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Grand Committee

Volume 801: debated on Tuesday 11 February 2020

Grand Committee

Tuesday 11 February 2020

Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Commencement No. 14) Order 2019

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Commencement No. 14) Order 2019.

Relevant document: 3rd Report from the Secondary Legislation Scrutiny Committee, Session 2019 (special attention drawn to the instrument)

My Lords, I begin with a short apology for the delay in commencing. The purpose of this draft instrument is to enable the Secretary of State to make the alcohol abstinence and monitoring requirement available across England and Wales.

This legislation gives the court a new tool directly to address alcohol-related offending. As part of a community sentence, judges and magistrates will be able to impose a ban on drinking alcohol for up to 120 days, and we will monitor this using continuous electronic monitoring, which is referred to as alcohol tagging. I am grateful for the comments made by the Lords Secondary Legislation Scrutiny Committee and intend to address them below and in the course of this debate.

Alcohol-fuelled crimes put a huge strain on front-line services. Problematic alcohol consumption is associated with crime, particularly heavy or binge drinking and violent crime. The latest published figures from the Crime Survey for England and Wales, in 2018, estimated that in 39% of violent incidents the victim believed the offender to be under the influence of alcohol. Alcohol-related crime is estimated to cost the taxpayer up to £13 billion per year. Public Health England estimates that the total social and economic cost of alcohol-related harm was £21.5 billion in 2018.

AAMRs have a punitive effect on offenders by restricting their ability to drink alcohol while the requirement is in force. In addition, the pilots have shown us the potential of this measure to address the purposes of sentencing more widely. Where the criminal behaviour is driven by alcohol, an alcohol ban has the potential to reduce crime and provide the opportunity for reform and rehabilitation. Through enforcing abstinence, AAMRs are designed to mitigate offending behaviour which is driven by alcohol. Where alcohol is driving or triggering criminal behaviour, the AAMR will interrupt it and should give individuals and communities a break, reduce the number of victims, protect the public and save the costs of dealing with the crimes.

The monitoring will be continuous and delivered via electronic ankle tags, providing assurance with compliance. If alcohol is detected, or attempts are made to avoid the monitoring, the offender can be returned to court. These requirements may not be imposed on dependent drinkers or alongside an alcohol treatment requirement. They are only for adult offenders.

Harnessing innovative technologies such as alcohol tags can not only punish offenders but help turn their lives around. This legislation plays an important role in a wider package of reforms of community penalties that the Government plan to bring forward in due course, which will ensure that community sentences can offer an appropriate level of punishment while effectively tackling underlying drivers of offending.

The alcohol abstinence and monitoring requirement was introduced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012. This legislation creates a new requirement within the Criminal Justice Act 2003 that can be used where a community order or suspended sentence order is imposed. The 2012 legislation requires the order to be piloted before it can be rolled out. This requirement has been met. There have been two pilot schemes: one in London, initiated by the Prime Minister when he was mayor, and the other in Humberside, Lincolnshire and North Yorkshire. These pilots have shown us that this new measure will be welcomed by criminal justice partners.

The two AAMR pilots were run respectively by the Mayor’s Office for Policing and Crime in London, and by the police and crime commissioners and the Humberside, Lincolnshire & North Yorkshire Community Rehabilitation Company. I appreciate that the absence of published findings was criticised by the Lords Secondary Legislation Scrutiny Committee. I am pleased to say that findings from the pilot in the north-east have now been published and I am happy to be able to highlight some of them during this debate. Some 1,500 orders were imposed during the pilots.

The pilots had significant differences in how they were run, but the compliance rates are very similar, which gives us confidence in the utility of this measure. Compliance was very high indeed—the figure for the requirement itself was 94% for both pilots; and for abstinence from alcohol it was 98% in the London pilot and 97.4% in the Humberside pilot. That is the percentage of monitored days that were free from both alcohol and interference with the equipment. There was significant use of the order in the sentencing of violent offences in the pilots. In London, 45% of requirements were for violent offences, and in the north-east 31% were for domestic abuse offences.

This measure is welcomed by those on the front line. Indeed, as the Humberside police and crime commissioner Keith Hunter said:

“The period in which the offender is tagged will give rehabilitation agencies a real opportunity to work with the individual and get them to recognise and change their behaviour, hopefully for good. I would like to see these orders available nationally as a standard feature of the Criminal Justice System.”

Sentencers in the London pilot were frustrated that they were unable to impose the order on offenders who fell outside the pilot area.

Reports from the pilots demonstrate that offenders also recognised benefits. They were generally optimistic about the requirement and felt that it had a positive impact on their lives, particularly around their health, well-being and offending behaviour. In the north-east, 81% of those surveyed at the end of the requirement reported that they thought they would drink less or no alcohol when the tag was removed.

The scrutiny committee commented on a lack of information about rollout of the new measure. We plan to begin the introduction of the order later this year. Our intention is to take a similar approach to that used for the successful rollout of location monitoring and so avoid disruption to the core electronic monitoring service. We will balance an incremental rollout that allows us to respond to learning from early deployments and further findings from the pilots if necessary, alongside opportunities to prepare stakeholders and inform decision-makers appropriately, with ensuring that the tool is available across England and Wales as quickly as possible. We estimate that when the requirement is fully rolled out and in use nationally, in around 2023-24, some 2,300 people will be sentenced to these orders each year. This will mean that approximately 400 orders will be active at any given point in time.

The order’s requirement imposes an alcohol ban of up to 120 days, while continuous monitoring provides assurance regarding compliance with the sentence of the court. We believe that the introduction of this measure strengthens the community sentence response to alcohol-related offending and is a powerful message that we are tackling this issue. We should not lose time in introducing a new measure which means that our courts can directly address a driver of crime and stop the drinking of those who cause misery, damage and fear by their behaviour, for up to four months. We strongly believe it is in the public interest to introduce this measure. I beg to move.

My Lords, there is widespread agreement that a great deal of crime is related to and fuelled by alcohol. Indeed, Members of your Lordships’ House have been saying for many years, in debate after debate, that much offending in this country is related to excess alcohol and drug abuse, so the passage of Section 76 of the LASPO Act was unsurprising. There is also widespread agreement that we all should support measures to reduce the consumption of alcohol in relation to crime, and thus alcohol-related crime.

The alcohol abstinence and monitoring requirements, which I shall call simply alcohol monitoring requirements, use electronic tagging technology to ensure that offenders reduce or eliminate alcohol consumption for a period. The essential elements for the application of Section 76 of the LASPO Act are: first, that the offences concerned are alcohol-related; secondly, that during the period of the order the offender will take no alcohol, or alcohol reduced to a specified level; thirdly, that the consumption of alcohol will be electronically tagged; fourthly, that the period of the requirement will not exceed 120 days; fifthly, that it can be imposed only together with a community order or suspended sentence; and finally, that a breach of the requirement is punishable by a sentence for that breach.

The Committee has heard from the Minister that there have been two pilots. The London pilot ran from 2014 to June 2018, while the Humber, Lincoln and North Yorkshire pilot—which I shall call the northern pilot—ran from after the 2017 election until April last year. There were different methodologies. The London requirements were imposed on a stand-alone basis, whereas the northern pilot imposed the orders together with community orders, while monitoring and fitting of the tag was carried out by probation staff. In addition, the northern pilot included domestic abuse offenders whereas the London pilot did not.

The only question that warrants the Committee’s attention at this stage is whether enough evidence has been gleaned from the two pilots that alcohol monitoring requirements are or will be effective to justify Parliament’s commencing the section now and rolling out alcohol monitoring requirements. Your Lordships’ Secondary Legislation Scrutiny Committee clearly concluded that there was not. Central to its view was that the results of the northern pilot had not been published, although we have heard from the Minister that they have been now; that was predicted for this month. But published or not, it follows from their recent nature that the results cannot have been publicly evaluated.

The Ministry of Justice sought to justify its position in its Explanatory Memorandum at paragraph 7.3, which bears reading because, I suggest, it is unconvincing. It says that the evaluation of the northern pilot

“is not due until February 2020 but sufficient learning has been shared with the department, through ongoing involvement with the pilot and its evaluation, to indicate findings consistent with, and complementary to”,

the London pilot, and that:

“In addition, the department conducted a proof of concept for using the alcohol monitoring technology for suitable offenders released on licence. This has provided considerable insight into how alcohol monitoring can support the management of risk and rehabilitation. On this basis, we consider that we have a good evidence base around the utility and practice”

of alcohol-monitoring requirements

“which has informed our plans for England and Wales roll-out.”

What the Ministry could not assess was the impact of alcohol monitoring requirements on reoffending. Indeed, paragraph 29 of the committee’s report quoted the department’s response to Questions. It said:

“Reoffending findings will be available well in advance of commencing roll out and will inform the delivery of AAMR. However, it is our view that the findings we already have from the”

pilots

“indicate that AAMR is an effective sentence option. It is the department’s intention to assess impacts much more substantially, including to inform the better targeting of resources to address alcohol harms, when we roll out AAMR.”

The reality is that assessing the effect on reoffending will have to await medium-term evaluation of the behaviour of offenders who have been placed under these monitoring requirements. The Government appear to have accepted that in their impact assessment.

I suggest that the problem is that there are two obvious reasons why the pilots may give little indication of the long-term effect of alcohol monitoring requirements. The first is that these requirements impose, or will impose, a short-term break—it is significant that the noble and learned Lord used that term—or short-term reduction in alcohol consumption. In other words, they run for a limited period only, during which time the offender is reducing or eliminating alcohol intake. The pilots tell us nothing about the likelihood of such an offender resuming excessive alcohol consumption after that break; that is particularly true where the break or reduction takes place without treatment or guidance from probation officers or other agencies that can help the offender. There is also no evidence concerning the effect of resuming alcohol consumption on reoffending, except for the general elements we know—for example, that much crime is alcohol-related.

Secondly, the reason why the requirements may be said to work is that they enforce the break or reduction in alcohol consumption. That is precisely because electronic tagging is effective. Let no one kid themselves that the 94% compliance rate—it is 97% in the north—is the result of an offender deciding to go without drink. It is not. It is a result of the offender being tagged and knowing that they will be caught drinking alcohol and sentenced for breach in the event that alcohol is consumed. These results are not the consequence of voluntary abstinence. One can conclude that it is more likely in the event of these requirements being in place that the unwilling short-term abstainer will resume consumption when the enforced break is over. That is as true of the merely weak abstainer, rather than the unwilling one.

I stress that this concern is heightened by the state of the probation service. As we know, it is under-resourced and, frankly, in crisis—if not chaos—according to all the reports on its current functioning, so support for offenders with past alcohol-related offences is not good enough. If it is not good enough, these monitoring requirements will be unlikely to help.

The Secondary Legislation Scrutiny Committee believe that it is

“inappropriate for the House to be asked to decide on further roll-out before information on the reoffending rate is available.”

I agree.

The impact assessment mentions other uncertainties. In paragraph 46, under the heading “Risks and Sensitivity Analysis”, it says:

“The analysis in this IA has a very high degree of uncertainty because it is heavily based on assumptions where there is limited information”.

I interpose that the greatest uncertainty is that to which I have spoken: the effect on reoffending rates. The impact assessment goes on to set out two further uncertainties,

“in particular about how sentencing behaviour might change if AAMR were rolled out, including potential changes in the combination of requirements given.”

Those are also good points.

The committee’s conclusion was almost as severe as any that one reads from committees at this time:

“the House is being asked to approve the programme on the basis of very limited information. This is unacceptable. While we find the proposal interesting, it seems premature as the House currently has very little means of assessing whether the MoJ’s assertions are overly optimistic.”

I simply ask the Minister: why the rush to judgment? The point of piloting, provided for in the enabling legislation, was to give us the information to decide on the merits and effectiveness of alcohol monitoring requirements before they were rolled out. I suggest that implementation without that information is not what the legislation intended and is wrong in principle.

