relation to Amendments 43, 44, 44A and 44B in the Bill, and I hope it will be possible to enter into discussions to see how there might be agreement in all parts of your Lordships’ House to deliver that.

My Lords, one of the amendments put forward by my noble friend Lord Beecham has reminded me that in Greater Manchester we had an argument with the Government about getting back our share of growth in business rates for the actions that we were taking. Through the city deal process we managed to convince Ministers that it would be a good scheme to take up, but unfortunately we then had to go to the Treasury and it took 18 months or more to get agreement on that. However, it is a model by which we can clearly demonstrate that the growth created through the work of the combined authority could be used for further investment to benefit and create further growth in the area.

I am certainly a supporter of fiscal devolution, which in a sense is the missing clause in this Bill. We need to think about what it is and what we mean to achieve. However, if we are to get the allocations of money from central government, which is a form of decentralisation, we need further freedom to agree with the Government what would be provided by the money. We can transfer funding from one field to another in a different and more effective way in some areas, provided that we do what was agreed in the deal with the Government.

I have said a number of times in this House—sometimes late at night a couple of years ago when my noble friend Lord McKenzie and I were talking to the Government about the change to business rates—that our system of local government finance in the UK is now a busted flush. There are two main taxes that we rely on. The revaluation means that business rates are no longer justifiable. There needs to be a major review and I am pleased that the Government are carrying that out. The other main form of taxation—council tax—has not been revalued since 1991, so a new house built in 2015 has to be valued as though it was built in 1991. A connection to broadband would not be a feature, because clearly in 1991 such things were not invented. There obviously has to be all-party agreement on this, because we do not want a system that is going to be changed when there is a change of government. We have to have a system, built for the 2020s, that gives local authorities the independence and freedom they need.

On fair funding, I am surprised that my noble friend Lord Beecham and the noble Lord, Lord Shipley, did not quote their former council, Newcastle City Council. It has done some wonderful work on this and produced what it referred to as a “heat map”, which shows in red the areas that have had the greatest reduction in council funding and in green those that have had the least. Guess what: most of the red areas are in the north or in urban areas, and this could be substituted for political control.

I wish to emphasise what my noble friend Lord Shipley and the noble Lord, Lord Smith, have just said. In Committee last week, I said that the real elephant in the room was the issue of fiscal devolution; otherwise the Bill is about decentralisation. I listened to the Minister and I agree with my noble friend Lord Shipley and the noble Lord, Lord Smith, that this will ultimately get lost unless there is something specific in the Bill. I hear what the Minister says about this being an enabling Bill, but there needs to be something in it that gives a framework—not a straitjacket—to understand the kind of fiscal autonomy that local authorities could have. If there is not, then we are, fundamentally, talking about a local government finance system that is not fit for the 21st century possibly being reallocated in a different way.

I accept that there is talk about TIF or business rate growth being able to be held at local level. However, it is fundamentally much more than this. As my noble friend Lady Janke said, it is about different approaches. Last week, the noble Lord, Lord Heseltine, spoke about the Mayor of Tokyo talking to potential international investors in his city. I am a former council leader who talked to international investors. As I said last week, they do not necessarily ask about the nameplate on your door. They want to talk about what tax incentives my area can give compared to elsewhere, rather than there being a national scheme. In the real world, those are the kind of issues being looked at.

So I ask the Minister to reconsider. This is so important; we are talking about a brand new deal for devolution and for local areas to become much stronger and authors of their own destiny. But we need some framework in the Bill. Otherwise, like the noble Lord, Lord Smith, I fear that when the Treasury gets hold of this, it will not treat it, as the Minister wishes, from a local government perspective.

My Lords, I support the comments made by my noble friend Lord Smith about the increasing frailty of the existing council tax structure to bear the responsibility we ask of it. I believe I am right in saying that, had the older rates system remained in place, the most expensive properties, compared to the median average, would be in a ratio of something like 20:1. In fact, the ratio of the top band to band D—the fulcrum point on the council tax scale—is only 3:1. That shows just how narrow the redistributive effect of council tax has become.

In the past, the Government have resisted looking at council tax revaluation, even though a full-scale revaluation went through fairly smoothly in Wales, without any great hiccups in the procedures. A few years ago, some of us did some work on this. It was clear that it would be desirable to revalue all properties—but at the very least, you could fish the top band. I was advised, by the Valuers’ Association and the Government’s valuation service that that would represent less than the valuations which happen now whenever a flat becomes a shop, a shop becomes a flat or a house is sold and is given a new valuation. So the amount of work required to allow local authorities to increase the bands above the current top band would be quite modest—I am assured of that by the district valuers who carry out this work, day in, day out, on other use changes and so on and so forth—and would allow us to stretch more fairly and produce more revenue in a way that was more reasonable.

Certainly the compression that has come from council tax bands compared to the old rate bands is probably, in my understanding, the narrowest in the OECD. In America, Australia and most of the countries in Europe, the property range of bands is far wider than we now have in the UK as a compression of council tax. As I said, we have only about three or four bands above the band D fulcrum compared to the 20:1 ratio that we used to have under the old rates system. So it is a perfectly serious proposition that this would be a fair and appropriate way to increase revenues to local authorities and to reflect local need and local ability to pay.

My Lords, perhaps my noble friend would agree with me that a major part of the problem is that the council tax embodies a significant element of the poll tax, and that that is what leads to such narrow banding.

I agree with my noble friends on our side of the House who have spoken about these issues. Council tax is in urgent need of reform. As for anyone who defends its existing basis—it is indefensible. It needs reform, as my noble friends Lady Hollis and Lord Smith have suggested.

I applaud the Government’s commitment to devolution, as I have said before in this House. But the elephant in the room is how to devise a scheme of fiscal federalism within the United Kingdom and within England. That is a very tricky question. It is tricky politically because once we start to look at these issues we see that London and the south-east are transferring considerable amounts of money to the rest of England. The transfers within England are probably much greater than the much talked-about transfers under the Barnett formula to Scotland and Wales.

Some years ago, in my own area of Cumbria, a study was done of all government spending and the estimated tax contribution from all sources. It came to some pretty alarming conclusions. In terms of total government commitment to Cumbria, roughly twice as much money was being spent by the Government in one form or another—this includes the nuclear plant at Sellafield, not just local government—as we were paying in. This issue has to be honestly addressed.

It is also the reason why there is an absolutely compelling need for local authorities to have the powers to contribute to local economic regeneration. That is the way to start building a tax base, rather than living off this drip-feed from London and the south-east.

Some very big issues are being touched on here. It would be interesting to hear from the Minister whether there is any interest from the Government in launching a major study of these questions—royal commissions are rather out of fashion, but I suggest that this would be a suitable subject for one—or whether we will continue with the terribly unfortunate “ad-hockery” that we have. I am sure the Minister agrees with me about the unfairness of the current local government arrangements. I remember, in a meeting in Cumbria County Council when the last settlement came out, quoting that the authority that did best of all was Elmbridge in Kent.

My apologies—I meant Elmbridge in Surrey. I looked on my iPad at the description of Elmbridge, which started by saying that that part of Surrey,

“is known as the ‘Beverly Hills’ of England”.

The Minister, who is a fair person, must admit that such extraordinary unfairness is where we end up. We need a much more independent and objective look at these questions, and that is of real importance if we are to get an effective devolution of power in this country.

My Lords, as worded, Amendment 44A would allow the Government to confer powers on a combined authority to set multiyear finance settlements and to retain business rates. In introducing this amendment, the noble Lord made clear that the intention behind it is to allow central government to put in place multiyear finance settlements, thereby allowing a combined authority greater certainty over its budget-setting process. In fact, we already have the powers we need to do this administratively as part of the wider local government finance settlement.

A combined authority is already able to set a multiyear budget; it is not necessary for central government to confer powers upon it allowing it to do so. Nor, as I have made clear in responding to Amendments 43 and 44, do the Government need new powers to allow a combined authority to retain some of its local business rates. The Bill will already set up a mayoral combined authority as a major precepting authority, and therefore we will be able to use our existing powers under the Local Government Finance Act 2012 to give the authority a share of its locally raised business rates, should we decide to do so.

Of course, any decision to make use of the existing powers to put in place multiyear settlements or to allow the retention of local business rates, or business rates’ growth, would be taken alongside any wider transfer of powers and functions to mayoral combined authorities. I further assure noble Lords that we will consider all proposals for devolution deals involving the transfer of both resources and powers.

Amendment 44B would require the Government to publish a one-off report about the impact on combined authorities of how resources had been distributed through the local government settlement, particularly with regard to levels of deprivation. I do not think the amendment would add anything to the information that we already provide. By looking only at the resources distributed through the settlement, the reports required by this amendment would separate government funding from other sources of income available to local authorities. By isolating deprivation from other drivers of spend—for example, the impact that population sparsity plays in rural areas—it would fail to present a properly rounded picture of the settlement.

As noble Lords know, we already publish annually an assessment of the impact of the settlement on authorities’ wider spending power and an equalities statement on the settlement’s effect. Moreover, the settlement is subject to wide-ranging consultation and comes before Parliament for approval. I am not persuaded that anything further is needed.

The noble Lord, Lord Smith of Leigh, talked about Manchester’s gains from economic growth. The devolution deal for Manchester illustrates what the city has gained as a result of its growth. A reformed “earn back” deal can earn up to £900 million over 30 years.

The noble Lord, Lord Beecham, talked about the relative impact of cuts in different areas. I know we could argue about this all day and all night. People have different views about cuts, but comparing regional spending in terms of spending power per household shows that in the north-east it is £2,154, in the south-east it is less, at £2,023, while in the north-west it is £2,230.

The noble Lord, Lord Smith, and the noble Baroness, Lady Hollis, talked about the revaluation of council tax. I understand the comments about this but, in practice, since 2010-11 council tax in England has fallen by 11% in real terms, and a total of £5 billion has been provided for five successive years of freezes that are worth up to £1,059 for average households. The noble Baroness mentioned the revaluation of just one band, the top band. As far as I can recall from my local government days, a simple revaluation has to be revenue-neutral. In the light of those comments, I would ask the noble Lord to withdraw his amendment.

I understand that a revaluation would have to be revenue-neutral, and obviously it is up to the local authority to make the total proceeds exactly the same, so that if you get more from X you can reduce the imposition on Y. However, I do not think that the noble Baroness should rejoice on behalf of local government for the freeze in council tax over the past few years. Obviously, it has helped council tax payers, but what they have gained by not having to pay council tax increases, they have lost in the social wage of the services that have been cut as a result. You need only go to cities to see exactly what that means when children with no books at home no longer have a library to which they can go because it has been cut. Their hopes of social mobility have, to that extent, been depressed. I think that was a much more contentious remark than perhaps the noble Baroness intended.

My Lords, I do not rejoice and I did not intend to be contentious. I was simply illustrating the effect of the council tax freeze and the money the Government have given to that. In difficult times, council tax payers will have been glad of lower council tax.

My Lords, while individual council tax payers might well feel a little more comfortable, of course the impact on services for their communities has been very marked, particularly in adult care and children’s services, as we are increasingly seeing. In any event, most of the £5 billion has been top-sliced from moneys that would have gone in the local government finance settlement in any event. It is a bit much for the Government to claim credit for the freeze. It is more than a freeze for some services because it is actually inflicting a cut.

That brings us to the central question about the impact of these devolution proposals between different areas. One of the objectives of the amendment, although perhaps we will need to look again at the wording, is to ensure that in the process of devolving functions and resources to the combined authorities, both of which would be welcome, fairness in respect of other areas and between the combined authorities themselves is a cardinal objective and is something that the Government will address. It is that which we want to see in terms of the report that Amendment 44B seeks to advance. Looking at it again and listening to the Minister, perhaps the objective was not made sufficiently clear in the amendment, so it is something to which we may have to return on Report.

Unless we have a fairer funding system for local government services and the people who depend on them across the piece, including those in combined authority areas, then, in our submission, the talk about devolution will prove to be more of process than of outcome, and that would be unfortunate. Let us credit the Government, and particularly the present Secretary of State, with good intentions in this respect, but unless this is accompanied by a much more rigorous examination and the necessary change in the funding of local government, including the combined authorities, those objections will not be met. Having said that, I beg leave to withdraw the amendment.

Amendment 44A withdrawn.

Clause 8 agreed.

Amendment 44B not moved.

Clause 9: General power of competence

Amendment 44C

Moved by

44C: Clause 9, page 10, line 7, leave out “may” and insert “shall”

My Lords, Members of your Lordships’ House will have observed that I am short. I intended this speech to be equally short, but I will give it a minute or two, in order to allow this debate to be kept to five minutes or thereabouts. Then we can proceed with the very important Statement which is to follow. Between us, the noble Baroness and I will no doubt get the clock to 4.30 pm.