My Lords, I thank the Minister for his explanation of the order. I concur very strongly with the comments of the noble Lord, Lord Marks. The documentation produced about the order makes it clear that the proposals are meant to punish the offender by ensuring that they do not consume alcohol. However, as has rightly been said, there is little to back that up. What will be the role of the probation service in supporting those involved, given the pressures on the service to which the noble Lord referred? For that matter, what is the role of the NHS? If one of its patients is involved, will doctors or general practitioners also be involved and invited to support individuals through the period during which the order applies? It would seem sensible for another professional who knows the person in question to offer support, in addition to the very overstretched probation service.

It is clear that, while the proposal is seen in the impact assessment as

“punitive as well as rehabilitative”,

there needs to be clear evidence that adequate support is available for those going through the process. Otherwise, it may be simply the temporary response to which the noble Lord, Lord Marks, referred, without any guarantee of a significant impact on future conduct. The objectives described in the impact assessment’s limited explanation of the proposal, which says that AAMRs

“are meant to punish the offender by ensuring they do not consume alcohol during the period in which the AAMR is in force”,

may be attained, but the long-term situation does not seem to be addressed by anything alongside this order. I therefore invite the Minister to say what discussions, if any, have taken place with the Department of Health and Social Care on what support can be given to patients of general practitioners who are in this position. Without that support, the chances of an enduring response are somewhat limited.

My Lords, I do not want to be repetitive, but I will add a couple of extra thoughts. No one has spoken against the principle of these orders, or of this legislation. The concerns are more about the adequacy of the rollout process, particularly the information that has been made available. I note that the legislative framework was passed in 2012 and, as the Minister said, the final rollout across the jurisdiction will not be until 2023 or 2024. That is a very long time between the passing of law and order legislation and rollout across England and Wales. The piloting of such orders is a very good idea if it is done well and the data is independently evaluated and shared with the public, professionals and so on. However, if the pilots, followed by incremental rollout, go on for too long, it creates a different legal and punitive regime for people across the jurisdiction, with the potential under Article 14 for arguing that people are not being treated equally in sentencing and rehabilitation. Does the Minister have thoughts on what good governance looks like and the appropriate balance between experimentation and piloting new orders, on the one hand, and equal treatment in sentencing across the jurisdiction, on the other?

In the light of previous contributions, I am sure the Minister will say whether he now thinks that the concerns addressed by the Secondary Legislation Scrutiny Committee have been met. As the noble Lord, Lord Marks, said, the comments about limited information being “unacceptable” are very strong. I also hope that the Minister will respond to what my noble friend said about the tension whereby such an order is described as being both a punishment and a rehabilitation measure in the context of abstinence. It is hard to see how telling offenders that their abstinence is a punishment is going to achieve voluntary abstinence and rehabilitation at the end of the relatively short enforced abstinence.

I am also interested in the choice of pilot areas, from the point of view of equal treatment and Article 14, particularly given that there is such a long period before national rollout. How are areas chosen for such pilots? Is the same methodology applied to both datasets to aid evaluation? Is there an independent element in the evaluation? Many of the comments seem to come from enthusiastic stakeholders and the offenders them- selves, many of whom said that they would drink less at the end of the process. With respect, they would say that, wouldn’t they? What is the non-profit-driven, independent element that does not involve those who are monitoring the orders, or the offenders themselves?

I am grateful to noble Lords for their contributions to this debate. I will address a number of the points that have been raised. First, the results of the second pilot in Humberside were known to the ministry as it brought forward this order. The results have now been published and they are quite compelling. We are talking about a compliance rate well over 90% in both pilots. Indeed, it was 98% in the case of the London pilot and 97.4% in respect of Humberside. They were carried out over different periods and applied in the context of different offences. That gave us a spectrum of results, but all were very encouraging. Of course, we should consider not only the immediate importance and impact of the orders—because they stop people taking alcohol for a period of up to 120 days—we should like to be informed whether there is an ongoing impact. In the Humberside pilot, about 81% of those who had undergone such an order were contemplating either stopping taking alcohol or reducing their alcohol intake at the end of the period. It was clearly having an impact, therefore, on people’s intentions—but they were only intentions, of course.

As regards reoffending, it will take time to go through that process. As the noble Lord, Lord Marks, himself said, that is something for the middle term, not something we can immediately analyse. As the noble Baroness, Lady Chakrabarti, said, the primary legislation was enacted in 2012. The pilots were completed only last year. For how many more years are we to analyse the data before we commit to rolling out what appears on the face of it, and on the basis of the pilots already carried out, to be a very successful programme?

On the issue of resuming alcohol consumption, raised by the noble Lord, Lord Marks, yes, that is always a risk, but there are two benefits. First, there is the immediate benefit of taking someone off alcohol for a period after they have committed an offence, one that may well have been induced by excessive alcohol consumption. Secondly, there is the potential for them to learn from the experience that they do not wish to imbibe alcohol to excess in future, in order to modify their behaviour. However, I accept that you cannot guarantee that.

The noble Lord, Lord Beecham, raised the question of medical assistance. Let me be clear: an order of this kind will not be made where an individual is alcohol dependent. It is difficult to see how you could bring in and use doctors in the context of someone who is not alcohol dependent but is being taken off alcohol for 120 days because of a violent crime committed under the influence of alcohol. I find it difficult to understand what their contribution would be. On the other hand, in cases where someone is alcohol dependent, provision is made through the Community Sentence Treatment Requirement Programme for Health and Justice partners to work together to deal with such dependency, be it on alcohol or drugs.

At the end of the day, we have to bear in mind that we intend to roll out this programme on the basis of the probation areas, so we will learn even as we roll out the programme between now and 2023 how effective it is being. But we have already seen the results of the original pilots, and I suggest that they really are impressive. In the circumstances, we consider that now is the time for us to respond to the issue of alcohol-related offending and alcohol-related violent crime by taking the steps proposed in the order. It is in these circumstances that I commend the draft instrument—

My Lords, before the noble and learned Lord sits down, is it intended that the alcohol monitoring requirements be imposed as a generality in the first stages of the rollout, together with rehabilitative requirements, so that the probation service will be involved, or is the stand-alone imposition of alcohol monitoring requirements likely, as in the London programme? It seems to me that there may be a substantial difference in the effect on future behaviour.

My understanding is that the monitoring will not be carried out by or related to the probation service; it will be carried out independently. But clearly, the justice system will have an overall picture because, where someone is in breach of the order, that individual will be brought back to court.

May I just clarify a point I made earlier? The period 2023-24 is when we intend to reach steady state and to have completed the rollout. The rollout itself is intended to take place over the next 12 months. I hope that assists noble Lords.

What does the Minister envisage the role of the probation service to be under this new arrangement?

Clearly, probation staff will have access to the monitoring data and will therefore use it to inform their supervision of individuals who are under licence, for example.

Has the matter been discussed with the probation service, and does it have the resources to do this? It is very stretched, and this will be an additional responsibility, presumably. The question therefore arises: can it meet it?

There is no suggestion that it will not have the resources to address this matter. It will receive data in circumstances where there will be some 400 active monitoring requirements at any one time. That, I respectfully suggest, is not an overwhelming imposition in addition to the demands made upon the probation service.

Motion agreed.

Andrey Lugovoy and Dmitri Kovtun Freezing Order 2020

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Andrey Lugovoy and Dmitri Kovtun Freezing Order 2020.

Relevant document: 3rd Report from the Secondary Legislation Scrutiny Committee

My Lords, first, I would like to draw noble Lords’ attention to the fact that the Secondary Legislation Scrutiny Committee described this order as an “instrument of interest” in its third report of 30 January. The order was laid before the House on 17 January under the “made affirmative” procedure and came into force on 19 January. It maintains a freeze of any funds or assets that the two individuals hold in the United Kingdom or with any United Kingdom-incorporated entities, denying them access to the UK financial system and prohibiting UK persons from making funds available to them.

The order was made because in 2016 an independent inquiry, chaired by Sir Robert Owen, concluded that Mr Alexander Litvinenko was deliberately poisoned in 2006 by Lugovoy and Kovtun through the use of polonium-210. The inquiry also concluded that there was a “strong probability” that Mr Litvinenko, an ex-KGB and ex-FSB officer and critic of the Russian Government, was murdered on the order of the FSB—the Russian domestic secret service—and furthermore that the killing was “probably approved” by then head of the FSB, Nikolai Patrushev, and by the Russian President, Vladimir Putin.

As part of its response to the gravity of these findings, the Treasury imposed an asset freeze in January 2016 on Lugovoy and Kovtun by making a freezing order under the Anti-terrorism, Crime and Security Act 2001. A second order was imposed in January 2018 which expired at the end of 18 January this year. The order that I am commending to the House was therefore put in place to ensure there was no gap in the freezing measures that have been enforced against Andrey Lugovoy and Dmitri Kovtun since 2016.

Under Section 8 of the Act, the duration of a freezing order is limited to two years. Since 2018, as required by Section 7 of the Act, the Treasury has kept the order under review. In May 2019 the Treasury reviewed the facts of the case against the relevant statutory criteria and concluded that the criteria continued to be met in respect of both individuals.

Prior to the expiry of the 2018 order, the Treasury again reviewed the facts of the case and decided to make a new order to maintain the asset freeze against these two individuals. The Treasury believes that making a new order is an appropriate and proportionate measure to take. The relevant conditions required to be met, as set out at Section 4 of the Act, are still being met. In this case, these are that

“the Treasury reasonably believe that … action constituting a threat to the life or property of one or more nationals of the United Kingdom or residents of the United Kingdom has been or is likely to be taken”

by a person or persons resident in a country or territory outside the UK.

The freezing order is one of a limited number of measures available to the UK authorities to act directly against Lugovoy and Kovtun. We continue to believe that it acts as a deterrent and a signal that the Government will not tolerate hostile acts on British soil and will take firm steps to defend our national security and rule of law. The new order maintains a robust approach on Russia, in line with our Russia strategy, and maintains unity of approach with the United States, which also sanctions these two individuals. Continued close co-ordination is a vital part of our joint effort in countering the Russian threat.

Were we not to maintain asset freezes against Lugovoy and Kovtun we would risk sending a damaging signal that the consequences of murder in the United Kingdom are limited and timebound if you choose to evade the UK justice system by remaining overseas. Not maintaining asset freezes against these individuals would be likely to be perceived as the UK softening its stance towards Russia. Furthermore, it would risk signalling to the Russian state that the UK is looking to normalise relations. This would be contrary to and directly undermining of Her Majesty’s Government’s consistent message that there can be no change in UK-Russia relations until Russia desists from attacks that undermine international treaties and security.

The current bilateral relationship is not the one we want. We continue to remain open to a different and co-operative relationship, but this depends on Russia stopping its destabilising activity, which threatens the UK and its allies. We engage with Russia on a guarded basis, defending UK national security where necessary while ensuring we address the global security issues of the day.

In summary, the Government believe that maintaining asset freezes against Lugovoy and Kovtun is an appropriate and proportionate measure to take and that not to do so would run counter to the national interest. I hope noble Lords will join me in supporting the order. I beg to move.

My Lords, I hear the noble Earl, but I hope he will understand that I am not wholly convinced by the case he has deployed for continuing the order in respect of the two Russians. Indeed, I question whether it serves any useful purpose. We are dealing with a freezing order in respect of those two people, prohibiting persons from making funds available for their benefit. In my judgment, it is unlikely that the pair are dreading the result of this debate.

I ask three key questions. My first question is: why now? The short answer is of course that this is the second order made against the two men following the Owen report in January 2016. The order has expired and must now be renewed. The question must arise: at what point will this two-year cycle end? What criteria did the Treasury use in looking at the case for its continuation? Are we to anticipate that this two-year continuation will go on ad infinitum?