It would be anomalous if the existing general power of competence which applies to local government in its manifestation across the country was not to be matched with a similar power for the combined authorities. The whole point of the combined authorities is to give them a wider range of functions than local government generally enjoys and for them to take on a wider role across the provision of a range of public services. Therefore, a general power of competence would facilitate the implementation of the Government’s objectives, which are shared by Members on all sides of your Lordships’ House. I hope that the Minister will concur with that view at some little length. I beg to move.

My Lords, the Localism Act 2011 provides that local authorities have the general power of competence. This is the same power to act that an individual generally has. All principal councils and eligible town and parish councils have this power. The provision in this Bill is designed to give the Secretary of State the discretion to decide whether or not to confer this same general power of competence to a particular combined authority. This is likely to go hand in hand with an arrangement in which the combined authority is to take on wider powers and functions, thus supporting the case for a general power of competence.

Flexibility, however, must remain in conferring this general power of competence to combined authorities, as it may not be appropriate to give the full power to act that an individual has to all combined authorities. For example, for combined authorities with relatively limited specific powers, it may not be appropriate to grant them a wide general power of competence. This is so given that Section 113A of the 2009 Act already gives them a power to do anything they consider appropriate for the carrying out of the specific functions that have been conferred on them.

This amendment is a further example of moving away from the enabling character of the Bill. It is an example of another centralised requirement which an area may not want, recognising that in its circumstances this would not be appropriate. So I ask the noble Lord to withdraw the amendment.

My Lords, if the noble Baroness is right, the general power of competence would seem to be more limited than, on the face of it, it appears to be. Certainly it might inhibit a kind of development across a combined authority area that might be thought to be most appropriate. For example, in another area in which I have an interest, the justice arena, a combined authority might be in a good position to develop schemes for assisting the rehabilitation of offenders. That is not a duty of local authorities at the moment but, particularly given the area involved in a combined authority, they might well have something to offer which they should be able to carry out. Their potential partners in the Prison Service or the probation service might want to join them in such an effort. I am a little puzzled as to why the noble Baroness should be reticent about extending a power in that sort of area.

My Lords, I do not think that it is reticence; it is about flexibility and what might be appropriate in different circumstances. I hope that the noble Lord does not take it as reticence.

Amendment 44C withdrawn.

Clause 9 agreed.

House resumed.

Tunisia and European Council

Statement

My Lords, with the leave of the House I will now repeat a Statement made by my right honourable friend the Prime Minister in another place. The Statement is as follows:

“It is with great sadness that I have to tell the House that we now know that at least 18 British nationals have been killed, with more injured and the death toll likely to rise still further. These were innocent British holidaymakers—people who had saved up for a special time away with their friends and family—who suddenly became the victims of the most brutal terrorist attack against British people for many years. I am sure the whole House will join me in sending our deepest condolences to the families and friends of all those who have lost loved ones. I know the whole country will want to share in a moment of remembrance. So, following the act of remembrance we have just held in this House, we will have a national minute’s silence on Friday at noon, one week on from the moment of the attack. In due course, in consultation with the families, we will also announce plans for a fitting memorial to the victims of this horrific attack.

This morning, I chaired the fourth daily meeting of the Government’s emergency COBRA committee. So let me take the House through three things: first, the latest on what we believe happened in Tunisia, and in the separate attacks in Kuwait and France; secondly, the immediate steps we have been taking to help the British victims and their families; and, thirdly, how we will work with our allies to defeat this evil in our world.

The events of last Friday are horribly familiar to anyone following them in the media. A radicalised university student armed with a Kalashnikov began massacring innocent tourists on the beach at Port El Kantaoui. He continued his attack into the Imperial Marhaba hotel and on to the streets, where he was shot dead by Tunisian police. While we believe he was the sole gunman, it is thought that he may have been part of an ISIL-inspired network, and the Tunisian security forces are investigating possible accomplices who may have supported this sickening attack.

On the same day in Kuwait, a suicide bomber killed 27 and injured more than 200 in an attack on the Imam Sadiq Mosque near Kuwait City. An ISIL-affiliated group based in Saudi Arabia has claimed it was behind the attack. In Syria, ISIL executed 120 people in their homes in Kobane and, in south-eastern France, a man was murdered and two were injured in an explosion. While all these attacks were clearly driven by the same underlying perverted ideology, there is no evidence to date that they were directly co-ordinated.

Our first priority has been to help the British victims and their families. This has meant helping on site, assisting the wounded, bringing home those who lost their lives, ensuring that holidaymakers still in Tunisia who want to come home are helped to do so and gathering further evidence of what happened.

A team of consular staff was on site in Sousse within hours, and by Saturday they were complemented by additional teams of consular staff, police and Red Cross experts. We now have over 50 people on the ground helping British victims and their families. To help the wounded, we have already sent a team of military medical liaison officers to assist with medical evacuations. A C-17 has just landed in Sousse to bring home some of the seriously injured.

It is right that we do everything we can to bring home those who lost their lives as quickly as possible. We have been helping the Tunisians with what is, in some cases, a very difficult identification process. The Royal Air Force will arrange directly the repatriation of all deceased British nationals whose families wish us to do so, as soon as the identification processes are complete.

Sixty family liaison officers back here in Britain are continuing to support the relatives of those killed and injured. We are working with the tour operators to ensure that those who want to come home can do so, and more than 20 special flights have already brought hundreds home. Since Friday evening, more than 380 counterterrorism and local officers have been at British airports to meet and support travellers returning home from Tunisia and to help gather evidence of what happened.

As Assistant Commissioner Mark Rowley said yesterday, the national policing response is likely to be one of the largest counterterrorism deployments in a decade. Yesterday afternoon I visited the Foreign Office crisis centre to see first-hand the work that our teams are doing to co-ordinate our efforts at home and abroad. As I speak, my right honourable friend the Home Secretary and the Foreign Office Minister, the Member for Bournemouth East, are in Sousse in person doing everything that they can to help the British victims and their families, and talking to the Tunisian authorities about ways in which we can help strengthen their security. I have been speaking to President Essebsi over the weekend and want to put on record my thanks for the assistance of the Tunisian authorities throughout this horrific ordeal.

The Foreign Office has updated its travel advice, which continues to make clear the high threat from terrorism in the country, just as it did before Friday’s events. However, it is not moving to the position of advising against all but essential travel to this part of Tunisia, so it is not advising against visiting the popular coastal resorts. This was agreed by the COBRA emergency committee and will be kept under close review. These are difficult judgments. Nowhere is without risk from extremist Islamist terrorists, and of course we take into account the capability of the country in question and its ability to counter the threat. Here in the UK, the threat level remains at severe, meaning that a terrorist attack is highly likely, but until we have defeated this threat, we must resolve as a country to carry on living our lives alongside it. Of course, making those judgments means taking sensible precautions, and where there is a specific threat we will always take action immediately. But we will not give up our way of life or cower in the face of terrorism.

These terrorists tried to strike at places of hope—in a country with a flourishing tourist industry that is on the road to democracy and at a mosque in Kuwait that dared to bring Sunnis and Shias together. But the Tunisians and Kuwaitis will not have that hope taken away from them. They will not be cowed by terror, and we will stand with them.

Defeating this terrorist threat requires us to do three things. First, we must give our police and security services the tools that they need to root out this poison. We have already increased funding for our police and intelligence services for this year and legislated to give them stronger powers to seize passports and prevent travel. Over the next two days, our security forces and emergency services will conduct a major training exercise in London to test and refine the UK’s preparedness to deal with a serious terrorist attack. But we must also do more to make sure that the powers that we give to our security services keep pace with changes in technology. ISIL’s methods of murder may be barbaric, but its methods of recruitment, propaganda and communication use the latest technology. So we must step up our own efforts to support our agencies in tracking vital online communications, and we will be bringing forward a draft Bill to achieve this.

We must also work with our international partners to improve our counterterrorism co-operation. I spoke to President Hollande, Chancellor Merkel and Prime Minister Michel of Belgium over the weekend and we agreed to work together to help Tunisia strengthen its security. Our ambassadors met the Tunisian authorities yesterday to put that into action, including by strengthening the protective security arrangements at coastal resorts.

Secondly, we must deal with this security threat at source—whether that is ISIL in Iraq and Syria or other extremist groups around the world. British aircraft are already delivering the second-largest number of air strikes over Iraq and our airborne intelligence and surveillance assets are assisting other countries with their operations over Syria. We are working with our UN, EU and American partners to support the formation of a Government of national accord in Libya and will continue to do all we can to support national Governments in strengthening weak political institutions and dealing with the ungoverned spaces where terrorists thrive. And as I have said in this House many times before, if we need to act to neutralise an imminent threat to the UK, we will always do so.

Thirdly, we must take on the radical narrative that is poisoning young minds. The people who do these things do it in the name of a twisted and perverted ideology which hijacks the Islamic faith and holds that mass murder and terror are not only acceptable but necessary. We must confront this evil with everything we have. We must be stronger at standing up for our values. And we must be more intolerant of intolerance—taking on anyone whose views condone the extremist narrative or create the conditions for it to flourish.

On Wednesday, a new statutory duty will come into force requiring all public bodies—from schools to prisons to local councils—to take steps to identify and tackle radicalisation. In the weeks ahead we will go further. We will stand in solidarity with all those outraged by these events—not least the overwhelming majority of Muslims in this country and around the world. For this is not the war between Islam and the West which ISIL want people to believe. It is a generational struggle between a minority of extremists who want hatred to flourish, and the rest of us who want freedom to prosper. And together we will prevail.

Let me turn to the European Council. This discussed three issues which strongly affect our national interest. On the situation in Greece, I chaired a contingency meeting in Downing Street earlier today and the Chancellor will be making a statement straight after this. So let me deal with the other two—the need for a comprehensive approach to the migration crisis and the beginning of the UK renegotiation process.

On migration, the right course of action is to combine saving lives with tackling the root causes of this problem. That means breaking the business model of the smugglers by breaking the link between getting in a boat and getting a chance to arrive and settle in Europe. It means gathering intelligence to disrupt the smuggling gangs and using our aid budget to help alleviate the poverty and failure of governance that so often drives these people from their homes in the first place.

Britain has already played a leading role in all of this, keeping its promises on aid and saving over 4,000 lives in the Mediterranean. By contrast, focusing primarily on setting up a relocation scheme for migrants who have already arrived in Europe could be counterproductive, because instead of breaking the smugglers’ business model it makes their offer more attractive. Others in the EU have decided to go ahead with these relocation schemes, but because of our opt-out from justice and home affairs matters, we will not be joining them. We will, however, enhance our plans to resettle the most vulnerable refugees from outside the EU, most notably from Syrian refugee camps, in line with the announcement I made in Bratislava earlier this month.

Finally, on the UK’s relationship with the European Union, we have a clear plan of reform, renegotiation and referendum. And at this Council I set out the case for substantive reform in four areas: sovereignty, fairness, immigration and competitiveness.

First on sovereignty, Britain will not support being part of an ever-closer union or being dragged into a state called Europe. That may be for others, but it will never be for Britain, and it is time to recognise that specifically. We want national parliaments to be able to work together to have more power, not less.

Secondly, on fairness, as the eurozone integrates further, the EU has got to be flexible enough to make sure the interests of both those inside and outside the eurozone are fairly balanced. Put simply, the single currency is not for all, but the single market and the European Union as a whole must work for all. Thirdly, on immigration, we need to tackle the welfare incentives that attract so many people from across the EU to seek work in Britain. And finally, alongside all these, we need to make the EU a source of growth, jobs, innovation and success rather than stagnation. That means signing trade deals and completing the single market, such as in digital, where the Council made progress towards a roaming agreement that could cut the cost of mobile phone bills for businesses and tourists alike.

At this meeting, my priority was to kick off the technical work on all of these issues and the specific reforms that we want in each area. The Council agreed that such a process will get under way and we will return to the issue at our meeting in December. These talks will take tenacity and patience. Not all the issues will be easily resolved. But, just as in the last Parliament we showed that change could happen when we cut the EU budget for the first time in its history, so in this Parliament we will fix the problems which have frustrated the British people for so long. We will put the common market back at the heart of our membership, get off the treadmill to ever-closer union, address the issue of migration to Britain from the rest of the EU and protect Britain’s place in the single market for the long term. It will not be the status quo. It will be a membership rooted in our national interest, and a European Union that is better for Britain and better for Europe, too. I commend this Statement to the House”.

My Lords, that concludes the Statement.

My Lords, I thank the noble Baroness for repeating the Prime Minister’s Statement. As the news came through on Friday lunchtime, it became almost too difficult to comprehend both the magnitude and the nature of the events as they unfolded in Sousse. Families and friends on holiday, relaxing and enjoying glorious weather and local hospitality, were thrown into murder and mayhem. I do not think any of us will ever forget the heartbreaking sight of sun loungers being used to stretcher the dead and the injured. With 18 British citizens confirmed dead and the death toll of British and other nationalities likely to rise, and with others seriously injured, the horror and fear of that day will never be erased from the memories of those who have survived. As we think of the pain and distress of families trying to find and identify loved ones we can only try to understand what they must be going through.

I concur with and support the comments of thanks to all those—the FCO staff, our police and other agencies and the locals in Sousse—who are trying their best to give both the practical and the emotional support that is needed and will be needed for many for months and years to come. The Home Secretary and the Minister with responsibility for the Middle East are in Tunisia today and they will understand the scale of the problem.

I am sure that, like me, the noble Baroness was deeply affected by the interviews with holidaymakers who, while clearly traumatised and visibly upset, said that they wanted to stay on, in recognition of the support that they had from the locals, who had helped them despite their own fears and distress. I understand that the Government are not issuing advice against travelling to Tunisia, but is any advice being provided to those who are booked to go on holiday there over the coming weeks?

Obviously many Tunisians are already worried about their futures, both in terms of security and economically. I know it is early days and I welcome the fact that discussions have been held with Prime Minister Hollande and Chancellor Merkel but have there been any further discussions with the Tunisian Government? I am thinking not just about security issues but also about economic issues, which can have a huge impact on the local economy and the national economy and will raise other issues around security.

At the European Council, security and defence were rightly high on the agenda. It is a stark reminder, as we reflect on the 10th anniversary of 7/7, that this week alone there have been deadly terrorist attacks not only in Tunisia, but also in Kuwait and France. Meanwhile, the death toll in Syria and Iraq continues to rise. The Prime Minister has rightly recognised that this violence stems from an extremist ideology which hijacks and perverts the religion of Islam, and that this must be tackled at home as well as internationally. We must challenge such extremism, whatever its origins, and champion the values of peace, freedom of speech, tolerance and equality.

The noble Baroness may be aware from debates in your Lordships’ House on the then Counter-Terrorism and Security Bill that not only must our security forces and police have the resources, the numbers and the appropriate tools to be effective but action must be community-based, and all communities have to engage with government and other public bodies in a climate of trust. She will be aware that so many within the Muslim community are challenging ideological extremism and championing the values that lead to a more tolerant and peaceful society. In their considerations of the way forward, are the Government also giving further thought to how these individuals and communities can be supported in their work?

The noble Baroness will know that your Lordships’ House has been very concerned about migration, as discussed at the European Council, both in tackling the organised criminality that fuels it and the instability in north Africa and the Middle East that leads frightened and vulnerable people to risk their lives and those of their families. One of the conclusions of the European Council meeting is:

“Further to the Commission’s European Agenda on Migration, work should be taken forward on all dimensions of a comprehensive and systemic approach”.

Is she in a position today to explain what that means in practice and what action will be taken? The same document refers to,

“the reinforcement of the management of the Union’s external borders”.

What contribution did the UK make to that discussion, given the cuts that we have seen in our UK Border Force?

Finally, on Britain’s negotiations with Europe, can the noble Baroness inform your Lordships’ House whether there will be any treaty changes before the referendum takes place? I understand the Prime Minister’s political difficulties and the sensitivities around this but it is a really important issue. How long was he given to make his case at the summit? Perhaps she can help me: we are not clear at this stage what he is negotiating for. There is even confusion among those he is negotiating with about what he is negotiating for. British citizens, who are going to be asked to vote in a referendum, are also unclear what he is negotiating for. The Prime Minister said in his Statement that this was the first stage, “to kick off the technical work” between now and December. What exactly does that mean and what steps will be taken to keep the public informed?

It is a fact of geography that we are an island nation but all these issues impact on the lives of British citizens. Whether it is terrorism in Tunisia, refugees in the Mediterranean or the economy in Greece, these problems connect us all, and if we are to genuinely address them, we must do it together.

My Lords, I, too, thank the Leader of the House for repeating the Statement made by the Prime Minister. I certainly join her and the Leader of the Opposition in expressing on behalf of these Benches our condolences to those families who have lost loved ones through the senseless and brutal terrorist attack in Tunisia. Our heartfelt thoughts are with those who were injured in the attack and are seeking as best they can to recover from those injuries.

Like the Leader of the House and the Leader of the Opposition, I think it is important to pay tribute to the heroic members of staff who went to the assistance of those who had been injured, and the holidaymakers who helped. As was acknowledged by the Prime Minister, there has been a considerable immediate response by Foreign and Commonwealth Office staff, consular officials, the police and the Red Cross. These are all very welcome.

The Leader of the Opposition also reflected on those who have expressed the view that they wish to stay on holiday in Tunisia. I certainly heard one of them on the “Today” programme this morning. I cannot help but reflect that it is the resilience of ordinary people to terrorism that will ultimately undermine the hate of terrorist organisations.

The Government have talked about a “full spectrum” of measures to support Tunisia and to address the consequences of the appalling events of last Friday. In his Statement, the Prime Minister referred to working with President Hollande of France, Chancellor Merkel of Germany and Prime Minister Michel of Belgium to help Tunisia strengthen security. That is a particularly welcome example of proper co-operation within Europe to help Tunisia. As well as shedding some light on what kind of help is in mind, perhaps the Leader of the House could also acknowledge that in addition to security measures, wider economic support will clearly have to be given to nurture what is a fledgling democracy. There are historic ties between our two countries. If democracy is to take root and flourish, it is very important that we not only give economic help—given the inevitable damage there will be to the tourist trade—but help where we can to support the institutional arrangements in Tunisia. Will the Leader of the House also update the House on what influence the Government are bringing to bear on those countries in the Middle East with which we have good working relations in order to undermine sources of funding to ISIL?

I heard the Prime Minister reported in the press today talking about the values of democracy, justice, freedom and tolerance. It will be these values that will prevail. I certainly wish to endorse that but there is an age-old balance to be struck between security and these values and freedoms that we cherish. Can I therefore have a reassurance from the Leader of the House that, in addressing the necessary measures, it will also be important not to undermine those values which we think are so important in winning the battle against the intolerance of extremism?

To return to the EU Council meeting, we have heard about the dynamics of the meeting. The noble Baroness, Lady Smith of Basildon, asked just how long the Prime Minister had to make his case. At the end of an eight-page communiqué issued after the meeting, there are two—or, rather, one and a half lines—that say:

“The UK Prime Minister set out his plans for an (in/out) referendum in the UK. The European Council agreed to revert to the matter in December”.

It has been reported that this was done during what in other circumstances might be described as a pit stop. Some colour on how the Prime Minister presented his case would be very welcome.

The Prime Minister’s Statement talks about both reform and renegotiation. If there is to be renegotiation of the treaty and there is treaty change, it will almost inevitably require referendums in France, Ireland and Denmark. Can the Leader of the House perhaps clarify whether the Prime Minister is expecting treaty change? Will the referendum which we are having here be contingent on those treaty changes having been approved in the referendums of those EU countries which require them under their own constitutions? Or is it just the case that the Prime Minister is not very clear at this stage whether he wants reform or renegotiation and is hedging his bets?

With regard to migrants, do the Government accept that many of those crossing the Mediterranean are fleeing war and persecution in places such as Syria and Eritrea and are forced to undertake dangerous journeys due to a lack of safe and legal routes to find protection? A key part of the response to the crisis must be to offer refugees safe routes into the EU so that they no longer have to make such dangerous journeys or have to use the appalling means of people smugglers. Given that there are now 20 million refugees worldwide, I am sure that the noble Baroness will accept that to resettle just 20,000 must only be a starting point. She talked about the Prime Minister making further commitments in Bratislava recently. By one estimate, we have so far resettled 187 Syrians. There are estimates of nearly 4 million Syrian refugees, most living in Lebanon, Jordan and Turkey. Can she indicate, in the light of what the Prime Minister committed to in Bratislava, what numbers we expect to see as an increase?

Finally, I acknowledge that the United Kingdom did have and has exercised a legal right not to take part in this resettlement—the opt-out. Perhaps the Leader of the House will explain to your Lordships the moral case for that course of action.

My Lords, I am grateful to the noble Baroness, Lady Smith of Basildon, and the noble and learned Lord, Lord Wallace of Tankerness, for their comments about the despicable act of cruelty that occurred in Tunisia last Friday. I certainly support the tributes that they have paid not just to the officials and all those involved in supporting the people and families affected but also to the Tunisians themselves. Anyone listening to my right honourable friend the Home Secretary doing her press conference in Sousse earlier today would have heard how she paid a very big tribute to everybody there and to the local people of Sousse.

The noble Baroness, Lady Smith, mentioned those who wish to stay in Tunisia and those who wish to continue to go on holiday there. She asked about the travel advice offered by the Foreign Office. That was updated to reflect the heightened risk of terrorist attacks post the events on Friday but, as I said in the Statement that I repeated, we are not advising against travel to that area. She also asked what further support we are providing to Tunisia for it to continue to be an attractive place for people to go on holiday to. We are doing a range of things: in an immediate sense, we are sending over relevant experts to make sure that the resorts have the security that they need; we are also looking at what is possible to support the Tunisian police to take an intelligence-led approach to policing in this area. As far as financial assistance to Tunisia is concerned, since 2011 we have already made quite a considerable contribution. We have done that through the Arab Partnership initiative, and we certainly want to look at that again in the light of events. We continue to work with all partners to ensure that we tackle terrorism at source.

The noble Baroness, Lady Smith, mentioned the effect of the events on the Muslim community here in the United Kingdom. The noble and learned Lord, Lord Wallace, also asked about values of democracy and what we are doing to promote our own values. I first pay real tribute to the Muslim community and its work to tackle extremism. We are working, and want to continue working, with the Muslim community to support it, and together to ensure that we are even more effective than we have been so far in addressing extremism.

The noble Baroness, Lady Smith, then asked some questions about the European Council and pointed specifically to the debate on the European Union’s external borders. As she knows, and as the House knows, we are not part of the Schengen agreement but we play a proper part in protecting the European Union’s borders. We contribute in quite a significant way to ensuring that the security around our borders is tight. One of the areas where we provide a lot of specific expertise is on asylum. She also asked about treaty change and the Prime Minister’s contribution during the European Council on his move to renegotiate and reform Britain’s membership of the European Union. The noble and learned Lord, Lord Wallace, asked about that too. I will say a couple of points in response.

First, it was an historic moment at the European Council on Thursday night. We have started the process to which the Prime Minister committed of Britain having a renegotiation with Europe, for reform in Europe and for us to seek a better deal for the United Kingdom. Prior to the European Council, he met and spoke to all the other European leaders. As was made clear, Thursday marked the start of this process, which will continue. He will ensure that throughout the next few months Parliament is kept informed of progress. The initial talks will be what we call technical talks at an official level. It is worth noting, for example, that my right honourable friend the Europe Minister, David Lidington, is giving evidence tomorrow to the House of Lords European Union Committee. I am sure that he will be asked about this at that time. Therefore, we will continue to keep people informed as we make progress on the start of something that the British people really want, and we will ensure that, finally, they do get their say in membership of the European Union.

As far as the questions put about Mediterranean migration and the steps on that are concerned, I say first that our contribution is very comprehensive. HMS “Bulwark” has contributed to saving 4,000 lives, as I mentioned in the Statement; 900 of those were just over the weekend. The Government have a very different view from the Labour Opposition. We are committed to a programme of resettlement of people from outside Europe—so people who are at risk in countries such as Syria and Libya. We play a big part in resettling people from those countries to the United Kingdom. However, we do not believe that it is right to follow a programme of resettlement of people who have already made the crossing over the Mediterranean to Europe. As the Prime Minister made clear in his Statement, we believe that would make the prospect all the more attractive to the gangs who create misery by promoting this as a prospect, which is not one that we believe is the right way forward. We want to support these countries with aid, and political support where that is appropriate, to make sure that they themselves—the countries that these people are seeking to leave—offer the kind of future and prosperity that all the people who live there rightly deserve. That is what we are doing and where we will continue to focus our efforts.

My Lords, the Prime Minister made it clear that he believes that ISIL and Daesh are actually a threat to the existence of our nation at the moment. I have to say I do not see it in that way, but he has said that. Clearly that means—rather like the last time we had such a threat, which was the Second World War and the Cold War—one has to look at spending priorities in a totally different way, and things such as foreign aid, education, the National Health Service and welfare have to take a hit because we need to spend money on defence and security. However, my question is more specific. When we started our air campaign in Iraq, we said that we would not do attacks into Syria unless something specific—an atrocity or something—happened. Those of us in the military pointed out it made no military sense not to do attacks into Syria. Is this now being looked at again so that we have some more cohesive aspect to what should be a much bigger overall strategic plan, which a number of us have talked about?