The Government have clearly put much effort into the order’s renewal, as shown by the timetable I just mentioned and some of the many committees that have looked into it. The instrument was made on 17 January. It was laid before both Houses. A Motion to approve has been made. It has been before several similar committees. There are also the English votes for English laws certification, the Secondary Legislation Scrutiny Committee, the Joint Committee on Statutory Instruments, the Delegated Legislation Committee and so forth. It is a pretty formidable series of consideration. I wonder whether it smacks a little of a job creation exercise and whether the Treasury is doing its job properly in asking whether there is value for money in what we are doing. For example, before or after the order made on 19 January, was any effort made—if we consider this so important—to persuade other countries to follow suit in respect of these two Russian gentlemen?

The second question I pose is this: why are we here at all? Has anyone in the Treasury, for example, asked the basic question on behalf of law and on taxpayers’ behalf: is this expenditure worth while? Is it worth the effort of time and finance? I put this question to the noble Earl: is there a scintilla of evidence that the two men have any assets in the UK on to which the Treasury might latch? Is there any possible way in which any financial institution within this country’s jurisdiction is likely to offer any loans or any form of financial help to these two men, who are GRU operatives? Are they likely either to seek or be given any such help, given their lack of creditworthiness? Otherwise, surely this is a pointless exercise. As we know, Russia will not extradite any of its nationals, let alone those like these two gentlemen—that is, operatives of the Russian secret state engaged in a clandestine mission.

The only explanation offered in the Explanatory Memorandum is in paragraphs 6.2 and 7.3. Paragraph 6.2 states:

“The Treasury believe that this Order will be an effective deterrent to prevent similar activities being undertaken again.”

Paragraph 7.3 states that

“Parliament will not tolerate activities of this sort, and constitutes a deterrent to these persons and others from undertaking similar activities in the future.”

Do the Government seriously suggest that the GRU or the other elements of the Russian secret service will be deterred by an order of this sort? The facts clearly suggest otherwise.

I cite the Salisbury outrage, when the GRU sent two men in the hope of murdering Mr Skripal. In effect, they murdered an ordinary British citizen through their negligence in discarding that vial. Remember, those GRU agents purported to have an interest in medieval ecclesiastical architecture. They said that they thought that Salisbury cathedral was an appropriate place for them to visit in this country, so they visited it to continue their interest in such architecture. It was absolute nonsense. They came here with a firm purpose. There was clearly no deterrent in that case. It was Mr Putin who, in his press conferences and elsewhere, tried to laugh off—almost—the evidence, saying in effect that all traitors may well suffer the same fate. We also know that a number of Chechen opposition people have been killed in France in the same way. Where is this deterrent effect that the Treasury found so convincing? To be fair, in paragraph 12.1, the Treasury concedes that:

“The continued listing of these two names is likely to have negligible impact.”

The use of “negligible impact” probably overstates the effect.

So, why are we here? Could not someone in the Treasury have looked at the facts of the case and what happened afterwards and have said, “Look, stop. This order is no longer justified”? Are we going to consider the charade of extending these two years indefinitely?

Finally, I want to ask about the Magnitsky clauses in the 2018 Act. Why are they not now put into effect? The clauses relate to asset freezes and visa bans. Had they been in effect, they could have been used in this case. I accept that the Government say that an SI will be put down to bring forward the Magnitsky clauses. They argue that they were restrained by EU membership. That is nonsense on stilts. There is no such restraint by EU membership. If there were, why have the Baltic countries—also EU members—had Magnitsky clauses of this sort, on the same lines as legislation in Canada and the USA and that being considered in Australia? The EU did not in any way restrain this. The Government’s argument is wholly without merit. I pay tribute to all those who, on a cross-party basis, led by Andrew Mitchell MP, persuaded the Government, rather against their will, to put forward those Magnitsky clauses. The Government’s best argument is that they are doing this because they are doing it. I only wish that someone had the nous and courage to say, “Enough is enough. We should stop at this point”.

My Lords, I believe that on balance it is necessary to renew the order, simply because not to renew it would send the wrong message, but I agree with many of the comments made by the noble Lord, Lord Anderson. I spoke on this issue back in 2018—I will not repeat the whole of that speech, as that would be to test the patience of the Committee. I used that opportunity to pay tribute to Marina Litvinenko, who fought so hard against the Home Secretary of the day for the public inquiry that should have come almost automatically but did not. The reality is that, because of the many delays, Andrey Lugovoy and Dmitri Kovtun had years in which to move out any assets that they had in the UK or within the scope of the UK. From the moment that the order was established, it was unlikely that it would have any personal impact on them, but at least it sent some sort of message.

At the time, I asked the Minister of the day to be sure that all assets were encompassed by the various definitions, including crypto-assets, and I received an assurance that they were. Is there an ongoing mechanism to make sure that, as new financial mechanisms develop, they are covered and automatically caught by the order? That would be a useful discipline to have in these instances.

I was also concerned to know to what extent these two individuals would be able to make use of Crown dependencies and overseas territories, many of which do not have a public register that would enable any civil society person to identify whether they were making use of financial services capabilities in those locations. Without that, the UK or the enforcement arm, presumably the Metropolitan Police, would need to initiate an investigation into assets in the names of the two individuals and into any shell companies that they might be involved in or any other kind of entities that were making use of those Crown dependencies and overseas territories. I am not sure how active that process is and whether we are serious about making sure that these two individuals are at least excluded from UK-related financial capacity.

I also asked about property ownership. As the Minister will be aware, we have public registers of beneficial owners, but not yet in the case of property, although I believe that that process is in train. I very much hope that he can assure me that the necessary monitoring is in place to ensure that neither of those individuals, or the shell companies that they use, has managed to get around the system by using the loophole of the absence of beneficial ownership.

Surely the argument put forward by the noble Baroness would have some merit if one had any suspicion that those two individuals had any form of asset—be it property or finance—or any possibility of obtaining a loan, given their lack of creditworthiness.

I think it is understood that those two individuals at some point had assets in the UK. Hence my frustration that the long delay and the public inquiry meant that they had every opportunity to remove those assets. We cannot guarantee that they used them, but they certainly had the opportunity. I fear that, with the way that various shell companies work, it is not as simple as looking at one individual’s creditworthiness: there are many other ways. I assume that these two people, within their own context, are considered to be very successful individuals who are not short of the ready, and therefore have the opportunity through various mechanisms to exploit financial services. If the order is to mean anything, there must be some enforcement capability to it, and I am inquiring whether there is.

I noticed that the debate that we had in 2018 was in February, towards the end of the month. To reinforce the point of the noble Lord, Lord Anderson, that this is not really a deterrent of any sort, the attack on the Skripals happened on 4 March that year, days later. That says everything about the weakness of the deterrent effect. It would be incumbent on the Treasury to rewrite its note in the light of the Salisbury poisonings. We need to pay great respect in understanding the suffering not only of the Skripals but of Dawn Sturgess, who died as a consequence.

I also wondered—I ought to know the answer to this but do not, so I am simply inquiring—whether the same orders now apply to the two individuals identified as being involved in the Skripal poisonings, Colonel Anatoliy Chepiga and Dr Alexander Mishkin, both of the GRU. If this is a principle, it ought at least to be more broadly applied. I very much agree with the noble Lord, Lord Anderson, that we need to implement the legislation passed in both Houses.

A more robust response to the poisoning of Litvinenko and the attempted poisoning of Skripal is fundamentally necessary. Will we wait for a third or fourth poisoning before we start looking at more senior figures within the Russian establishment? Clearly, all the people we have mentioned who face freezing orders were under orders from far more senior people. It is a great weakness in our position not to have recognised that much more clearly and to have considered whether, if we believe that constraining people from using UK financial services has an impact on their behaviour, making that work up the chain will be a lot more useful than simply applying it to the individuals who we have been able to identify but who are, frankly, in every case, pretty small fry.

My Lords, it is not the intention of the Labour Front Bench to oppose this order nor to rehearse the merits of the case. However, as a matter of principle, I would like the Minister to explain why he had to use the “made affirmative” procedure. When a two-year order is about to expire, the one thing you know is that you would have had two years’ notice of that. It is not clear why a perfectly normal order could not have been made. This procedure should be used only in emergency circumstances.

I thank all noble Lords for their contribution to this short debate. I will do my best to cover all the points raised but should I miss any out, I will write to noble Lords. The noble Baroness, Lady Kramer, asked how the asset freeze affects real property—land, buildings et cetera. She also mentioned cryptocurrencies, which she had referred to in the previous debate, two years ago. Under an asset freeze, all funds and economic resources must be frozen. No funds or economic resources can be made available, directly or indirectly, to a designated person or for their benefit. To do so may be a criminal offence. Funds generally mean financial assets and benefits of every kind. Economic resources—this relates to the noble Baroness’s point about property—generally refers to assets of every kind, tangible or intangible, moveable or immoveable, which are not funds but which may be used to obtain funds, goods or services. This includes, but is not limited to, property. As confirmed in the previous debates, crypto-assets are also covered by this.

I do not want to create a problem for the noble Earl, because this may be outside his general scope, but where there is no public register of beneficial interests, the problem is that civil society groups—which do a lot of the monitoring on behalf of us all—cannot see through to identify whether there is abuse. In those particular circumstances, the only way to find out whether somebody has acquired property in the UK, which will be under various other names, shell companies, and whatever else, is by active intervention by UK enforcement authorities. Until we get the public register, that is limited. That was the question I was trying to focus on.

The noble Baroness’s point is basically about transparency. I do not have any information on that issue to hand, but I will write to the noble Baroness.

The next point was about a link between the 2018 order and the Salisbury event. As noble Lords are aware, the murder of Alexander Litvinenko and the attack on Salisbury are part of a pattern of Russian aggression over the past decade, which includes its actions in Georgia, Crimea and Ukraine, and campaigns of reckless and irresponsible cyberattacks. We took a range of measures following the attacks in Salisbury, including co-ordinating the expulsion of 153 Russian intelligence officers, the largest mass expulsion in history. We continue to believe that, in conjunction with the other measures which the Government have taken in response to the murder of Alexander Litvinenko, this freezing order sends a message to others who might consider committing similar acts in future that the UK Government will not tolerate such action. After the Salisbury attack, four Russian individuals were sanctioned under the Chemical Weapons (Asset-Freezing) and Miscellaneous Amendments Regulations 2018 for their roles in transporting and using a toxic nerve agent—Novichok—in Salisbury in March 2018.

The noble Lord, Lord Anderson, raised a number of issues relating to his thoughts on whether it was worth while going through this exercise. Obviously, Her Majesty’s Government feel that it is, but he also mentioned the Magnitsky sanctions and asked why we were not introducing the asset freeze under them. The Government have announced their intention to establish UK-autonomous global human rights Magnitsky-style sanctions, as he said. These will be coming forward shortly, once we have left the European Union—which I imagine we have.

How shortly is shortly? Since the 2018 Act, the Government have had two years in which to implement this. They are not in fact constrained by the European Union. I pose the same question again: do the Government have any suspicion at all that these two individuals mentioned have any assets, or any other form of property or whatever, in the UK? If not, this is surely a totally pointless exercise.

As the noble Lord is well aware, “shortly” is a term often used in this position from the Dispatch Box. I cannot give him any more details on that at the moment. He also raised another point which he had already raised in his earlier speech; I will come to that.

Another point raised by noble Lords was on the GRU in the UK and what we have done about that. As I mentioned, there was asset freezing following the Salisbury event, but we have exposed the role of the GRU in the despicable attack on Salisbury. We have exposed its operatives and the methods it used. The actions of the GRU are a threat to all our allies and we have shared the information with them. We have stepped up our collective efforts to disrupt and dismantle the GRU networks in this country, with the expulsion of these Russian members.