I think what the Prime Minister said was that ISIL presents an existential threat to the United Kingdom. In response to the point that the noble Lord makes about military action and intervention and expanding on what we are already doing in the area, as he knows, the House of Commons was given an opportunity to consider whether we should get involved militarily in Syria and decided against that action. We believe that what we are doing right now is an appropriate and a very valid and important contribution to the fight against ISIL. Ultimately, we believe—and the international community feels—that to properly combat the threat of terrorism that emanates from ISIL there needs to be better governance in these countries. That is going to take a long time, and we need to support the people in the relevant countries to form the kind of representation of all the people that will lead to stability in those areas.

My Lords, we, too, on these Benches send our sympathies to those who have been bereaved and those who are injured. It is deeply concerning that Tunisia, a relatively peaceful haven in a part of the world in which there are many tensions, has now had this attack. Does the Minister agree that it calls for a renewed emphasis on working to strengthen community relations here in this country? The danger is that the events from Tunisia, Kuwait, Kobani and France could inflame ethnic and other violence and inspire copycat attacks here in this country.

It has been interesting over the weekend to hear of some of the fairly rapid responses that were made by community leaders. In my own diocese in Luton, we had a Britain First demonstration on Saturday. We had already planned to deploy a number of people on the streets, and that gave huge impetus to redouble our efforts. Fortunately, it went off relatively peacefully, but it had all the potential simply to bring those tensions that are overseas on to our own streets. There is really quite a pressing need to see what we can do. In some areas, community leaders including church leaders were immediately making contact with their counterparts in the Muslim community; certainly, that was going on in some of the interfaith areas in my own diocese. I know of at least one area—for example, the diocese of the right reverend Prelate the Bishop of Leicester—where a vigil was organised.

Sorry, I shall ask a question. Does the Minister agree that we need to redouble our efforts to work on these relationships?

The right reverend Prelate touches on an important point. Certainly, with regard to the Muslim community, there has been a lot of effort over the past few years to step up and increase integration. I have a couple of recent examples of things that we have done to support them and build relations in communities. One is the Big Iftar—and I had the great pleasure of going to one of those last year when I was a DCLG Minister. There is also the Sadaqa Day, a social action day of community, which is a bit like the ones that we support with the Jewish faith. Those are to try to make sure that those communities can play their part in the wider community as they want to do so.

As for extremism more generally, one reason why we are developing the extremism strategy that we are developing and intend to bring forward the legislation that we will is because we want to tackle all forms of extremism, not just the specific extremism that we have focused on in the Statement today. That is what we will ensure that we do.

My Lords, I hope that I shall be forgiven for focusing my question just on the European Union negotiations in this massive Statement that has covered so many issues, not least because so much has been said and words are almost inadequate in the face of the Tunisian horror—and, anyway, I agree totally with the Prime Minister that this is not just a western issue but a global issue requiring a global response.

I turn to the EU negotiations, which came at the end of the Statement. I admire very much the tenacity and energy of my right honourable friend the Prime Minister for getting the negotiations on the table. He has constantly said that the key issue is not so much British demands as EU reform; he has said that the EU is an “organisation in peril”, and that we need,

“'the flexibility of networks, not the rigidity of blocs”.

In the light of that essential insight, which is quite right, when are our negotiators going to begin to work with their allies across Europe on the fundamental redesign of the very troubled European Union today? Are not we leaving it a bit late?

I am grateful to my noble friend for his remarks about the Prime Minister’s approach and his tenacity on this issue. He asks when the talks are going to start. They have already started. Thursday signalled the start of the technical talks, and the efforts of the very senior government representatives who will lead on this are now under way. Prior to that the Prime Minister made a round of visits and had discussions with all other European leaders. Over the past couple of years, since he made it clear that this was something that he, as Prime Minister of this country, wanted to do, he has, in my view, been able to stimulate some enthusiasm and an agreement from other European leaders that reform of the European Union is in their interests as much as it is in the interests of all people in the United Kingdom.

My Lords, in order to satisfy the interest in this subject I propose that we extend the time for questions on the Statement for another 10 minutes.

My Lords, I am very grateful for the Statement and I agree with every word that the Leader of the House said on Tunisia. As I know only too well, terrorist attacks of this sort are immensely difficult and traumatic for those who are caught up in them and for their families and friends. I congratulate the Government on the quick response of the Foreign Office and others to the attacks in Tunisia. I very much support what the Prime Minister and the Leader have said about greater funding for the police and the security services because I fear that we are inevitably going to see further attacks of this sort around the world. Will the noble Baroness confirm that there will also be sufficient funding for the Foreign Office, and particularly its consular services, because they, too, are going to be required to provide the services that people who are attacked and affected both deserve and need?

I know that the noble Lord knows only too well, as a former Permanent Under-Secretary at the Foreign and Commonwealth Office, just what is involved in the reaction of the Foreign Office to such incidents, so I welcome his congratulation on the way the Government have handled this. As for funding, as he acknowledges, we do and we have ensured that not only has funding for the security services been maintained, it has increased in recent times. As for funding for consular services in the Foreign Office, our approach is always to make sure that there is adequate funding for any of our operational services to meet their needs.

My Lords, we are trying to do this in turns, as we do at Question Time, and it is therefore the turn of the Liberal Democrats.

My Lords, will the Leader of the House give us an assurance that we will hear more consistent messaging from the Prime Minister about the purposes of engagement with our EU partners? We have had mixed messages up to now. I was glad to hear the Statement refer to reform as well as renegotiation, but of course those require rather different styles. If we are taking about the reform of the whole EU, which will, of course, get a good degree of support across the EU, as opposed to renegotiation of Britain’s relationship with the EU, which was the language in the Conservative manifesto, is the Prime Minister going to say consistently that his aim is multilateral reform of the EU? If so, he may get more than a few minutes, during what my noble friend called a pit stop, at a future European Council, to be heard on this issue.

I am glad to know that the noble Baroness has studied our manifesto. As far as her question is concerned, the Prime Minister will take an approach that covers both those things. As I said, this is about reform, renegotiation and a referendum, when the British people will have the opportunity to decide. The Prime Minister has been very careful to talk to all his counterparts in the European Union and he will continue to do so. As I said, I think that there is now real enthusiasm from others that this should be an opportunity that benefits the European Union as a whole.

Is it not constitutionally improper and pretentious for the Prime Minister to use the word “never” in the context of this country subscribing to the concept of ever closer union of peoples in Europe? The Prime Minister has a mandate for one Parliament, not for ever. No Parliament can bind its successor and the Prime Minister ought to know that.

On the matter of refugees coming from Africa, if the Government wish, understandably and rightly, to break the link between being rescued at sea and gaining residency rights in the European Union, why is the Royal Navy not instructed to rescue these poor people but then to take them back to wherever they came from—Libya, in most cases? Have we undertaken negotiations with those de facto in control of the various ports in Libya so that we might be able to adopt such a policy?

I wish the noble Lord all the very best with his approach to ever closer integration in Europe if the Labour Party gets the chance to govern on that agenda. As for his question about Mediterranean migration, at the moment we are ensuring that when people are rescued they are taken to the first available place in order to establish whether they are economic migrants or asylum seekers. At the moment it is not possible to return people to Libya in the way that the noble Lord described, but I will reflect further on what he said.

My Lords, did my noble friend see the article in yesterday’s Sunday Times about Foreign Office expenditure on some weird and wonderful overseas aid projects? Will she now urge the Foreign Office to divert that rather wasteful expenditure to Tunisia, which is in the front line fighting extremism? The Islamic extremists know that they have to destroy Tunisia because Tunisia has opted for democracy and for keeping Islamic fundamentalism firmly in its box and out of government. Tunisia needs all the help it can get because, if it is destroyed, no other country is safe.

My noble friend is right that Tunisia is a great example of a country which is trying to provide the kind of future, prosperity and hope to its citizens that we want others in the area to see as a possible way forward. For that reason, it is important that we support it in its endeavours, and that is most definitely what we intend to do.

My Lords, I believe that the Prime Minister is right, as he said this morning on Radio 4, to compare the threat from Islamist terrorism with that from communism during the Cold War. Then, one of the most useful defence mechanisms that we had was enhanced positive vetting of all those in sensitive posts. First, will my noble friend assure us that the Government will make full use of positive vetting for all those who are responsible for the protection of our borders? Secondly, will the Government review the practice of using non-British local people to process visa applications in countries such as Nigeria?

I am not familiar with the detail of the processes that are in place these days for vetting staff. However, I am confident that there is appropriate vetting of any individual who is employed by this Government, wherever they are based, to ensure that they have the appropriate clearance for the task they are given. As to my noble friend’s point about non-British nationals being locally engaged in embassies to carry out entry clearance for visas and that sort of thing, again, I would imagine that there is no reason to doubt the processes involved in recruiting local personnel.

My Lords, in answering an earlier question on the Statement, which she repeated, the Leader of the House said that the issues would take time. One of the really difficult things is the feeling that we may not have an awful lot of time to deal with some of them. There are now 4 million displaced people in Syria, which is causing huge disruption and real difficulty in Jordan and Lebanon. We know that this is not happening just in Tunisia; we are seeing it split apart countries such as Syria, Iraq and Libya. What progress is being made in the work undertaken by Sir John Jenkins to look at the sources of funding and weaponry for ISIL? That very important report was announced some time ago, and it would be enormously helpful to have an idea of when we might expect publication.

The noble Baroness has a lot of expert knowledge of this area. I will write to her in response to her question about the report by Sir John Jenkins.

Clearly immediate action needs to be taken, and it is being taken. There is military intervention in Syria, albeit that America is taking the lead there with our Arab partners. We are providing some security and intelligence effort. We are contributing very directly in Iraq and are the second largest contributor to air strikes. Ultimately, the answer to stability in that part of the world lies in good governance. We must support these countries to get to a point where they have Governments in place who can properly represent all the peoples of their individual nations so that together they can combat this terrible, perverted ideology. That will take some time.

My Lords, on defeating Islamism, the Statement rightly says that,

“we must take on the radical narrative that is poisoning young minds”.

Is not one way to do that for us all to be allowed to talk openly about Islam, among ourselves and with our Muslim friends? If we try to do this nowadays, we are immediately told that it is we who are stirring up religious hatred. Surely the hatred is all in the breasts of the Islamists? It is all very well intoning that Islam is a religion of peace, but the jihadists, for instance the murderers of Drummer Rigby, believe that they are justified by the Koran and the life of Muhammad, which they quote freely. Will the Government encourage a national conversation about the nature of true Islam?

It is important for me to say that this is not about defeating Islamism; it is about defeating extremism and an ideology that is perverting a religion called Islam. All, I am sure, that any of us in your Lordships’ House wants is for the shared values in Britain, which are all about freedom and democracy, to be the loudest message that everyone hears. We want to ensure that we say to any person who shows sympathy with extremism that that will not be tolerated. Wherever it comes from, extremism should never be part of anybody’s conversation in this country. The Prime Minister is making clear in his contribution to the debate at this time that he wants all those in the Muslim community to have the confidence to know that they are right in condemning acts of extremism, that when they condemn acts of extremism they are standing alongside the rest of this country and that together we are going to defeat this extremism. Only together will we succeed.

My Lords, the Minister speaks about the Muslim countries in the Middle East trying to achieve good governance and stability. Would she accept that the war in Syria, which by next year will be entering its sixth year, must be resolved? The European Council Statement talks about a strategic reflection to conclude by June 2016. By then, ISIL will have been in power for two years in a given territory and the Syrian war will have been going on for six years. We do not have the time or the leisure to watch all this unfold over an extremely long period. What progress are they making towards trying to bring about Geneva III, a peace process, even if that results in a partial peace in Syria? We will turn the tide back through incremental gains in peace and stability on the ground and not through a good-governance revolution in places such as Saudi Arabia and Bahrain, which are going in the opposite direction.

What I am trying to say is that, as the Prime Minister made clear in his Statement, this is not a situation in which just one approach will see a successful result. There has to be a combination of approaches, which includes some military intervention. We are not involved in the military intervention in Syria—the noble Baroness knows of course that the decision was taken not to pursue that course of action—but we are supporting it with intelligence. I do not have the kinds of answers that she wants from me today, but I can assure her that the Government completely agree with her desire for urgent action. We want to see progress. That is what we are working towards, and we are trying to do so at every level and with every partner that we can to bring about progress in the Middle East.