The noble Lord also asked whether there was any evidence of these individuals actually owning assets in the United Kingdom. Her Majesty’s Treasury has received no information about frozen funds in respect of designations in place against Kovtun and Lugovoy. However, the asset freeze continues to deny those individuals access to the UK financial sector. Beyond the financial impact, this order is part of a package of measures which send a clear message that such illegal acts will not be tolerated.

In the absence of bringing the killers of Litvinenko to trial in the UK, the Government believe that it is important and appropriate to maintain these measures against the two individuals—including the asset freeze, the European arrest warrants and the Interpol red notices—as a deterrent against others conducting such unacceptable actions in future. We continue to believe that this freezing order sends a message to others, who might consider committing similar acts in future, that the United Kingdom will not tolerate such action. Despite the poisoning of Sergei Skripal in Salisbury in March 2018, we cannot discount the possibility that the 2016 and 2018 orders have had a deterrent effect on the Russian state, or indeed on other states.

The noble Lord, Lord Anderson, asked at the beginning of his speech at which point these orders will end. Under Section 7 of the Anti-terrorism, Crime and Security Act 2001, the Treasury is required to keep a freezing order under review. In accordance with this obligation under Section 7, in May 2019 Her Majesty’s Treasury conducted a review of the facts of the case against these individuals. The Home Office and the Foreign and Commonwealth Office were consulted as part of that review, which established that the then-existing freezing order was an appropriate measure to maintain. The new freezing order will lapse two years after it is made, as set out in Section 8 of the 2001 Act. Her Majesty’s Treasury will continue to monitor the evidence and review the facts of the case against these two individuals while the order is in force.

The noble Lord, Lord Tunnicliffe, asked about the made affirmative procedure. Section 10 of the Anti-terrorism, Crime and Security Act 2001 requires that freezing orders under it are made using this procedure. The procedure allows for immediate action followed by debate in the next 28 days. If Parliament does not agree the order, the asset freeze falls away. Freezing orders under the Act are designed for situations in which events require an urgent response and/or in which there is a risk of asset flight. The original 2016 order against Lugovoy and Kovtun was made one day after Sir Robert Owen’s inquiry reported, concluding that the two individuals had deliberately poisoned Litvinenko. The Treasury continues to believe that the conditions for making the order set out in this Act remain satisfied.

Motion agreed.

Public Bodies (Abolition of Public Works Loan Commissioners) Order 2019

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Public Bodies (Abolition of Public Works Loan Commissioners) Order 2019.

Relevant documents: 2nd Report from the Joint Committee on Statutory Instruments, Session 2019, 3rd Report from the Secondary Legislation Scrutiny Committee, Session 2019, 1st Report from the Secondary Legislation Scrutiny Committee

My Lords, the draft order, which is being introduced under the Public Bodies Act 2011, abolishes the office of the Public Works Loan Commissioners and transfers their power to lend and all other functions to Her Majesty’s Treasury, including interests in land, liabilities, property and all other rights. This draft order does not affect the essential role of the Public Works Loan Board as a lender to local authorities. Instead, it will resolve ambiguities in the governance and accountability arrangements of this vital body to ensure that it can continue to support local capital investment across the country.

As noble Lords may be aware, the PWLB was formalised by an Act of Parliament in 1817, and has supported local authorities in England, Scotland and Wales through major historical events, from the Napoleonic Wars and the formation of Trafalgar Square to our recovery from two world wars, as well as the construction and maintenance of essential infra- structure projects. By funding public utility and sanitary improvements, conservation of harbours and housing developments, the PWLB has created employment prospects and enhanced the quality of life for our citizens over generations.

Over the years, the role and legal basis of the PWLB has transformed. It is now a statutory body of up to 12 independent commissioners that issues loans from the National Loans Fund to local authorities and other specified bodies. The PWLB operates within a policy framework set by Her Majesty’s Treasury and delegates the practicalities of lending to the UK Debt Management Office.

It is important to note that, since 2004, all borrowing decisions have been devolved to the local authorities under the prudential regime. The commissioners no longer assess applications and retain only a ceremonial role, serving in office so that central government lending complies with statute, rather than serving any executive purpose. The recruitment of commissioners for these posts has predictably become more difficult as the role has diminished over time. Were the board of commissioners to become inquorate, the PWLB would be unable to lend or collect repayments. This would have substantial repercussions on local authority budgets and financing plans, jeopardising essential capital works.

These critical concerns will persist while the governance arrangements of the PWLB continue to go unreformed. This draft order will put this essential lending function on a secure statutory footing, giving local authorities the reassurance of a lending function, and so supporting their delivery of value-for-money, long-term capital investment initiatives, strengthening the Government’s commitment to levelling up.

As is usual for this type of legislation, the draft order has been put to the SLSC, the JCSI and the TSC for scrutiny. None of the committees requested the enhanced scrutiny procedure available under the Act. Further, the SLSC report states that Her Majesty’s Treasury demonstrated that the proposals will clarify

“the governance framework and improve accountability by making Ministers directly accountable to Parliament for”

PWLB loans.

Finally, I wish to thank current and former Public Works Loan Commissioners for the services that they have rendered, on an entirely voluntary basis, to the benefit of the citizens of this country. I commend this instrument to the Committee. I beg to move.

My Lords, I remind the Committee that I am a vice-president of the Local Government Association.

This is an appropriate measure for all the reasons the Minister set out. Indeed, the responses to the formal consultation indicate broad agreement. In paragraph 7.14 of the explanatory document, there is a reference to annual reporting to Parliament, which sounds as if it is going to be enhanced. I suggest that when the Government report to Parliament, they comment on whether they see the level and nature of borrowing causing any concern, generally or specifically, in relation to a single council. It is important that local councils do not turn into property companies, with council services becoming an ancillary function. That would be a very rare event, but it is something one has to guard against. It is reported in the media that councils have spent around £5.5 billion in property acquisitions over the past three years, with a quarter of that being invested in the retail sector. Issues arising include whether they may have paid more for the property they have acquired than the market value. Is there any evidence of local authorities borrowing from the Public Works Loan Board and paying over the odds for what they are purchasing?

Secondly, it is important for the Government to report on whether there is a danger of assets declining in value. We have recently seen some of the problems that there are with retail shopping centres. I find it entirely understandable that a local council might wish to invest in its own retail shopping centres or in property within its own borders, but I find it harder to understand why some councils are investing in places a very long way from their immediate responsibilities in their area.

Finally, there is social housing. As Members will know, last year, there was a 1% increase in the interest rate for loans from the Public Works Loan Board. I am interested to know what the Government think the impact of that is on the ability of local councils to build social housing. Most Public Works Loan Board borrowing now relates to social housing. The removal of the borrowing cap on housing revenue accounts was welcome, but the rise in the Public Works Loan Board interest rate may have negated some of that positive impact. How do the Government plan to judge the correct level of interest rate that encourages the building of social housing?

My Lords, I follow the noble Lord, Lord Shipley, on the first of his points. It is a great pity to abolish things that have been going on for so long, but if we are going to do it, it is perfectly sensible. I am not really arguing about that. However, there is an opportunity here to make sure that there is better understanding about some of the decisions that are made.

I declare an interest because one of my businesses advises companies on sustainable development in the sense of building. Obviously, we see what the market for development is; it is very noticeable that, on quite a number of occasions, developers have decided that the price being offered for a particular development has been too great but a local authority has been prepared to pay that price. It may be that the local authority is clever enough to be cleverer than the developer, but in the one case, it is quite a difficult profession, and in the other case, it is an ancillary activity and sometimes one notices a certain belief by the local authority that it knows better. I am not saying that that is always true but I suggest, as the noble Lord, Lord Shipley, rightly said, that it is a question we have to ask.

My worry is that, with the very serious downturn in shopping, particularly in the kind of malls that have been bought by local authorities, it must be true—it is not a question of asking whether it is true—that quite a number of local authorities have spent above the odds and now hold significant assets that may be worth considerably less than they actually paid for them. To give them some uncharged advice, if I may: it ain’t going to get any better. This is not an area where sensible people would invest, except in circumstances where they really did have a plan for the future that is very different from others.

It is important for us to have much more independent reporting from the Treasury if it is to take over this role in name as well as in fact. Parliament ought to be much more aware of these matters—not because we should be interfering with local authority decisions in single cases, but if there is a general change where we are seeing some real concerns, it is important that Parliament should be warned of it because it could have serious effects in a number of local authorities that are seeing their purchases as a mechanism for supporting both the government resources that they get and their own local rates.

I hope that we can have an undertaking from my noble friend that the Treasury will look with great care in its report and think seriously about enabling Parliament to take some interest, not in individual decision-making but in the overall issues thrown up by local authorities’ investment from borrowings from the Public Works Loan Board.

My Lords, the Labour Front Bench does not intend to oppose these statutory instruments but the essence of the case for getting rid of the commissioners is that, essentially, they do not do anything and taking them away will have no impact or a benign impact. That is quite an attractive argument, until it alerts one to the question of how these loans are actually managed and controlled.

So, my first question is: can the Minister flesh out a bit more how loans to local authorities are managed and controlled? I realise there is a letter from John Glen that may answer this question but there is a crucial difference between a letter that floats around among Peers and a record in Hansard. Local authorities will be reading this debate—poor souls—and a clear statement by the Minister in the record is worthwhile, so can he explain how loans to local authorities will now be managed and controlled?

Secondly, I come to the exact point that was made previously. I do not know, but it sounds as though it is true that some local authorities have been taking loans and investing their money in property, perhaps as a straightforward business exercise to support their other incomes. If the answer to that is yes—it seems that it is—is this practice legal, or at least is it seen as undesirable? In the light of the fact that it has been debated in other places, has it now been stopped?

My next question is: why were interest rates raised—last autumn, I believe—from 1.8% to 2.8%? I do not know the system, so does this apply to current loans or just to new ones?

My Lords, I thank noble Lords for their contributions and questions.

My noble friend Lord Deben asked how Parliament will be kept informed. I may have to write to him with the exact details on that issue, but I will take it back to the department and try to get some clarification on it.

First, I will deal with the point made by the noble Lord, Lord Tunnicliffe, and explain how loans to authorities will now be managed and controlled. The statutory instrument does not change how loans are managed or controlled. The purpose of the statutory instrument is to resolve to administrative risk around the recruitment and maintenance of a quorate board of commissioners, as I said earlier. There is no change to existing debt or to lending terms. Day-to-day operation of the PWLB will continue to be managed by the Debt Management Office. No action is required by local authorities. The Government consulted on this change in 2016 and found widespread support.

With respect, that does not answer the question. To be fair, I gave him a few hours’ notice of it. Subsequent questions suggest that it has not gone exactly right—that this money has not been used for general purposes. I cannot take a view on that unless I know how the Debt Management Office does its job. For example, what criteria does it use? How much direct control does it have, or is it a big bag of money? I know that I should know that, but given the number of portfolios I have, please forgive me for not knowing the answer to my own question.

I understand that the noble Lord is for ever on his feet on a wide range of issues. I am probably putting the cart before the horse. If we go to the cart, I will come on to aspects of the management of the governance relating to these loans.

The noble Lords, Lord Shipley and Lord Tunnicliffe, and my noble friend Lord Deben referred to property investments being made by local authorities. Decisions on borrowing and spending capital are devolved to local authorities. They pick capital projects in line with local priorities and choose how to pay for those projects, including whether to borrow. Where local authorities borrow, they must have regard to the prudential framework—as set out by CIPFA and MHCLG, or the respective devolved Administration—to ensure that they borrow prudently.

If I may say so, the phrase “to ensure that their borrowing is prudent” covers a multitude of sins. My issue is not that local authorities should not be able to borrow or to make their own decisions, but if they make a number of decisions that mean that there is a change in the way in which the Public Works Loan Board is being used, does my noble friend not think that that issue should be raised in Parliament, not just left to the local authorities?

My Lords, my noble friend makes a good point. I will come to that issue in a couple of paragraphs and will point it out when we get to it.

Under the prudential system, local authorities should not look to take on disproportionate levels of financial risk, especially when that is funded by additional borrowing. On the point raised by my noble friend and the noble Lords, Lord Tunnicliffe and Lord Shipley, the Treasury is concerned about local authorities investing in commercial assets that do not directly serve policy objectives, especially when these investments are financed by debt, including from the Public Works Loan Board. The National Audit Office is currently reviewing the issue and intends to publish a report into this activity in the coming weeks. We will continue to keep this situation under review.

In his intervention, the noble Lord, Lord Tunnicliffe, asked for an explanation of how loans to local authorities will now be managed and controlled. Decisions over whether to borrow and how to spend borrowing are devolved to individual local authorities. Each council must appoint a qualified finance officer and have regard to statutory guidance published by MCHLG and CIPFA. This is called the prudential regime, as I mentioned earlier. As decision-making is local, the PWLB does not ask what loans are for. If there is anything more I can add on that, I will write to the noble Lord.

The noble Lord, Lord Tunnicliffe, also asked about the interest rate being raised. There is a statutory limit on the total amount of PWLB loans that can be outstanding at one time. Some local authorities substantially increased their use of the PWLB in 2019. If PWLB borrowing had reached the statutory limit, it would have effectively been unable to issue new loans. That would have been very disruptive to local authority capital plans. To ensure that lending continued to be available, the Government legislated to increase the statutory lending limit from £85 billion to £95 billion and raised the interest rate on new loans by one percentage point. In making this change, the Treasury restored rates to levels available in 2018. The cost of PWLB loans has fallen significantly over the past decades, even accounting for changing policy margins.

The noble Lord, Lord Shipley, asked about the impact on social housing. By ensuring that the PWLB can continue to lend, the rate rise supports social housing delivery.

On whether Her Majesty’s Government should have oversight, in general, it is right for decisions to be made locally by the elected council. Most borrowing is spent on schools, roads and waste services. I commend this instrument to the Committee.

Motion agreed.

Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 2020

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 2020.

My Lords, I thank noble Lords for the opportunity to debate this order, which is part of the Government’s ongoing commitment to devolution. I will begin by providing background to the order, which is made under the Scotland Act 1998. The 1998 Act devolved powers to Scotland and legislated for the establishment of a Scottish Parliament. The Scotland Act 2016 was the second major update to the settlement, making amendments to the 1998 Act and delivering the cross-party Smith commission agreement, which was established following the 2014 Scottish independence referendum. As a result of the 2016 Act, a wide range of powers, including welfare powers, has now been transferred to the Scottish Government and Scottish Parliament.

Scotland Act orders are used to implement, update or adjust Scotland’s devolution settlement. The order before the Grand Committee today is a Section 63 order, which provides for functions to be shared by Scottish Ministers concurrently with a Minister of the Crown. This is commonly known as executive devolution. Section 63 orders are Orders in Council and are subject to approval by affirmative resolution in both Houses of this Parliament and the Scottish Parliament. Indeed, this order was approved by the Scottish Parliament on 4 December last year.

I will now turn to the instrument itself and explain exactly what it does. The Scottish Government have committed to introducing a grant, known as job start payment, for young people aged 16 between 24 who have been out of paid employment for six months or more and who make an application. The Scottish Government do not currently have the executive competence to provide assistance to this cohort of young people to help them retain employment. This order is therefore required to enable the introduction of the Scottish Government’s job start payment.

To be clear, the order only gives Scottish Ministers the necessary powers and does not set policy. Furthermore, the powers of the UK Government will not be reduced as a result of the order as the functions are simply being shared with the Scottish Government. My right honourable friend the Secretary of State for Work and Pensions has agreed to share the function of making arrangements to provide assistance to this cohort concurrently with the Scottish Government.

The order will achieve this by amending the Employment And Training Act 1973 to make certain existing powers for the Secretary of State exercisable concurrently by Scottish Ministers. Section 31 of the Scotland Act 2016 created exceptions to the reservation of the subject matter of the Employment And Training Act 1973 in order to give the Scottish Parliament certain powers in this area. However, those exceptions did not extend to providing assistance to retain employment to this cohort of young people. The amendment is therefore required to enable the introduction of the job start payment as without it, Scottish Ministers would not have the necessary powers.

I will now explain what the Scottish Government intend to do with the powers transferred through this order. I previously explained the nature of the grant. In targeting young people, the Scottish Government are targeting the people who need support most. Evidence suggests that the unemployment rate for young people is higher than for those over 25. The unemployment rate for young people in Scotland was 9.1% from October 2018 to September 2019, compared with an overall unemployment rate in Scotland of 3.9%. The proposed payment will consist of a one-off cash payment of £250, or £400 for young people who have children. This will help with the initial costs associated with entering and remaining in work. It could be used to pay for food and clothing and to help towards travel costs, thus removing some of the initial pressure of starting a new job.

Young people will have a three-month window from receiving an offer of employment to apply for the benefit. Upon receipt of a job start payment application, the Scottish Government anticipate that it will take 21 working days and a further three working days for payment to be made. Care leavers will be able to apply for an additional year compared with other young people and will have to be out of paid work only on the date of the job offer, rather than for the previous six months, to be eligible.

The job start payment is expected to be introduced in spring 2020. This is of course dependent on the order being made. Job start payment will be administered by Social Security Scotland, the Scottish Government’s benefit delivery agency. Any costs associated with delivering the payment will fall solely on the Scottish Government. In the Scottish budget 2020-21, announced on 6 February, £2 million was allocated to fund the benefit expenditure for job start payment.

The UK Government do not view the order as controversial and are fully supportive of the Scottish Government’s plans to support young people to retain employment through the introduction of the job start payment. Indeed, we take no issue with the Scottish Government using their budget to support young people in this way, in addition to the support provided across the UK by the UK Government within reserved competence.

The order demonstrates that the UK Government remain committed to strengthening the devolution settlement and shows Scotland’s two Governments working well together. I commend the order to the Committee, and I beg to move.

My Lords, I thank the Minister for that introduction and explanation. As he said, this is a relatively small measure, it is not contentious and it is clearly the wish of the Scottish Government, so in that sense we do not need to detain the Committee for long. I commend the basics of the grant, accept that there are circumstances in which young people might find it difficult to get work if they have been unemployed for a long time, and accept that this would be a benefit, but is there any accountability for this money, or is it simply cash in hand for young people to do with as they wish?

My second point concerns perhaps a more general characteristic of the Scottish Government’s campaign to secure control over social security and welfare payments in Scotland—they proceed very slowly and with some timidity in implementing them. We know how big the welfare bill is, and the Minister has put a maximum figure of £2 million on this measure. I know that this is a very small cohort of people and that is probably as much as it deserves; nevertheless, against the big picture of welfare and social security it is a very modest measure. When we compare that with the profligacy with which the Scottish Government have managed to nationalise, at great expense, significant sections of the Scottish economy—shipyards that cannot complete ships, airports that do not run planes and trains that do not run at all—one would like to think that they might be a little more ambitious in saving money on those projects and using it for more radical welfare benefit measures in Scotland.

Many of us had hoped that the Scottish Parliament and the Scottish Government would use the transferred powers to show how Scotland and its needs are different, and possibly to develop different ways to deliver welfare and social security peculiar to those needs, but in ways that also might influence delivery methods in other parts of the UK. It is disappointing that the Scottish Government do not seem able to show a great deal of imagination and vision. While one would of course not object to the transfer of these powers and to the processes whereby it is co-determined—I guess that means that each decision is sanctioned by the appropriate Minister in the UK Government—it is nevertheless worth putting on record that the Scottish Government need to show a little more vision and imagination if they really want to demonstrate that their campaign to get these welfare powers was worth the effort.

My Lords, I also thank the Minister for outlining this modest, minor order. We are happy to support it, given that its whole purpose is to enable Scottish Ministers to help young people who have been out of work for six months or more by giving them a £250 grant to help them take up a job. That is pretty important because, as the Minister said, the unemployment rate for those aged under 25 is higher than for older people. Having supported the order’s aims, I have a few brief questions for the Minister.

First, could he outline what consultation, if any, took place, particularly with the young Scottish people who will be affected by this? Secondly, and I guess this will have a technical answer, why is it necessary to have a whole statutory instrument for what seems a very minor issue? Why was it not included in the Scotland Act 2016? It seems even more minor than I thought when I first read it. If the expenditure is still a joint responsibility, it is giving only a little bit to Scotland and it seems extraordinary that it needs all this. I am delighted to be here with colleagues this afternoon to deal with it, but it is hard to understand why it needs a whole SI.

Thirdly, given that the Minister said the figure would be £2 million for the total pot, does he happen to know how the Scottish Government propose to raise the money to fund this? Fourthly, to his knowledge—I understand this is not his responsibility—are the Scottish Government planning any evaluation to ascertain the scheme’s effectiveness? Before the noble Lord, Lord Bruce, got in first, I was going to ask about accountability for this expenditure. Lastly, should a young Scottish person be awarded this £250 grant, is there any risk that they would lose access to any UK-wide funding?

As I said, we welcome any initiative that helps young people into work, but do the Government have any explanation for how an SNP Government are overseeing such a horrendously high level of youth unemployment? According to the Scotsman, the figure is even higher for this age cohort than the Minister said: 9.8%, which is three times higher than that in England and a rise of 0.8% in the year to July 2019. Does the Minister have any thoughts about that? Do the Scottish Government have any other plans in hand that are more meaningful than a £250 grant to ensure that these youngsters have a more successful entry into adulthood? If I may again borrow the words of the noble Lord, Lord Bruce, should the Scottish Government perhaps be a little more ambitious in seeking to reduce young people’s unemployment in Scotland? Nevertheless, we agree to the order.

My Lords, I thank the Committee, the noble Lord, Lord Bruce of Bennachie, and the noble Baroness, Lady Hayter, for their points and questions. I will do my best to answer them. The first question to address is about accountability for this money. A young person receives the £250 cash in hand; the point is to allow the young person to spend the money in the way they feel is right. It is designed to go on travel or food costs to help them in their early days in work. However, they could easily decide to spend it on a PlayStation or something. That is the truth. The only answer I can give is that there is trust that once young people have the job they will decide to spend the money wisely.

That may answer the question asked by the noble Lord, Lord Bruce. I meant what accountability do the Scottish Government have in setting up this scheme that they are choosing the right people and that the pot is being handled efficiently. I recognise that this is not an issue for this government department, but the Minister might know from discussions. He might want to write, if it is not within his knowledge.

The noble Baroness makes a good point. I will need to write. On how wisely the £2 million is being spent by the Scottish Government, the assumption is that the £250 grants will go to the right people at the right time for the right reasons. I will write if we can get some more information on that point.

Do the Government have any plans to monitor this? It may well be a very good idea and prove to be very effective, and that is fine, but it may be found that it is just cash in hand and is not really used for good purposes. It is presumably worth doing some systematic modelling. It may not be an awful lot of money, but simply handing out money for a purpose without seeing whether it is used for that purpose seems not entirely right.

I feel sure that we should be able to get some information for the noble Lord. I asked these questions as part of my briefing, but I will see what more I can get. That leads on nicely to take note of the points the noble Lord made about the Scottish Government. He made the point that it is a modest measure that lacks imagination and vision. The only thing to say is that I have noted that. I think it is a fair point, but I should be careful not to criticise the Scottish Government. Again, if there is something I can put in writing on that I will certainly do so.