Can I take the Minister back to her answer to the last point made by the noble and learned Lord, Lord Wallace of Tankerness, about cross-Mediterranean migration and death? She referred to the pull factor that discourages us from agreeing to receive any of these poor people if they make it. I cannot see the logic of that. I can see that there could be a pull factor when the news gets back home that somebody has made it across the water, but we do not think that is a deterrent to rescuing them, and quite right too. I do not see why it should be an additional pull factor if the postmark on the news is French, British or Danish. If they have made it across, surely if there is any pull factor it is there, so I do not see why we absolve ourselves from any moral responsibility to help. Could the Minister look at page 4 of the conclusions and help me with the footnote, which appears to say, as far as I can see, that our partners in Protocols 21 and 22 to the treaties—the Irish and the Danes, who like us have no obligation to take anybody—have decided that they will not rule out taking people, whereas we specifically chose to rule out doing so? Is she quite sure that that was wise, given that we are engaging in a negotiation that in the end will require unanimity, and that Prime Minister Renzi has a very real problem?

I object to the noble Lord’s description of us not making a moral contribution to this crisis, because we are. As I said, we are playing our part in the rescue of those who are at risk at sea and are making a very large contribution by way of aid to the countries where people are affected by war or by other things that cause them to seek to move to Europe. We are playing a strong part. As I said, we have a point-of-principle disagreement on the resettlement of people who have made that crossing, but we are doing quite a lot in the resettlement of people from countries such as Syria before they actually make the crossing.

My Lords, has there been a precedent for raising a domestic issue of the European Council in common with a Statement on an international terrorist tragedy, such as in Tunisia? Is that not strange? I can understand why government would want to cloak the impact of what has happened in Tunisia, but as somebody who has lived cheek by jowl with international terrorism for almost three decades, I suggest that we would not have mixed up a domestic issue with the Omagh bomb, the Ballygawley bus bomb or the Enniskillen Armistice Day bomb. Why on earth have we chosen now to take this tragedy—and I feel the injustice of that tragedy—in the way we have rather than talk about the positive, concrete steps that we might take to bolster a Government in Tunisia who are not in favour of the sort of terrorism that we see elsewhere in the Middle East?

The Prime Minister was due to give a Statement to the House of Commons today about the European Council, as he customarily does following his attendance at a European Council meeting—that being something that he is obliged to do. He decided, quite rightly in my view, that he should also make a Statement about the terrible events in Tunisia. This will not be the final occasion when the Government make a Statement to Parliament about our response to the most recent terrorist attacks. One reason why it was felt appropriate to combine the two is that clearly we are at the initial phase of responding to the events of last Friday. The most important and urgent thing that we are trying to do is to support the families affected by this despicable act. That is what the Prime Minister has sought to do in describing how the Government have responded. As I say, as things unfold, I am quite sure that others from the Government—my other ministerial colleagues—will make Statements as they see appropriate.

Greece

Statement

My Lords, with the leave of the House, I will repeat a Statement made a few minute ago by my right honourable friend the Chancellor of the Exchequer in another place:

“Mr Speaker, let me report to the House on the latest developments in the financial crisis in Greece, how they might affect British citizens and how we protect our economic security at this uncertain time.

The developments over the weekend have been well reported. Greece’s financial assistance programme is due to expire tomorrow. After tense negotiations last week between the Greek Government and their eurozone partners, it looked likely that a deal to extend that programme would be agreed. On Friday, however, the Greek PM suddenly announced that there will be a referendum on 5 July on the terms of that programme extension and that he will be recommending that the Greek people vote no.

On Saturday the eurozone Finance Ministers confirmed that, as a result of this unexpected move, negotiations were at an end and the programme would expire. Yesterday the European Central Bank said that without a programme it could not extend the emergency liquidity assistance that is the life support of the Greek banking system. Last night, clearly under pressure, the Greek Government announced that banks would not open today and capital controls would be introduced.

There is considerable uncertainty about what happens next. I have spoken over the last 48 hours to fellow Finance Ministers, the chair of the eurogroup and the head of the IMF. This lunchtime, as we just heard, the PM chaired a meeting attended by the Governor of the Bank of England, myself, the Foreign Secretary and others to co-ordinate our response. Britain’s attitude to the developing Greek crisis is clear: we hope for the best but we prepare for the worst.

Let me address some immediate issues that will concern people. First, our view on the overall state of the relationship between Greece and its fellow eurozone members is that, whether or not Greece should ever have joined the euro, it is now part of that single currency and an exit will be traumatic. It was the Greek Government’s decision to hold a referendum that was the immediate trigger for the events over the weekend and the bank closures today.

We should plan on the assumption that this referendum will effectively be a choice for the Greek people about whether their country now leaves the euro. This is a matter for the Greek people to decide, and we respect their democratic right to decide their country’s future. We also respect the right of the eurozone to set conditions of membership. That remorseless logic of integration is one of the reasons we did not join the euro and we do not want to in the future.

Secondly, there is the impact of the current events on the stability of the financial system, in the UK and across Europe. Related to that is the position of the Greek banks here in the UK. This Greek crisis has been with us in one form or another for five years. It has been one of the biggest external economic risks to the British economy, and the situation today shows that these risks remain. I do not think that anyone should underestimate the impact that a Greek exit from the euro would have on the European economy, and the knock-on effects on us. That is why I have consistently agreed that the best way to protect ourselves from these risks is to get our own house in order.

Of course, markets anticipate some of these risks. The private sector exposures to Greek banks and the Greek economy are far lower than they were, say, three years ago, so the financial market reaction today has been relatively contained. Stock prices on European exchanges have fallen by between 2% and 5% and Greek bond yields have increased by around 400 basis points to over 14%, but bond spreads in other eurozone economies have stayed broadly steady.

The eurozone authorities have made clear that they,

“stand ready to do whatever is necessary to ensure financial stability of the euro area”,

and we welcome that commitment to the currency. Equally, the British Government and the Bank of England stand ready to ensure our financial stability in the UK. The four largest Greek banks—Alpha Bank, Euro Bank, National Bank of Greece and Piraeus—all have branches here. Their UK balance sheets are small; between them, their deposits total less than £225 million. The resolution and supervision of these branches is the responsibility of the Greek and EU authorities, while the protection of depositors is solely the responsibility of the Greek authorities. All four branches are open today. There is one Greek bank with a subsidiary in the UK, Alpha Bank. This is a separate, standalone entity from its parent bank. It is small, with assets of slightly over £500 million. It is regulated by the Bank of England, and customers can be assured that their deposits are covered by the UK’s Financial Services Compensation Scheme.

Thirdly, there are 40,000 British residents in Greece, including 6,000 receiving payments from the Department for Work and Pensions and around 300 receiving public sector pension payments. The Greek Government have announced a bank holiday in Greece, lasting at least until after the conclusion of the referendum on 5 July, and restrictions on withdrawals from ATMs. Withdrawals will be limited to €60 per day per account for Greek accounts. The Greek bank accounts of those British residents are subject to these restrictions. Their UK bank accounts are not affected.

International payments into Greece are exempt from the restrictions that the Greek authorities have placed on the banking system. That means that UK government payments, including state pension and public service pension payments, should be permitted, and I can confirm that those payments will continue to be made in the usual way. However, the situation remains fast-moving and uncertain; we will keep it under review and I recognise that people may be concerned.

I have asked the Department for Work and Pensions and public service pension administrators to attempt to contact people who draw a British state or public sector pension from a Greek bank account. Those people will be helped to switch these payments to a non-Greek bank account if they wish.

Fourthly, there are on average 150,000 British tourists per week in Greece in the month of July. For the time being, the Greek Government have announced that, as usual, tourists will be able to withdraw up to €600 on cards that have been issued outside Greece. However, the foreign ministry could impose limits in future, and the availability of ATMs that are stocked with cash may get increasingly patchy. I remind people that credit and debit cards are of course accepted only at the discretion of the business that you are paying.

As a result of these limited and potentially unreliable banking services, I confirm that, as I speak, the Foreign Office is updating its travel advice. We recommend that travellers should take sufficient euros in cash to cover the duration of their stay, emergencies, unforeseen circumstances and any unexpected delays. Obviously travellers should be careful and take sensible precautions against theft. The full advice is available from gov.uk, and travellers should check this regularly.

Lastly, we are taking steps to help firms doing business with Greece. There are restrictions on the settlement of payments being transferred out of the Greek banking system. The department for business is today publishing guidance for businesses that may be affected. In addition, I can announce that HMRC’s Time to Pay service will be available to help to give breathing space to businesses that are experiencing cash-flow difficulties as a result of events in Greece.

So let me be clear: British pensioners are being paid as normal, British businesses trading with Greece will be supported and British holidaymakers will receive the advice and help that they need. In a rapidly changing situation, I want people to know that Britain is prepared.

To conclude, it is vital now that the Government and people of Greece act to resolve the current uncertainty, and ensure economic and financial stability across Europe. Five years ago we came to office in the first flush of the Greek crisis. At the time, Britain too was dangerously exposed and on the brink. Since then, with the British people, we have worked hard to repair our economy and ensure that we can deal with risks like this from abroad. If ever we needed a reminder of why we need to continue working through our plan to deliver economic security at home, we have it today. I will take further steps to secure our country’s future in the Budget next week”.

My Lords, I thank the Minister for repeating the Statement made by the Chancellor in the other place. I think that we can dispense with those last few remarks comparing the British economy with the Greek position and suggesting that it is government action in the past four years that has prevented our position from being the same. We all know the particular and extremely difficult circumstances of Greek society and its economy. These are very serious times for Greece and for the eurozone, of which of course it is a member, and there are risks for Europe and indeed for our country if urgent resolution cannot be found.

The main immediate fact is of course that the Greek banking system is now closed. I shall focus my response, first, on the impact on British citizens and, secondly, on the implications for our economy and financial system. Understandably, exporters, pension funds and the many British visitors to Greece need to know that the UK Government have a thorough contingency plan. I must say that in the Statement today there is a fair amount of wishful thinking rather than clear evidence of a plan.

I turn first to the impact on British citizens. As the Minister has indicated, some 150,000 British citizens would have been expected to go to Greece in July, although of course that number may now reduce. However, it will still be a very large number because people have made their plans. How will people travelling to Greece this summer be able to obtain full information and updates about the best way to plan and proceed with their arrangements? An obvious piece of advice the Government can give is this: “Go there absolutely loaded with euros and make sure that you look after them carefully”. That is wise advice, I am sure, but it is not much solace to the British traveller. What we want to know is what discussions have British officials had with the Greek authorities and banks to ensure that UK citizens are able to withdraw sufficient funds. What is the Minister’s assessment of the number of British citizens with resources deposited in Greek banks who will be anxious about what this means in terms of their ability to access their funds? For many, the British embassy in Athens and the consular staff will be the first port of call. Can the Minister give us an assurance that the embassy is sufficiently staffed and has the resources to cope with what inevitably will be a flood of anxious calls and representations?

I turn now to the impact on our economy and financial system. What discussions have the Treasury and the Bank of England had with financial institutions both here and across the European Union about the implications for our financial system, and what structures are in place to monitor closely any emerging risks? It is clear that if there are wider ramifications for the eurozone economies in the months ahead, there will be greater risks for UK business, trade and, of course, our economy. What assessment have the Government made of the number of British firms and the volume of exports that are potentially at risk? Billions have been invested from eurozone economies in bailouts and considerable hardship has been felt by the Greek people, who are facing economic distress. Does the Minister agree that it is important that the institutions should continue to seek opportunities for a negotiated settlement with the Greek authorities during the week ahead? Time is of the essence. Does he also agree that it is important for the Greek Government to accept their part in charting a course towards a long-term resolution?

This is surely a time for all parties to pursue a responsible approach for Greece and for the wider European economy, for much is at stake.

My Lords, watching the events in Greece is like watching a car crash in slow motion, and we on these Benches hope very much that steps will be taken over the coming days and weeks to avert what is undoubtedly a lose-lose outcome for essentially everyone involved. I have a few questions for the Minister.

Everyone in the House will be concerned for British citizens who are travelling in Greece. For tourists, the advice is to carry cash. I understand that that seems to be the most obvious solution, but I do not think that anyone would recommend it for themselves or their family because it exposes one to extraordinary risk. What conversations are taking place with our consular officials in Greece to see if they can provide some better advice, and if this continues beyond a few days, on looking to work with financial organisations? American Express and Thomas Cook are organisations that come to mind in terms of going back to some of the older methods of payment like travellers’ cheques, which were used before the days of credit cards.

Can the Minister give an assurance that the UK banks have passed stress tests which look not just at the immediate fall-out of the impact on the Greek banks, but on banks in other parts of the eurozone which might be the victims of knock-on effects by predatory financial traders, and indeed of the normal actions of the market looking for other weak spots? Can he also assure me that conversations have been held with the bank regulators? At times of volatility, and this crisis could lead to one, there is an obvious opportunity for misbehaviour in the financial system. We have another burgeoning crisis in the US swap market and one would hate to see those bad behaviours use the opportunity to take advantage of the volatility that may result from this crisis.