Moving on, the noble Baroness, Lady Hayter, asked why there is an order for such a minor provision and why it was not in the Scotland Act 2016 in the first place, which is a fair question. The intention to develop the job start payment first appeared in the SNP manifesto in April 2016 and the Scotland Act 2016 completed its passage through the UK Parliament in March 2016. The 2016 Act devolved the competence to legislate for new benefits, but only for benefits which were not connected with reserved matters. The relevant powers relating to assisting persons to retain employment are reserved under the Scotland Act 1998 under the job search and support reservation. The message is that it just missed the cut, if that is the way to put it.

The noble Baroness also asked where the money for the job start payment is coming from. The Scottish Government announced their budget last week and committed money from the Scottish Consolidated Fund. I cannot say which source of money goes to which expenditure. The Scottish Consolidated Fund comes from a range of sources, including the block grant from the UK Government, Scottish taxes and borrowing. That includes the Scottish tax-raising powers as well, which, as the Committee knows, the UK Government gave the Scottish Parliament.

The noble Baroness asked whether I am concerned that the SNP Government are not properly addressing the high level of youth unemployment. She made an extremely good point. I am concerned that my colleagues in the Scottish Government are more focused on constitutional conflict and their own agenda for independence than on using the powers that they have to address the issues that people in Scotland badly need to be addressed and which they care about. That is not just youth unemployment but failings in education, healthcare and a range of other devolved responsibilities. I suspect that the noble Baroness and the noble Lord, Lord Bruce, would probably agree with me on that front.

The noble Baroness asked what consultation exercises the Scottish Government have undertaken. To be fair to them, they ran a public consultation on the proposed format and the key eligibility criteria of the job start payment between 16 January and 9 April 2019. The analysis of 96 responses showed that the majority of individuals and respondents believed that the job grant, as it was then called, met policy intent.

The noble Baroness also asked what support was in place for unemployed young people across the UK. The people receiving the £250 would not lose out on the benefits that they might receive in addition. There are existing UK-wide benefits that support unemployed people while they search for work. Young people may also be able to access funds from other sources to support them with some of the costs associated with applying for and starting a new job. These include the flexible support fund, which is not just for young people. It is offered by jobcentres across the UK at the discretion of work coaches, who have the flexibility and discretion to make awards that will enhance the employment prospects of the claimants and other customers with whom they are engaged, if there is a need. The difference is that, unlike job start payment, the flexible support fund does not specifically apply to young people; it extends further.

Finally, the noble Lord, Lord Bruce, asked whether UK Ministers sanction decisions. The answer is no. Scottish Ministers will have discretion as to how to use the power once it is shared. It is just that UK Ministers also retain the competence.

I hope that covers all the questions. I thank the noble Baroness, Lady Hayter, and the noble Lord, Lord Bruce, for their support in principle for this.

Motion agreed.

Northamptonshire (Structural Changes) Order 2019

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Northamptonshire (Structural Changes) Order 2019.

Relevant document: 4th Report from the Secondary Legislation Scrutiny Committee, Session 2019

My Lords, this order was laid before the House on 28 October. The Secondary Legislation Scrutiny Committee published its report on 4 November. The good people of Northamptonshire then had a significant wait before yesterday’s debate on this order by the Second Delegated Legislation Committee in the House of Commons. I understand that the order was welcomed and was considered fairly swiftly.

Let me start by setting out the background to this order. Your Lordships may recall that just over two years ago my predecessor, my noble friend Lord Bourne, informed this House that the then Secretary of State had concerns about financial management at Northamptonshire County Council and whether it was failing to meet its best value duty. Your Lordships may also remember the reports in the press relating to this story. An inspector was appointed under powers given by the Local Government Act 1999.

I would like to quote directly from the report of that inspector:

“To change the culture and organisational ethos and to restore balance, would, in the judgement of the inspection team, take of the order of 5 years and require a substantial one off cash injection. Effectively, it would be a reward for failure. Even under a Directions regime, it is not considered likely that councillors and officers would have the strength of purpose to carry through such a long running programme of recovery potentially crossing two electoral cycles. In the meantime, it would be the people of the county who would suffer. A way forward with a clean sheet, leaving all the history behind, is required.”

The independent reviewer recommended that local government in Northamptonshire should be reorganised into two unitary councils, one covering the areas of Corby, East Northamptonshire, Kettering and Wellingborough and another covering Daventry, Northampton and South Northamptonshire.

The order before us today creates just this new start for local government in Northamptonshire, which has been described by the councils themselves as a

“once in a generation opportunity to develop and transform services so they are modern, financially resilient and future-proof, learning from national best practice and making informed decisions about the future.”

This order, if approved and made by Parliament, will provide for the establishment of two new local government areas. For each new area a new unitary council will be established; they are to be known as North Northamptonshire Council and West Northamptonshire Council. The order also provides important transitional arrangements, as is usual in such cases. In particular, provision is made to replace the district council elections in May 2020 with elections to the new unitary councils, which will be shadow authorities until 1 April 2021.

Turning to the detail, I will now speak of the process behind local government reorganisation. On 27 March 2018 the then Secretary of State, Sajid Javid, issued an invitation to all eight Northamptonshire councils to submit a proposal for local government restructuring. The invitation set out that the proposals should meet our long-standing criteria that restructuring, if implemented, should improve local government, be based on a credible geography, and command a good deal of local support. On 31 August 2018, seven of the eight authorities submitted a proposal for two new unitary councils. I thank all the councils for the way in which they have worked together to develop this proposal, for the significant work that has been undertaken to prepare for its implementation, and for the support that the commissioners have provided. The then Secretary of State, James Brokenshire, decided that this proposal meets our criteria for unitarisation and the additional requirements set out in the invitation.

Taking the first criteria of improving local government, a significant factor was a consideration of children’s services, particularly because they have been identified as a matter of concern. The then Secretary of State for Education commissioned a report by the Northampton- shire children’s services commissioner on how best to ensure continued improvement of children’s social care, should there be a reorganisation of local government in Northamptonshire. The commissioner recommended that there should be a children’s trust to cover the whole area. Retaining a shared children’s social care function through establishing a children’s trust will provide continuity in children’s social services across the two new counties. It will provide a stable platform to accelerate service improvement so that vulnerable children and families get the help and protection that they need and deserve. Significant progress has been made with the establishment of Children First Northamptonshire and I welcome the recent appointment of the chair, Ian Curryer.

Another vital local government service is adult social care, and the decision was also made on the basis that work continues to be taken forward to integrate adult social care and health services. I am pleased that local health and council leaders have agreed a draft plan involving the creation of community hubs.

I also want to highlight the other ways the councils expect the proposal, if implemented, to improve local government. These are by: offering more coherent geographic units for aligning infrastructure, housing and environment services to help drive growth; enabling a clear point of contact for residents at their relative councils to access all council services; delivering advantages in health and well-being by enhancing social care and safeguarding services through closer connection with related services; improving education and skills provisions; improving community safety; and finally, delivering estimated cost savings of £12 million per year as a result of the reorganisation, which will be achieved within two years of the establishment of the new councils.

Let me say a little more about the future finances of these new councils. The commissioners have ensured that the county council’s finances, while still fragile, will be a stable platform on which to establish the new councils. The councils have worked hard through the implementation process to get a firm grip on the costs and benefits associated with their unitary proposal. I understand the programme currently estimates that investment of £43.5 million is required to deliver the local government reorganisation and transformation it seeks to deliver. This investment will in part be funded by £18 million of business rates pilot funding. This investment programme is expected to yield savings of some £85.9 million annually, which will be available to invest in sustaining local services. This is a significant figure and it will be for the councils to carefully monitor and report both future financial progress and the progress that has been made towards delivering modern and sustaining local services. I am clear that the two new unitary councils have a credible geography that meets the second criteria.

The third criterion focuses on the quality and extent of support for the proposal. I am pleased to say that the proposal has a good deal of support. Over 67% of the 5,831 respondents to an independent consultation, carried out on behalf of the councils, agreed that the number of councils should be reduced. In addition, a representative residents’ survey demonstrated that absolute majorities of all residents, across the county and within each proposed unitary area, agreed with the proposal. As noble Lords would expect there was also a statutory consultation on the proposal, which received 386 responses. Responses from businesses, members of the public, parish councils and community organisations to that consultation were more mixed. However, the consultation demonstrated that seven of the eight councils in the area, all public sector partners and the local enterprise partnership support the proposal for two unitaries. As referred to previously, local partners see this reorganisation as an opportunity to review services and ensure that they meet the needs of local communities.

This order implements the proposal and reflects local preferences. It provides for arrangements to manage the transition to the new unitary councils, including the establishment of joint committees and shadow authorities to drive the implementation. Evidence from previous unitarisations suggests that elections to a shadow authority can help establish legitimacy, effective leadership and better long-term decision-making to ensure smooth transition to the new arrangements. The Secretary of State decided to modify the proposal to delay implementation to April 2021 and establish shadow authorities, with elections to those shadow authorities in May 2020. This is to ensure that the new councils would be in the strongest possible position to deliver high-quality services to the people of Northampton- shire from the outset.

The May 2019 district council elections in Northamptonshire were previously postponed to May 2020. The order provides that those May 2020 district council elections are cancelled. This is to avoid confusion for residents in being asked to vote for councillors for the new councils and councillors for a district council that will be abolished 11 months later. District councillors will therefore remain as elected members of their district council until their council is abolished. Some will serve for six years.

Finally, I would just like to mention my personal experience. My own council will soon be the new unitary Buckinghamshire Council. I am looking forward to exercising my democratic rights on 7 May in electing councillors to that new authority. I am also most encouraged by the recent local government reorganisation in Dorset. While it is the first time that I have taken one of these debates in my newish role within the department, for my officials this is of course business as usual. I am pleased to report that the implementation phase for this reorganisation is well under way. I have full confidence in the local area implementing the unitarisation by April 2021. I therefore commend this order to the Committee and I beg to move.

I remind everybody of my entry in the register of interests, as a councillor in Kirklees in West Yorkshire—a unitary council—and as a vice-president of the Local Government Association. The order enacts decisions made in response to the financial calamity that befell local government in Northamptonshire through its county council. It was clearly imperative that action was taken; it is my understanding that change had to be made. However, I would like to comment on and perhaps challenge some of the decisions that have resulted from the decision to reorganise local government in Northamptonshire.

First, it seems that we as a country are in danger of taking the “local” out of local government. I say that as somebody who serves a very large ward—not the largest in the country, but one of the largest—at a unitary level and understands the demands on the three councillors who serve a population of 16,000. From my experience, it means that some of the very local issues become less important to councillors, who have to deal with high-level strategic decisions, but remain very important to local people. When you have a big ward, there is a tension between the strategic and the local. If we are not careful, local people often miss out. That is more so with large wards serving rural communities.

I do not know the county of Northants very well, but I guess that some of its wards will be significantly rural in nature. In my experience, this creates a potential disconnect between decision-makers and the people they serve. There is potential for the Government to give additional powers to parish and town councils, so that they can take up some of the very local responsibilities that would previously have been the remit of district councillors. That would enable a local element to be retained in local governance. I will leave it there and hope that the Minister will have some sort of response to it.

The second element is the size of the two unitary councils and the number of councillors they have. One has got 93 and the other has 78. In my experience, that is quite a large number. The Explanatory Memorandum states that there will be a boundary review for those wards before the next local elections in 2025. Are the Government thinking about reducing the number of councillors, because that is what a boundary review could achieve? On balance, having fewer councillors might improve governance but, on the other hand, it increases the size of wards and makes it more difficult for ward councillors to undertake their local responsibilities. Is that in view?

My next point is a general one about when there are 93 councillors—even 78—and only 10 of them are actual decision-makers. They are in the cabinet; they make the decisions for the council. That leaves another 83; they can do scrutiny, but they are not taking decisions, which is what local people expect them to be doing. Apart from the annual budget, the local plan and, perhaps, an annual children’s plan, there is not much that every councillor has to take decisions on. There has to be a rethink of the roles and responsibilities of councillors who are not in a cabinet. It can make councillors feel remote from decision-making. As ward size makes people feel remote, councillors feel remote if they are not in the cabinet. In my experience, remote decision-making fuels discontent and we should take note of that.