Does the Minister agree with the Financial Times that this,

“is a soluble problem merely cloaked in an aura of impossibility”?

Although the British Government have pointed out that they are not directly involved because they are not members of the eurozone, surely this is the time for the Government to make strenuous efforts and urge all parties back to the table. Does he not also agree that this crisis in Greece offers up some broader lessons, one of which is that EU Ministers and Governments will not put up with endless game playing? As a consequence, as he looks at the EU’s own negotiations on reform, will he ask the Government to make sure that they do not focus on synthetic issues—quite frankly, like whether there are phrases about ever-closer union—but on real issues such as the standing of non-eurozone countries and whether they are on a par with others? Perhaps he will speak to members of his own Cabinet who think that playing with a no vote in a referendum is a way to strengthen Britain’s negotiating hand. That is the kind of childish behaviour that we have just seen get Greece into extraordinary difficulties. This is a time when everyone needs to act like a grown-up.

My Lords, I thank the noble Lord and the noble Baroness for their comments. I shall start with the initial remarks of the noble Lord, Lord Davies. I shall just refer back to what the Chancellor said, because I do not see any part of the Statement where he compared this country to Greece. He said:

“If ever we needed a reminder of why we need to continue working through our plan to deliver economic security at home”.

Economic security at home is extremely important to deal not only with the obvious problems in Greece, which are not the same as we have here, but the other, unexpected problems that occur in the worldwide economy.

The noble Lord and the noble Baroness asked about British citizens. Of course, that is one of the most important issues as far as we are concerned. Greece is a big tourist destination, with 150,000 tourists normally going there in July. The Foreign Office updated its information both last night and again, I think, within the last hour. All British citizens should look at the information from the Foreign Office on the GOV.UK website because the situation is developing fast and that is the best way to get up-to-date information. The Foreign Office has been dealing with the Greek authorities and I can answer the noble Lord opposite directly: it has undertaken contingency plans to make sure that if the situation gets worse, adequate support will be provided for UK citizens in Greece and it will ensure that adequate resources are available.

I was asked what structures are in place in this country to monitor the situation. The Bank of England has primary responsibility for stability and is looking at this on a daily basis. The number of firms that deal with Greece is relatively minimal. The financial sector has reduced dramatically over recent months, with the latest figures for March showing that exposure levels were approaching a quarter of what they were in December last year. By way of comparison, they comprise less than 2% of the UK’s financial exposure to France. Direct trade and investment links are also minimal, with only 0.6% of total UK goods and services exports going to Greece—worth around £2.8 billion in 2013—while only $1.1 billion of Greek foreign direct investment stock comes from the UK. In fact, of all the periphery euro area economies, Greece receives the smallest amount of UK outward foreign direct investment.

I agree with the noble Lord opposite that a negotiated settlement is preferable. I also agree that the Government here will do whatever they can to help in that. They have been in touch with European institutions, but, obviously, as we are not part of the eurozone, we have less influence in this matter. But I agree with him that a negotiated settlement would be best. I have to bear in mind what the president of the IMF said: it is time to have some adults in the room when they get to negotiations.

The noble Baroness, Lady Kramer, asked about cash, which obviously is a risk. I think that it is sensible to take more cash than you would normally take. One could also take more than one card, if one has them. Of course, the problem is that those cards are no good if the banking system is not working and the ATMs have run out of cash—and I think that they will run out of cash fairly soon. She mentioned travellers’ cheques. Again, they are only any good if the banking system is open and working. Hotels, I think, fairly rapidly run out of cash.

The noble Baroness asked about the stress tests and the banks in this country. I cannot answer directly whether they involved a specific reference to a situation like Greece, but all our banks have passed their stress tests. These take into account instability in the economy, which is one of the tests—and the banks passed. There is much less contagion risk in the periphery than there was a few years ago. Countries such as Spain and Italy have reduced their exposure to Greece as well—it is not just this country. As for the discussions with the bank regulator, the Bank of England—the regulator in this country—has talked to other European institutions.

The noble Baroness said that this was a soluble problem. I think it is soluble with good will on both sides, but it will be very difficult. The performance of some of the players has made that more difficult, to be frank. On reform generally and the effect that this will have on our negotiations with the EU, I do not agree that ever closer union is a synthetic issue. When you have a eurozone, ever closer union is an absolutely important part of that. That is a real issue we have to address, and the Prime Minister is determined to do so.

My Lords, is it not clear that the Greek disaster is simply the most acute evidence of the fact that the European monetary union was, from the start, a fundamentally flawed enterprise, as a number of us predicted and explained very clearly at the time? Is not the best thing that we can do now to persuade our friends in the eurozone to enable Greece to exit from the eurozone in the most orderly way possible? Inevitably, it cannot be totally orderly; it will be difficult. But to facilitate the most orderly exit of Greece from the monetary union is the best service we could provide.

My Lords, I am not sure that it is fundamentally flawed. The key is that the participants in the eurozone have the right economic fundamentals that allow them to go into it and play their part. As for exit, that is up to the Greeks. It is they who are having a referendum. It is not for us to tell them which way to vote. I absolutely agree with my noble friend that if they decide to exit by dint of the referendum, which is their democratic right, we should do all that we can to make it orderly.

My Lords, it is clear that a Greek exit would provide an existential threat to the whole European monetary and economic framework, with knock-on effects geopolitically and also for the United Kingdom. As Angela Merkel said, if we lose the ability to compromise, we will lose Europe. Even at this late stage, is it not incumbent on the UK Government to ensure that their voice is heard and that a compromise is agreed with a degree of debt write-down and concomitant structural changes in Greece itself? That is still a possibility and every effort has to be made to ensure that before the weekend.

I agree that we should do what we can, but it is fundamentally a eurozone problem. There is a limited amount we can do. In terms of the bailout, we would not be on the hook for that. I agree that we should do what we can. Of course, the former Leader of this House is hard at work in Europe, even as we speak.

My Lords, in the present confused situation, only one thing is clear. It is inconceivable that Greece will become competitive and achieve economic recovery at the present exchange rate. Therefore it will be condemned to endless austerity, abortive negotiations and financial crisis until such time as it leaves the euro. My noble friend’s Statement refers to an exit by Greece as being traumatic. The important, thing, therefore, is that we should do everything we possibly can to make it happen in an orderly way, rather than in a traumatic way, where other European countries are not taking action because they believe that it is fundamental that Greece remains in. It is not going to remain in; sooner or later, it is coming out. Therefore it is very important that we should work together with other European countries to achieve a sensible exit.

In particular it needs to be made clear that, if there is an exit of Greece from the eurozone, it does not mean that Greece exits from the European Union. From a political point of view, it is very important indeed that it should not do so. At the moment, however, I fear that we are underestimating our interest in this matter. We are of course already contributing in part to the bailout through our contribution to the IMF, and it is obviously extremely important as far as our export markets to Europe and so on are concerned. So we need to work with the other members in the European Union to seek to achieve a resolution to this crisis that is long term. That can only be if Greece exits the euro.

My noble friend is obviously right. I would not swap economics with him. I accept that there are difficulties if your exchange rate is constrained by the euro and your interest rate policy is determined by the euro authorities. Ultimately, that is why it would be traumatic, as my right honourable friend said, if they leave—and it will be traumatic for individual Greeks, for whom we should feel a great deal of sympathy.

As far as the IMF is concerned, it is true that if Greece does not pay back its loan, it will go into arrears. There are contingency funds within the IMF which may cope with that. Ultimately, however, if that was the case, we would have about a 15% share of that. I agree with my noble friend that if we get to the stage of Greece leaving the euro, we should do all we can to help. I note that on Twitter today, President Juncker has said that, in his view, if Greece leaves the eurozone it will mean that it will be leaving the European Union.

My Lords, does the noble Lord agree that it is strange that the Greek people, and indeed the Portuguese and the Spanish, blame their problems on austerity, without seeming to realise that that is caused entirely by the ill-fated project of European integration and its euro, which they think they want to keep? Do the Government agree that, as other noble Lords have suggested, the Greek people’s best way out of the cruel euro trap is to leave it, devalue and gradually rebuild their economy? Would it not be nice if the Greeks were to succeed in this task and were eventually followed by the Portuguese, the Spanish and perhaps even the French? That might start to break up the whole euro project and, indeed, the project of European integration itself, which is doing so much damage to Europe.

The noble Lord may be surprised to know that the Government do not agree with that analysis. I know that he has certain views. Austerity per se is not the cause only of the Greeks’ predicament. It has been a long time coming, and other European countries have dealt with it in a possibly more effective way. Austerity alone is not the answer, but nor is leaving the euro. We need to help the Greeks negotiate a position where they can face the future with a bit more optimism, and I am sure that the noble Lord will join me in that.

The noble Lord has accepted that the United Kingdom is exposed through the IMF to a Greek default or Greece being in arrears. He has not given us a figure, but the Times this morning said that Greek indebtedness to the IMF was to the tune of about €21 billion. Will he tell the House what specifically the United Kingdom exposure would be in that regard?

Would it not be a good idea for the Government, when they refer to ever closer union, to quote the phrase correctly? It is the ever closer union of peoples. It has never been a legal or an institutional matter. On Greece, I am sure that the Government have given some thought to what follows, or what might follow, from the referendum on Sunday. Presumably, if the vote is no, Greece will continue down the tube of bankruptcy, and no doubt leave the euro, have high inflation and so forth. If the vote is yes, will the package, which was so petulantly rejected by Mr Tsipras the other day, be revived and be on offer to a new Greek Government? Will our Government use their influence with our eurozone partners and the IMF to urge them to adopt that cause?

My Lords, I do not think that the package is a matter for this Government. We would certainly take into account what would happen after the referendum, which of course is a Greek choice, but it is for the eurozone to decide what package is given to its members.

As for the ever closer union of peoples, the point is that when you have one currency, you need to have closer political union to make that one currency work. If you do not have that, you end up having some of the problems that we are seeing.

My Lords, given that the German Finance Minister only a month ago suggested that a referendum on the package might be appropriate, is it really acceptable that the package should be withdrawn the moment the Greek Government announce that they are going to have a referendum on whether the people should accept it? What exactly are the Greek people voting on if the package has been snatched away? When the Minister refers to the loan to the IMF being in arrears, will he explain the difference between being in arrears and being in default?

As regards the arrears, I was merely repeating the official nomenclature of the IMF. I would not comment on the precise meaning of the IMF vocabulary, but it is true that it refers to being in arrears. If that was the case, Greece would join Zimabwe, Somalia and the Sudan. On the referendum, the negotiations are coming to an end because, despite what the German Finance Minister said, if you are to have a sensible negotiation, you need to have willingness on both sides to compromise. Walking out instead of taking the decisions that are needed, and turning around without any warning and instituting a referendum, is not the way to get proper negotiations and to achieve success.

My Lords, is not one of the difficulties of the analysis that people assume that something follows on from having a referendum, which of course must be nonsense? It is not a logically connected piece of analysis. There can be all sorts of scenarios from where we are now, but Angela Merkel has said that the referendum question is simply, “Do you want the euro? If so, vote yes. If you want the drachma, vote no”. Can it be as simple as that? Are there not a number of scenarios that could follow, and should we not be thinking through a number of them, otherwise the schizophrenia in this debate about whether a referendum is a bright idea has not been followed up by thinking through the policy scenarios?

Montenegro is just up the road from Greece. It is a member of the United Nations and a singing and dancing country. It uses the euro without permission from Frankfurt. It is not obvious to me exactly what the connection is between the way the referendum is posed and the scenarios that follow.

I can see the noble Lord’s problem, but I do not think that it is a problem for the UK Government. The referendum was instituted by Greece and it is up to them what the question should be, what they are trying to address and why they are trying to have one. I completely agree with the noble Lord that there are many scenarios resulting from that. The Treasury, the Government, the Bank of England and the Foreign Office are looking at this and working out contingency plans on a daily basis.

My Lords, the Minister said that the British Government would be preparing for the worst. I think it is quite widely thought that the worst that might come quite quickly is a humanitarian crisis within Greece. Once no cash is circulating, particularly in an economy that has such a substantial cash sector as in Greece, the difficulties for people in getting food and basic services will become very immediate. Are the British Government going to play a role, should that be required, in any EU humanitarian effort to mitigate suffering in Greece?

My Lords, I agree with my noble friend that in preparing for the worst—I alluded earlier to the sufferings of the Greek people—a humanitarian crisis would be very serious and possible. I am afraid that I am not in a position to commit today on how we would help in that situation. I would like to, but I just do not have the knowledge to do so, I am afraid.