Paragraph 7.6 of the Explanatory Memorandum, which the Minister referred to, outlines the benefits of the new structure:

“aligning infrastructure; housing and environment services to help deliver growth; advantages in … health and wellbeing; improved education and skills provision”,

though I have to say that the responsibilities of local councils regarding education are very limited these days. The levers that they have to change anything are minimal, so I would not have referred to education in that way. Does the Minister agree that there could be an alternative to achieving that aim, which I think will come up in the next few months in a number of ways? A constructive collaboration, formalised between districts and the county, could achieve the same aims without the upheaval of a structural reorganisation. This would be an upheaval, and it takes a long time—several years—for councils to get on their feet and begin delivering strategically, not operationally, the services that they should.

The second point I want to make about the benefits of the reorganisation is on the projected savings of £12 million per annum. Such figures are always produced by the protagonists of the reorganisation. My knowledge of reorganisations tells me that that saving might not be the case. The Secondary Legislation Scrutiny Committee highlighted that it hoped the House would,

“seek a commitment from the Minister to review whether the benefits and savings have been met.”

I hope the Minister will be able to commit to such a review, because it will inform future changes, which is important.

Another point I would make about the changes is about the children’s trust, which I understand will be set up for a very good reason: so that there is continuity in children’s services in the whole county of Northamptonshire. I have had one experience of a children’s trust and it was not particularly helpful or positive. It becomes dominated by children’s services officers and the accountability factor of local governance, as exemplified by local councillors, gets lost. I would like the Minister to give some thought to that, although maybe not to respond today.

The consultation was interesting. It seems that people were saying, “We’ve got failure. We need to change. This’ll do.” That is how it came out when I read it. They were accepting a fait accompli, really.

Change was, of course, inevitable. We had to have a fresh start, given the financial failure of the large council in the area. We have had a review, but I wonder whether anybody has ever reflected on how that failure happened. Someone somewhere must have known; surely action should have been taken at that stage, before failure happened. It is no good for local people who rely on services. Where was some intervention? There seemed to be a failure somewhere in local governance.

Finally, I would point out that England has the fewest elected representatives of all the major European countries, and when compared to the United States of America. The direction of travel is to reduce them here. I worry that we are reducing the number of elected representatives to the detriment of local democracy. Again, I think that will fuel discontent. If people do not feel that they know who is taking the decisions, and where, it does not help anyone; it makes people cynical about local government. Having been a representative in local government for a large number of years, that is the last thing I would want to happen. However, I understand the need for the order, and I support what is going on.

My Lords, I query the process. Having been the Secretary of State responsible for local government reorganisation, I find this process extremely peculiar. The Secretary of State asked the principal councils in Northamptonshire to decide how they wanted the future to be, but he said that Northamptonshire could not be a single unitary and if it were going to be three unitaries, they had to find some extremely good reasons for it. What we have here is a series of commissioners proposing a particular answer and the Secretary of State thanking the commissioners for all their work and presenting local people with a choice that is not a choice. I am not happy with that as a procedure.

Then we discover that we are supposed to think that the local people will be thrilled about it because there were 300-odd responses to a statutory consultation from a population of something like 700,000. We also had a number of businesses and others who thought it was a frightfully good idea. One of the questions that was asked—this is fascinating—which was thought to be a very good argument, was about whether there should be fewer councils. That is not the issue. The issue is why should we have two councils rather than three or one. That is the first question. I find the process very peculiar.

The second thing that seems odd about it is the decision that the historic county of Northamptonshire should be treated differently from the historic country of Cornwall. I am not suggesting that either is the right answer, but it seems that you have to have a reason for it. When I had to deal with Sir John Banham’s report, one of the things I found very difficult was that a number of the proposals did not seem to tie up with other proposals; it was therefore quite difficult to present them to the House of Commons because the other place, quite naturally, asked why it was that the proposals for this place were based on these arguments and the arguments were overturned in the proposals for some other place.

That leads me to question whether we have any idea about what we are trying to do. What is the Government’s view of local authorities? If we are going to do them piecemeal because of a disaster, I understand that we have to do it quickly—I will not hold up the proceedings any longer than I have to in asking these fundamental questions; I certainly will not suggest that one is not content with this—but it does not seem to be very good business. It does not seem to be a sensible way to proceed.

That leads me to my third point, which is simply this: we have had some quite successful changes in local government. If I remember rightly, the original changes in 1974, which were Conservative ones, were largely bad because they were based on the principle of having a whole lot of councils, many of which were not viable. For example, in my county of Suffolk, we should have had two unitary authorities: the old county council of east Suffolk and the old county council of west Suffolk. That would have been sensible. Instead, we had eight district councils and a county council. It is a very large area, much bigger than Northamptonshire, and it was not a sensible thing. Ever since, there have been attempts for councils to work together. That is now happening. East Suffolk Council is an amalgamation of two district councils. It is true of Mid Suffolk District Council and Babergh District Council and of the western district councils, which are now working together because that is the only way in which they can provide proper services at a proper price.

I do not particularly like neatness. It is the enemy of civilisation. I do not like the concept of being neat for the sake of it, but I do like rationality, and my problem here is that I see no rationality behind this. It looks to me as if there was a failing county council, it was a disaster, we put in some people to hold the place together and now let us get some answer, which we will have, but let us not be too careful about whether we have a philosophy behind it. What sort of numbers should we be dealing with in the historic county of Northamptonshire? Somebody should have said, “What about a unitary authority?” That is one answer. I am not suggesting that it is necessarily right, but should it not have been a question that was asked? Would it have been significantly more expensive? Then you would not have had to have a children’s trust. I am a bit worried about the need for a children’s trust but nobody thinks that you have to have any other, countywide, for what is not an enormous county and one that is quite a reasonable shape.

I have stayed behind because I want to know what the Government’s philosophy is. I know a number of the Minister’s civil servants from my own history—they have been around for quite some time—and I always want to know why we decide on a particular answer. This decision is not based on a “why”; this decision says that we are doing it because it is the easiest, quickest, simplest way—and pray to God it works. I am not sure that that is government.

My Lords, I declare an interest as a county councillor in Cumbria, and some of my remarks are going to relate to Cumbria in the context of what the Government have decided on Northampton- shire. I agree with many of the general points that the noble Baroness, Lady Pinnock, and the noble Lord, Lord Deben, have made, but I am rather concerned that the Northamptonshire model is being seized on by Ministers as something that they can go around the country imposing on people, whatever they think. The cause of that suspicion is that Mr Jake Berry, the Minister for the Northern Powerhouse, summoned the leaders of the councils of Cumbria to see him and basically told them that the only option for the way forward was two unitary authorities in Cumbria—a county of some 500,000 people but obviously a vast geographical area—and that that was basically the Government’s intention. I realise that the noble Viscount, Lord Younger, may not be in a position to answer my questions, but I would be very grateful if he would commit to send me a letter in answer to the points I am about to make.

First, what is the current position on ministerial powers in relation to local government reorganisation? As I understand it, there was a provision in the Local Government Act to allow the department to impose schemes on areas but these powers have now lapsed. I am not sure whether I am right about that, so I want to know what the statutory power is at present and whether the Government are considering—because I know that there is talk of a devolution White Paper later in the year—taking on the power to reorganise local government even if there is not unanimous agreement? I rather gathered from what the Minister said that although seven of the eight authorities said they would accept the two-unitary structure in Northamptonshire, it was not necessarily unanimous of all the authorities. I do not know what the position is there. So, the first question is: where do we currently stand on ministerial powers and on the Government’s intentions for the future, given the Prime Minister’s laudable desire to make local government work better as he sees it and to devolve power?

Secondly, do the Government have rules about what they regard as the minimum size of a unitary authority? Again, there is talk of the normal rule being a population of 300,000, but is that a rule or is it just a thought when people are looking at these questions?

This is particularly relevant in the case of Cumbria. I am a supporter of unitary authorities. Local government in Cumbria would be a lot better if we did not have this confusing duplication with the county council and six district councils and the national park. I tell you this as someone who represents Wigton in Cumbria: I get people coming to me all the time with particular issues and they do not have a clue about who is responsible for what. That is very bad for democracy. I am a strong supporter of the idea that, if we want a more vital local democracy, unitaries are the way forward.

In the case of Cumbria, there could be two unitary authorities—a northern one and a southern one—but the geographical logic of the southern authority would include Lancaster and Morecambe to create a Morecambe Bay authority, which was considered 50 years ago. It would stretch from the city of Lancaster—I declare an interest as the pro-chancellor of Lancaster University—round the bay, including the South Lakeland area, Kendal and Barrow-in-Furness. The problem is that Mr Berry apparently told our local government leaders that this was ruled out completely and that the Government could not possible consider something that crossed a county boundary. That is an illogical rule for Ministers to adopt in trying to create a logical local government structure.

Thirdly, I have some reservations about the idea of a trust to deal with children’s services. The Minister mentioned adult social care as well, but it was not clear to me whether the two unitaries would be responsible for adult social care or whether, again, it would be removed from the council’s responsibilities and put in some independent hands. I do not know how a trust would work. There are lots of issues to do with children’s services that require democratic accountability and debate. I am concerned about what some people will call the privatisation of these services; I do not believe that it would be privatisation unless the Government imposed that, but it is not a democratically satisfactory arrangement to have an independent body on matters of such sensitivity.

Finally, again in relation to Northamptonshire and Cumbria, why did Mr Berry tell our leaders that a condition of this was that we had an elected mayor? What is the Government’s policy on having an elected mayor for the whole county—that is, not having one for each authority, but having an elected mayor to cover the two unitary authorities? Where has this idea come from? What is the logic of it? Why is that thought to be an essential part of effective local government reorganisation? I should say again that I am not against elected mayors. Having an elected mayor has done London enormous good. Mr Street in Birmingham and Mr Burnham in Manchester are playing a good role. I am not against elected mayors in principle, but I do not see why they have automatically to be part of a scheme to revitalise local democracy and have a more sensible local government structure. I am asking for the principles that led to the Northamptonshire reorganisation to be more clearly stated and for the Government to be a little clearer about whether they see these principles to be of general relevance and how they would apply in the Cumbria case. I would be grateful for an explanation of those points by letter from the Minister.

My Lords, I apologise for being slightly late. I was stuck in a committee. I declare an interest as a vice-chairman of the Local Government Association and president of the National Association of Local Councils. Probably more importantly, I am a member of Wiltshire Council. For 10 years, I led a unitary authority and for the six years before that I led a county council, leading it and its four districts in to a unitary authority. So I know quite a lot about unitary authorities. I agree wholeheartedly with the noble Lord, Lord Deben, that this is a mess. For many years, since I started in local government about 25 years ago, I have hoped that government would grasp hold of this and look at the reorganisation of local government so that we were more similar and sensible and would therefore have a stronger voice with central government because we would not be so complex in the way we do business.

I know a little bit about Northamptonshire, and I wish it well in the future. I think this is the right thing for that county, although personally I agree with the noble Lord, Lord Deben: I would have had one single unitary authority. Northamptonshire is about the same size as Wiltshire—about 500,000 people—which, in my experience, is about right, although I always said that if somebody gave me another 200,000 to 300,000 people, I would take them. I would have become much more efficient and been just as local. The noble Baroness, Lady Pinnock, and I have talked about this in the Chamber a number of times. There is no reason for a unitary authority to become divorced from its communities. People in Wiltshire will tell you that Wiltshire Council is now much closer to its communities. It takes work, planning and a system to do that, but it can be done. It can also work much better with its parish and town councils and start to look at devolution downwards. We talk a lot about devolution from central government to local government, but we forget the people on the ground. The people to deliver playgrounds, parks and gardens, swimming pools and things like that are towns and parishes. They do not cost the central taxpayer any money, because that is local precepting. It is easy for a town or parish to have a scheme, ask local people for the money, and be challenged on whether it has delivered it with the money it has got from local communities. I do not worry about size.