My Lords, the Minister said that the Foreign Office was updating its advice to travellers to Greece hourly, daily or something, which clearly is welcome. For humanitarian reasons and for the sake of people’s holidays, clearly we do not want to discourage people from going to Greece, but surely the only safe advice at a time when the banks are shutting and credit cards may not work is for people to take cash, probably in euros but any hard currency would do. Is that not the best advice to give people, rather than saying, “Well, you might be able to go to a bank or you might not?”, or anything else?

My Lords, I have not checked the latest advice. I have been informed that it was updated last night and will be re-updated today. I think that is exactly what the advice said.

My Lords, are we not just kidding ourselves about the real situation? Does the noble Lord not agree that the eurozone is fundamentally flawed and has been so right from the beginning? The grown-ups among us recognised that when we opposed going into what was to be a flawed system. Is it not true that without the fiscal and social power, together with the monetary policy, the eurozone simply cannot work? The idea that it could work, particularly with the membership of Greece, was always absurd.

My Lords, the Government do not believe that the eurozone is fundamentally flawed as long as its members have the right economic position when they go in and go in at the right exchange rate. The euro institutions’ power is adequate as long as the members go in at the right time and with the right criteria. I accept that there are different views on this, but the countries in the eurozone are varied. Greece may well leave—I do not know; it is up to the Greek people—but just because one country on the periphery leaves does not necessarily mean that the eurozone is fundamentally flawed.

Does the Minister agree that politics brought the Greek people into the eurozone and that politics will be deployed to keep them in it as the week goes on? Will that not mean that the misery that they suffer continues? As the noble Lord, Lord Davies of Stamford, said, what happens if the Greek people vote yes when their Government recommended no? What policy can we expect to be implemented following such a decision?

I completely agree that politics is very important in all these things, along with the economic arguments. Politics demands that all people in positions of power take decisions that are not just in the short-term interests of their political persuasion but in the long-term interests of the Greek people.

My Lords, it looks inevitable and is probably desirable for the euro’s sake that Greece leaves the euro area. Does the Minister agree that it is very important that Greece stays in the EU, which is a more important organisation of longer standing than the euro and should be much more durable? Does he agree that Greece should not invent some Mickey Mouse currency such as a new drachma, which would not fulfil the functions of money—store of value, unit of account and medium of exchange—but should instead continue to use the euro? As the noble Lord, Lord Lea, said, a country does not necessarily have to be in the euro area to use the currency. It has been done with the dollar in South America. Tourists, who are so important to Greece, could use travellers’ cheques. Hotels and so on do not have to cash them; they can accept them and keep them. As long as they have been issued by a reputable outside bank, they are as good as cash for them.

My Lords, I am not an economist, but I accept that it is theoretically possible to use other countries’ currencies. The problem is that a country does not have control over its currency if it does that. It is not up to me or to the UK Government to decide which currency Greece should use in the event that it leaves the euro. That will be up to the Greek Government.

Cities and Local Government Devolution Bill [HL]

Committee (3rd Day) (Continued)

Amendment 44DA

Moved by

44DA: After Clause 9, insert the following new Clause—

“Sustainable development

After section 117 of the Local Democracy, Economic Development and Construction Act 2009 (orders) insert—“117A Sustainable development

(1) In determining whether or how to exercise the power conferred by section 113D, a combined authority shall have regard to the effect which the proposed exercise of the power would have on—

(a) the health of persons in its area; and(b) the achievement of sustainable development in the United Kingdom.(2) Where the authority exercises the power conferred by subsection (1), it shall do so in the way which it considers best calculated—

(a) to promote improvements in the health of persons in its area, and(b) to contribute towards the achievement of sustainable development in the United Kingdom,except to the extent that the authority considers that any action that would need to be taken by virtue of paragraphs (a) or (b) above is not reasonably practicable in all the circumstances of the case.(3) In subsection (2)(a), the reference to promoting improvements in health includes a reference to mitigating any detriment to health which would otherwise be occasioned by the exercise of the power.

(4) In deciding whether or how to exercise that power, the authority shall have regard to any guidance issued under section 118.””

Amendments 44DA, 44DB and 44DC are probing. They mirror similar texts in the Greater London Authority Act 1999. Why do the Government not propose to include these important safeguards for devolution outside London that the 1999 Act provides for within London? That is particularly important in relation to the concentration of power that is proposed for mayors. It is also relevant to the exercise by combined authorities of the general powers of competence.

Amendment 44DA requires the combined authority to have regard to the effect on the health of persons in its area and to the achievement of sustainable development. I would have thought that the Government were keen to see those things promoted and would be in favour of the provision in proposed new subsection (3), which states that,

“the reference to promoting improvements in health includes a reference to mitigating any detriment to health which would otherwise be occasioned by the exercise of the power”.

Amendment 44DB relates to consultation. All Governments say that they do not like lists of people who have to be consulted, but the list in my amendment seems reasonable. Amendment 44DC refers to transport strategies. The London mayor has produced many strategies—most of them are good, some less good—and people in the London area have been consulted on them. I was in Liverpool last week hearing people’s views on the northern way, or northern powerhouse or any of the other names for the new area for development across the Pennines—from the Humber to the Tyne and Tees to Liverpool and most places in between. It is good, and surprising, that the authorities have got together and appear to be coming up with a joint strategy for the whole region. Only a few years ago, as the Minister will know from her experience there, such a strategy was a bit of a pipe dream, but it is happening now. It will need funding and it will need more detail, but it is happening.

The key is to achieve consensus without any one mayor thinking that he or she is in charge. A couple of years ago I was told that the people of Liverpool had to run everything because they were better. Perhaps Manchester is supposed to be better now, but in fact everyone is working together.

Amendment 44DA is a probing amendment to find out why the Government have not felt it necessary to replicate the text from the Greater London Authority Act in this Bill. Is it seen as an unnecessary constraint on the mayor’s powers? We need some constraints, especially on health and sustainable development. The measure has not been entirely successful in London because, before the Olympics two years ago, the mayor managed to hide the statistics for air pollution by covering up the monitors. It was an easy way of doing it and he seemed to have got away with it. We were certainly said to have better air quality than Beijing, which would not have been the case if the monitors had not been covered up.

I shall be interested to hear what the Minister has to say. She may say that the amendment is not necessary, but if it is good for London, why is it not good for the rest of the UK in the circumstances that the Bill covers?

I support the amendment. A question has come from a number of Benches and the Minister about the problem of trying to recreate London devolution in the north and elsewhere in the country. I understand that and I concede that there might be differences in the way it is implemented which are more relevant to those areas. However, I suspect it is dangerous to talk about the north because those cities to the left of the Pennines might not see it in the same way as those on the eastern side. The fundamental thing is not necessarily to make it the same—as the noble Lord, Lord Berkeley, said, this is a probing amendment—but why should metropolitan areas outside London have a second-division method of governance in comparison to what has been trialled and used in London, to a degree successfully, although not completely?

The areas of particular importance in this are sustainable development—which ties up completely with the outline planning rules introduced by the previous Government—and transport. When we discussed the Infrastructure Act last year we asked for a transport strategy—particularly around cycling and pedestrians— which I hope the Government and the Secretary of State are developing. It is important that this becomes part of the work of combined authorities.

This may not be the perfect amendment but it is necessary to include this kind of framework in the Bill for northern cities and combined authorities. Even though a direct comparison with and a copying of London legislation and regulations may not be completely appropriate, it is important to find something that fits the situation of combined authorities in the north and elsewhere that enables them to be successful. In that sense, I hope the Government will come forward with a different formula that meets those objectives.

My Lords, I know that opposition to motherhood and apple pie is always disliked in this House, but the impression put forward by these amendments is very worrying. Do we have any indication that the governance of London has been affected by this, because any sensible mayor of any denomination would do the useful things that are listed here? However, some of them mean very little. For example, what can we take from subsection (2) of proposed new Section 117B, which states that any body or person a combined authority considers consulting must include any council within its area and,

“bodies of each of the descriptions specified in subsection (3)”?

Those bodies in subsection (3) include:

“(a) voluntary bodies some or all of whose activities benefit the whole or part of its area;

(b) bodies which represent the interests of different racial, ethnic or religious groups in its area;

(c) bodies which represent the interests of persons carrying on business in its area”.

Are there any bodies of any kind whatever not covered by that? It makes no sense. It is a list of things. Will a decision by the mayor be illegal which did not follow a discussion with a particular body providing for the interests of a small number of people in a particular ethnic group for whom it was not appropriate? This is a list of things which are good, valuable and helpful but totally not useful in the activities which we envisage the mayor carrying through.

It would be perfectly reasonable to say that the mayor should have serious concern about sustainable development; that he should have appropriate consultation; that it would be a good idea to ensure that transport strategies were,

“consistent with national policies and with such international obligations as the Secretary of State may notify to the mayor for the purposes of this section”.

However, I have my doubts about whether it would make any difference. If there are things to be said, they should be said when they are necessary. There should not be merely a list of things about which we can all feel warm because we have voted in favour of reminding people that it is a good idea to consult.

My Lords, the amendments of my noble friend Lord Berkeley reasonably probe the Government and focus on issues which should underpin a combined authority’s operations and strategies. There are issues around the health of people in the area and around sustainable development, about which my noble friend always speaks with passion. I know the Minister’s answer will be, “You can ask for all these things; you may well get these things in a deal; but you do not have to have them in the Bill”

The consultation requirements in these amendments are a little more specific than one would like, even if one were in support of putting them in the Bill. The issue here is to encourage all the deals that take place under these devolution proposals to have, as their underpinning, issues around sustainable development and the health of people in the area. I am sure the Minister will tell us there is no reason why those issues should not feature in any deal that might be entered into. If that is not the case, there is a stronger case for putting something more specific in the Bill.

As to the strategic view on transport, if there is an argument for putting measures in the Bill it might be to hold the Government to account so that we do not proceed on an assumption of a northern powerhouse, with a big debate around connectivity, and hear a few days later that the funding is not there to deliver on it. That does not help trust between government and local authorities in creating an environment where devolution can work and where issues around sustainable development and the health of people in an area are at the forefront of the strategic operations of a combined authority.

My Lords, these amendments seek to introduce into the Bill new clauses that would place on combined authorities prescriptions and requirements about how they exercise certain powers which may be conferred upon them.

Amendments 44DA and 44DB place requirements on how a combined authority which has been given the full general power of competence through the provisions of Clause 9 of the Bill is to exercise these powers. These requirements are about having regard to certain matters and having to undertake consultation with various specified authorities and other bodies. The intention of new Section 113D, which Clause 9 inserts into the Local Democracy, Economic Development and Construction Act 2009, is to allow the same power of general competence that is available to local authorities to be conferred on combined authorities. The purpose of such a general power is to give the authority concerned the same scope and freedom of action as is available to any individual, such as you or me, subject to any specific legislative restraints applying to that authority.

To seek to prescribe to combined authorities how they should exercise this power would seem to be contrary to the essence of the general power of competence. It would place combined authorities in a more restrictive regime than that which applies to local authorities generally. There are no grounds for doing this in those situations where, as part of an agreed deal, it is considered right to give a combined authority the full general power of competence.

I recognise that these amendments appear to mirror some of the provisions that apply to the Greater London Authority. In the London context, the authority has the power to do anything which it considers will further any one or more of its principal purposes. In exercising this power the authority is required to have regard, for example, to its effect on the achievement of sustainable development in the UK and on the health of persons in Greater London. However, these specific powers which are given to the Greater London Authority are of a very different nature to the general power of competence, which, as I said, is the power for an authority to do anything which an individual can do, unless it is specifically prohibited. These are particular powers about promoting economic development and wealth creation in Greater London, promoting social development in Greater London and promoting the improvement of the environment in Greater London. It may be in a particular deal that similar powers are conferred on a combined authority, using the powers in the Bill under Clause 6.

Amendment 44DC provides that in preparing or revising any transport strategy a combined authority shall have regard to the health of persons in its area, the achievement of sustainable development in the UK and certain matters relating to national policies, international obligations and the available resources for that strategy. This amendment mirrors provisions which apply to the London mayor in respect of his general duties in relation to his strategies. However, such provisions are not appropriate to be included in an enabling Bill, which does not refer to any particular powers or duties a combined authority and its mayor may have. If, as part of a particular deal, a combined authority mayor is given a power similar to the Mayor of London’s in relation to certain strategies, then it may be right that, in the case of that combined authority, matters such as sustainable development and the health of the people in the area could be relevant considerations to be taken into account by the mayor when drawing up those strategies. The orders creating such an arrangement would be able to reflect this.

Whatever the importance of particular issues, and clearly the health of people in an area is of the utmost importance, it is not for this Bill to include either references to specific powers, or provisions which can relate only to specific powers. This is an enabling Bill and in our previous debates I have made very clear that the Bill is not a vehicle for setting out lists or descriptions of powers which may or may not form part of an agreed deal with particular areas. Accordingly, I hope the noble Lord will agree to withdraw his amendment.

I am very grateful to the noble Baroness for her comprehensive explanation, which might be summed up with “good try”. As I said, it is a probing amendment. It has been an interesting debate, and I accept the comments of the noble Lord, Lord Deben, about the detail. The amendment was basically copied from a GLA Act, which seemed a good place to start, but he has made some very good points.

The noble Lord, Lord Teverson, reminded the Committee that we are still waiting for the Government’s strategy on cycling and walking, which came in earlier this year, and that will be good. My noble friend Lord McKenzie hit the nail on the head by saying that all this is fine but unless it is accompanied by funding—and, one could even add, an ability to raise funds locally—how important will it actually be? I will read the Minister’s comments with great interest. I may come back on this again, or I may not. I beg leave to withdraw the amendment.

Amendment 44DA withdrawn.

Amendments 44DB and 44DC not moved.

Amendment 44DD

Moved by

44DD: After Clause 9, insert the following new Clause—

“NHS responsibilities

(1) The Secretary of State may transfer to a combined authority any NHS responsibilities provided for in the Health and Social Care Act 2012 if he considers—

(a) that it is in the best interests of the authority’s population in terms of health outcomes; and(b) that it will help fulfil his duty in section 2 of the 2012 Act (the Secretary of State’s duty as to improvement in quality of services) to improve the quality of health services.(2) In making a transfer of responsibilities to a combined authority under subsection (1), the Secretary of State shall request that a memorandum of understanding between NHS England and the combined authority be agreed.

(3) The memorandum of understanding shall—

(a) be consistent with the duties and powers of the combined authority under the 2012 Act, and(b) last for a minimum of 5 years, unless the combined authority fails to discharge its responsibilities under the memorandum, including its mandate from the Secretary of State.(4) Any memorandum under subsection (2) shall have regard to the Secretary of State’s duty under section 5 of the 2012 Act (the Secretary of State’s duty as to promoting autonomy) by—

(a) promoting autonomy and avoiding placing unnecessary burdens on the combined authority, and(b) specifying the key health outcomes to be achieved by the combined authority.(5) The requirements in the memorandum shall be set out in regulations by the Secretary of State.

(6) A combined authority assuming NHS responsibilities under the provisions of this section shall publish an annual report on how it has discharged its responsibilities on the basis set out in the memorandum of understanding.”

My Lords, we return to the issue that we discussed last Wednesday, namely the ability of combined authorities to assume NHS responsibilities under this Bill. Several things emerged in our last discussion. The first was that the Government currently have no intention of making any clear provisions in the Bill for combined authorities to assume NHS responsibilities. Instead, they wish to proceed on the basis that a combined authority could negotiate a deal with NHS England that would be enshrined in a memorandum of understanding covering a number of years. However, the Secretary of State would retain all his powers in the Health and Social Care Act 2012 to overrule actions by the combined authority in accordance with the memorandum of understanding, if he disagreed with those actions. No matter how much agreement there was between local bodies such as clinical commissioning groups, health and well-being boards and a combined authority, it would still be the Secretary of State’s view that prevailed. The Minister made it clear when I taxed her on the issue of local bodies replacing acute hospital beds with more preventive and community-based services that that was the position. I have reread Hansard to make sure I did not misunderstand her and I did not.

The second point which now seems apparent is that this position sits rather oddly both with the NHS’s Five Year Forward View, endorsed by the Government, and the devolution claims by the Chancellor for the Greater Manchester deal, announced with much fanfare in February. The Five Year Forward View made it absolutely clear that:

“England is too diverse for a ‘one size fits all’ care model to apply everywhere”.

That clearly means that NHS England expects variations between areas. Its five-year plan is very clear that the NHS balance should shift to preventive and community services and that funding incentives and systems should change. That was the purpose of my question to the Minister—what would happen if those sorts of changes took place and proved uncomfortable and controversial in some parts of the country? This is clearly a plan that moves activities and funding away from in-patient hospital care on an agreed local basis. That is very much reflected in the Greater Manchester plans, and the memorandum of understanding is consistent with that. It certainly gives the impression that once a deal is finalised with NHS England and local interests have agreed it, there will be no political interference from the centre.

The Minister’s utterances last Wednesday suggested something quite different. They also suggested a total muddle in the Government’s thinking on how this Bill sits with the Health Secretary’s powers under the Health and Social Care Act 2012. I can understand that the Government do not want to amend the 457 pages of that Act. Who would want to go through that agony again? What I cannot understand is why they want to undermine this broadly sensible Bill by failing to make it clear how NHS responsibilities can be transferred to combined authorities on an agreed basis that is consistent with the 2012 Act. All we have to go on regarding how things might work in practice is the current memorandum of understanding between NHS England and the Greater Manchester Combined Authority, which is not even the finished article—it refers to it being the build-up year—and the prospect of a ministerial order, the terms of which we have not seen. Even if we saw such an order, as I understand it from the Minister, there is no guarantee that the same arrangements would apply to subsequent deals. These would all be bespoke negotiations. What we do have is the Minister’s expressed view, which causes me the greatest concern, that the Health Secretary could overturn local agreements if he thought them wrong—or “bad”, in her words. In other words, agreements hammered out locally could be overturned by a Minister in Whitehall because he did not like the look of them or he had been got at by an adversely affected particular interest. I can assure the Minister, having been a Health Minister who sat in Whitehall and dealt with hospital closures and changes, that there is no shortage of people coming forward to tell you it is a thoroughly bad idea.

That is the position we are in and it is not particularly satisfactory. I do not believe that we need to get to a point where we rewrite the Health and Social Care Act 2012 but this House is a scrutinising House. We should not allow muddled legislation to leave it without attempting to make clear how it relates to earlier relevant legislation. This means that we have to look at the Bill before us, which is concerned with the functions of combined authorities, and be clear about how those authorities could assume NHS responsibilities if that is what people at the local level wanted to do. This is very important, given the size and prominence of the NHS in British life, and means putting in the Bill processes that could be adopted across the country, not just in Greater Manchester, that are as consistent as possible with the terms of the Health and Social Care Act 2012. We should not pass the Bill with the current level of uncertainty and lack of transparency on those processes. That can only lead to confusion in the minds of the public, the NHS and its staff, and indeed in local government, and will inevitably lead to legal challenges when some interest or collection of interests does not like the look of particular local changes and tries to challenge those given the Health Secretary’s powers. In all likelihood, that would mean leaving it to the courts to try to work out what Parliament intended.

This is the context in which I have drafted my amendment, which has several subsections. It starts by clearly stating that the Health Secretary has the power to,

“transfer to a combined authority any NHS responsibilities provided for in the Health and Social Care Act 2012”—

so a link is established between the two bits of legislation. However, he must be satisfied that,

“it is in the best interests of the authority’s population in terms of health outcomes”,

and it must be consistent with,

“his duty in section 2 of the 2012 Act … to improve the quality of health services”.

I am sure the Minister is totally cognisant of all the provisions of that splendid piece of legislation. In making such a transfer,

“the Secretary of State shall request that a memorandum of understanding between NHS England and the combined authority be agreed”,

that is consistent with his duties under the 2012 Act and which will last,

“for a minimum of 5 years, unless the combined authority fails to discharge its responsibilities under the memorandum”.

The proposed new clause goes on to say:

“Any memorandum … shall have regard to the Secretary of State’s duty under section 5 of the 2012 Act (the Secretary of State’s duty as to promoting autonomy) by … avoiding placing unnecessary burdens on the combined authority, and … specifying the key health outcomes to be achieved by the combined authority”.

Finally, the amendment requires the Health Secretary to make regulations setting out the requirements in the memorandum of understanding, and requires the combined authority to publish annually a report on how it is discharging its responsibilities.

I am neither a proud author nor make any claims to being a parliamentary draftsman. This amendment was crafted rather rapidly after Wednesday’s discussion before I had to travel from London early the next day. I am sure it can be improved. It is designed to outline the kind of provision that needs to be in the Bill setting out a process for transferring NHS responsibilities to combined authorities that both reflects the spirit of the Bill and is as consistent as possible with the Health Secretary’s duties under the 2012 Act. I have retained the idea of a memorandum of understanding between NHS England and a combined authority, à la Greater Manchester. I relate the Health Secretary’s powers to transfer responsibility by order to his duties under the 2012 Act. But once he has signed off that order for five years, which is the period I am suggesting, he should not interfere with the authority’s actions unless it is failing to discharge its duties under the memorandum of understanding.

If we are to make a success of devolution, we cannot have agreements made in good faith between people at the local level and the centre being abrogated because of a bit of pressure put on a Health Secretary by a number of particular interests—often vested interests, some would say. It is essential to have an amendment of this kind in the Bill. I hope the Government will be prepared to discuss such a provision across the Benches. It is not intended to be a partisan amendment. Indeed, I do not even know at this stage whether it finds favour with those on the Labour Front Bench in the other place—they seem to have one or two other things on their minds. I support the purpose of the Bill and more devolution of health responsibilities to combined authorities but that has to be done through a transparency process consistent with the 2012 Act until such time as that legislation is amended. I beg to move.

My Lords, I warmly welcome my noble friend’s amendment. I read with interest the debate in Committee last Wednesday about this very important issue, which goes right to the heart of the relationship between the combined authority and the National Health Service, and the integrity of the NHS as a national service providing uniformity of services across the nation.

Of course, our debate is mostly about Greater Manchester. I very much support the thrust of what is happening in Greater Manchester. I want to see the same in greater Birmingham. But we have to get to the bottom of the essential relationship between local authorities, the combined authority and the NHS. This is not an academic exercise. It would be all too easy for a Chancellor faced with enormous financial pressures, as he is, to transfer responsibility to local government or combined authorities and then deny responsibility, putting the blame firmly on local government and using local government legitimacy to defend the rationing of services to an extent that the NHS has never seen.

Of course, one can go back to the foundations of the NHS, to the arguments in the post-war Attlee Government between Morrison and Bevan. Morrison had been leader of the London County Council, which before 1948 had been the largest hospital authority in the world, and wanted local government to run the NHS, but Bevan was concerned that it would be a very patchy service. Bevan won the argument and we had a national NHS. So the arguments we are having today will be very familiar throughout the history of the NHS. The key question is: how do we get the advantage of local government leadership and democratic legitimacy while ensuring that we have what we would recognise as a national NHS? That is why this is such an important debate and why the Bill lacks clarity.

The Minister was very helpful on Wednesday and spelled out a number of principles. She said first that healthcare services,

“must remain firmly part of the NHS … and the position of NHS services in the area in relation to the NHS constitution and mandate cannot change”.

She said that,

“all national standards for health services … must … be complied with”.

I take that to mean that the NICE technology appraisals will be fully complied with as well. She said:

“The Greater Manchester deal does indeed put health as a function of the combined authority and not of the mayor”,

but that it will not prejudice arrangements elsewhere, which is a very important factor—for me, certainly—in relation to greater Birmingham, although very few of us in greater Birmingham actually want a mayor and very much object to the blackmail that is being put upon us by the Government forcing us to have a mayor in order to accept the greater responsibilities that would be given. We had a referendum in Birmingham not so long ago when we voted very clearly not to have an elected mayor. It is highly objectionable for the Government now to come along and say, “We don’t really care what the public thought, we insist that you have a mayor”. Significantly, the Minister went on to say that,

“in the field of health and social care, all decisions about Greater Manchester will be taken with Greater Manchester”,

with,

“clinical commissioning groups … providers, patients, carers and partners to shape the future of Greater Manchester together”,

and that the Bill will give local authorities within the combined authority,

“the powers to participate in … strong, collaborative partnerships”.—[Official Report, 24/6/15; col. 1672.]

I would just say that they already have statutory freedom to enter into those partnerships.

In principle, the key issue is that all decisions about Greater Manchester will be taken by Greater Manchester. The Minister referred to the two governance bodies which will prepare a strategic plan and commission Greater Manchester-wide services, but what is unclear is who on earth the decision-maker in Greater Manchester is. Where do decision-making authority and accountability lie? Which of the many bodies in that great region will be held accountable for NHS services and planning and strategic direction? One of the real risks here is that, far from giving Greater Manchester a huge opportunity to lead change in the health service and integration with social care using the fantastic life science base in the city of Manchester, an additional bureaucratic tier is being added.

No decision about Greater Manchester can be taken without Greater Manchester—but what does “Greater Manchester” s