The other issue about size is that county councils now deliver more than 85% of the services across the county area. We are probably talking about 13% to 15% of the services, so why are we not thinking about a million? It would not worry me, providing that each of the unitary authorities is big and strategic but looks at how it can be local as well. That is possible. Cornwall and Wiltshire are doing this very successfully. They are also saving the money. I am sorry to say to the noble Baroness, Lady Pinnock, that it does not take long. In Wiltshire I was bothered, as every leader who changes a local government system must be, that local services would take a dip. I assure the Committee that every performance indicator in Wiltshire got better when we went to unitary and did so straight away. It did not dip. Not only that, we expected to make the savings in two years; we made them in 18 months. This is not a bad news story; it is a good news story. That is why I would support Northamptonshire all the way.

I would be concerned about children’s trusts. What Mr Berry said recently about Cumbria is concerning. It concerns me because if we take children’s services and adult care services out of local government, what is left? In local government over the past 10 years, we have shown how efficient and effective we can be. Just because there might be one difficult apple—not a bad apple, but experiencing difficulties—it does not mean that the system has to change. In both children’s and adults’ services, it is important that there is democratic accountability locally. We have seen what happens in the health service when there is not democratic accountability. Please do not do that to us for children’s and adult care services.

I could go on a great deal, but I will not. Northamptonshire has been through a very difficult time, and this is its chance to step up to the mark and deliver the services that its people deserve. I wish it all the best.

My Lords, I refer to my relevant interest as a vice-president of the Local Government Association. I thank the Minister for explaining the order. I agree with many of the points made by every Member here. Like my noble friend, I am generally a supporter of unitary authorities. I think they are the way to go, generally speaking. However, this is quite a sad day in some ways. We are not here because councils have come together and decided that this is what they need to do for their county. They have not had discussions and worked out that this is the best way forward. We are here because of complete incompetence and bad management at Northamptonshire County Council. This unitary authority decision has then been imposed on people. As we have heard, they could not have one unitary council—I do not know why, but they could not—and they could not have three. It had to be two. That is very disappointing.

I know the area really well. I lived and worked in the east Midlands for a very long time. I like Northamptonshire a lot. The town of Northampton got its charter in 1189. It has a beautiful town hall. The town was incorporated in 1835. The county itself is wonderful. As has already been said, it has a very compact shape and great road and rail links. There are great businesses there. Dr. Martens is in Wellingborough. The county also has Weetabix, Barclaycard and Carlsberg —all really good businesses. It is the home of the motor industry, with Silverstone and the Rockingham Motor Speedway. These are Premier League businesses with a Sunday league county council working for them. It is dreadful that we are where we are today.

Corby is another great town, with a great history in the steel industry. We may not all remember, but it was 40 years ago that the steelworks closed. Some 10,000 people lost their jobs in one fell swoop. However, the local community, the local authority and the councils came together, and they reinvented themselves.

I am also disappointed in the names of these two councils: North Northamptonshire and West Northamptonshire. They are terrible, dreadful names. Where have the historical county names gone? I mean names such as Northamptonshire, Kettering, Wellingborough, Corby and Daventry. We must also remember that we can have all the new names and structures and we can dismantle what has gone before, but unless the structure is sound, the funding is stable and the officers and members understand the challenge before them, this will solve nothing at all and we will back here again in a few months or a few years’ time.

Northamptonshire County Council failed the communities of Northamptonshire completely. A lot of good people tried to deliver, but a failure of political leadership was at the centre of this disaster. I thank the staff and the people who worked hard in the councils. In particular, I pay tribute to Councillor Tom Beattie, the long-serving leader of Corby Borough Council. Corby was very much against this reorganisation. If Tom had been the leader of the county council it would not have opened a brand-new, glitzy county council office—with Sajid Javid opening it—for it to go bust only a matter of weeks later. It was absolutely ridiculous. He would never have got us into this mess in the first place.

Having said that, the order creates two new local authorities. I wish them well as they progress from shadow authority status in May to taking over full responsibility for all services in April 2021, but we need to take a serious look at what happened. There was a complete failure of leadership, which we must try to avoid in other councils. As other noble Lords asked, why can there not be one unitary county council? We seem to have been forced into this as the only option, which is not a good way to do it. I believe in devolution and unitary authorities, and I believe that local people should have some status in that. I will leave my remarks there. I look forward to the Minister’s reply.

I thank the noble Lords who took part in the debate, which has been not only interesting but informed. It has also been somewhat philosophical, particularly in the remarks made by the noble Baroness, Lady Pinnock.

The noble Baroness, Lady Pinnock, the noble Lord, Lord Liddle, and my noble friend Lady Scott referred to the children’s trust. I absolutely take note of their comments. All I can say is that I will take these concerns back as I am not in a position to answer them; perhaps these views are of a more philosophical sort.

In the same breath, let me say in response to the noble Lord, Lord Liddle, that a letter will be delivered to all noble Lords who took part in the debate, perhaps to put a little more meat on the bones of that particular comment relating to the children’s trust, but also to answer his questions. In fact, I will attempt to answer some of those questions during my closing remarks, but I suspect that I will not answer them in full.

Perhaps this is me being a bit philosophical, but this subject leads to endless debate. Everybody has their own view on how local services are best met and how local authorities and local councils come together best. I understand that. I have my own views; obviously, they are the views of the Government.

I start by setting out our high-level policy: what are we trying to do in local government reorganisation? I hope to allay some fears. The Government are open to innovative, locally led proposals that will improve services, enhance accountability and deliver financial sustainability. Any proposal considered under the Cities and Local Government Devolution Act process will require unanimous consent from all councils. Alternatively, the Secretary of State may issue a formal invitation for proposals.

Two circumstances will be considered in issuing such an invitation. The first is where the following two conditions are met: there is a local request for an invitation, and that request demonstrates that local opinion is coalescing around a single option that is reasonably likely to meet the existing publicly announced criteria for unitarisation. The second circumstance is where it is considered that this action would be appropriate given the specific circumstances of the area, including the long-term sustainability of local services. We are clear that any change to council structure should not be dreamed up or imposed by Whitehall, but led by councils and local people. Councils are much better placed to develop proposals that suit the unique needs of their residents and businesses. That is the overarching policy, which noble Lords have no doubt heard before.

I am sorry to press my noble friend on this, but this proposal does not meet any of those things. First, it was not unanimously accepted by the local councils. Secondly, it was the Secretary of State who said what they could and could not agree to. There was no opportunity for innovative proposals; indeed, they were told precisely that there could not be innovative proposals. It is that that worries me. It is not that there is not a philosophy; it is that in no single case have I found that philosophy being followed. My noble friend, the former leader of Wiltshire Council, pointed out that Wilshire works perfectly well and so does Cornwall. Why was Northamptonshire not given the choice to have a single unitary authority? It is that that worries one. We are not keeping to what we said was our policy; I therefore wonder whether we really have a policy.

I hear what my noble friend says, but I do not agree with him on this. There are several reasons for that. Of course he will expect me to say that; I will say it. We see a fresh start for the people of Northamptonshire. It will provide new councils in which local people can have confidence, providing effective, modern and sustainable services. Like the noble Lord, Lord Kennedy, I thank the leaders of the eight—not seven—Northamptonshire councils and the commissioners for the leadership that they have shown to take us to this point.

On the lack of unanimity and there being one council —Corby—that was not entirely on board, it has consistently shown great strength of purpose in nearly supporting things, so when we say that it is not entirely unanimous, Corby was behind many of the issues. Perhaps a letter is required to give a little more information on that.

One of the most important things in this process is consultation. The local consultation described the majorities in favour as overwhelming, with 74% support overall and 77% and 70% in West Northamptonshire and North Northamptonshire respectively. I do not want to be drawn in on the names—I do not think that I can comment on that—but I take the noble Lord’s point on the names that were given.

Where are West Northamptonshire and North Northamptonshire? They are dreadful, dreadful names. The Government could certainly have done something about that. Northampton got its charter in 1189. They are dreadful, dreadful names. Something much better should have been done.

I think that I heard “dreadful” at least four times. I say, perhaps as a reassurance—although I do not think that it will wash with the noble Lord—that the names have been chosen locally. Admittedly there was no competition, but they were chosen locally rather than being imposed on them.

I shall go further on the consultation. The Northamptonshire Healthcare NHS Foundation Trust and Healthwatch Northamptonshire support a reduction in the number of councils. They both welcome the closer integration possible as a result of having to engage with fewer authorities, and agree that this is a positive opportunity for change to secure a sustainable future. The Northamptonshire police and crime commissioner is supportive and stated that the

“creation of unitary authorities would bring about clarity for the public and present opportunities for greater co-ordination, realisation of efficiencies and simpler partnership working.”

Finally, the Northamptonshire County Association of Local Councils reported that an overwhelming majority of town and parish councillors supported the principle of unitary authorities being established. We should not dismiss the opinions of local people in this respect. This allows me to pick up a point made by the noble Baroness, Lady Pinnock, about taking “local” out of “local government”. I point out to her that the new parish and town councils are in the process of being established, including in Kettering, Northampton and Wellingborough—note those names. I welcome and encourage this as an important way to strengthen local democracy and enable decisions to be taken to reflect the needs of local communities. I do not agree entirely with the noble Baroness that the local is being taken out the process. In my view, we still have some very robust local democracy.

I will pick up another point made by the noble Baroness about the role of councillors in the cabinet system. I think her point was that only 10 were making decisions, as opposed to the other 93—sorry, 89; my maths is bad. It will be for the new councils to determine the role of councillors and to ensure that all councillors can take a full role in representing their residents and ensuring an effective local democracy.

Furthermore, as to the size of wards, for the election in May 2020, each ward, which are county electoral divisions, will have three members. For the next election in May 2025, we expect the independent boundary commission to undertake a full electoral review. It is for the commission to decide the number of councillors and the size of wards. Experience shows that the new unitary councils establish strong and effective arrangements at parish and community levels, to add a little more to what I said. We would expect the new Northamptonshire councils to follow best practice—as, for example, in the unitary Wiltshire Council, led by my noble friend Lady Scott, if I may spare her blushes.

The noble Lord, Lord Deben, spoke and expressed concerns about process. My guess is that a letter will better satisfy him, but the start of the process was the independent inspector. The proposal made follows exactly the inspector’s recommendation. The consideration behind the inspector’s recommendation was that a new start was needed, with two new councils. In the inspector’s view, two unitaries best met this aim and the criteria for unitary local government: improving local government; a credible geography with a population substantially in excess of 300,000; and a good deal of support. That penultimate figure perhaps answers the question asked by the noble Lord, Lord Liddle. To clarify, the figure is substantially in excess of 300,000. A unitary county would risk being seen as replicating and rewarding a failing county.

The noble Lord, Lord Liddle, spoke about Cumbria with great passion, for obvious reasons. The position in Cumbria is all about a devolution deal. It is for Cumbria to decide whether it wishes to have a devolution deal; initial discussions are continuing. Major deals have involved a mayoral combined authority. If Cumbria wished to have a mayor deal with a mayoral combined authority, it would point to a simplification of current local government structures: establishing unitary councils. We know that there are different local views about unitary structures for Cumbria. As I am sure the noble Lord will tell me, discussions are continuing. We will want to hear more from the local area in this respect.

The noble Lord made points about the elected mayors. The idea of elected mayors arises in major devolution deals where substantial powers and budgets are devolved over a functional economic area. An elected mayor is seen as providing a strong single point of accountability for the exercise of those powers and for managing those budgets. That elected mayor can be a combined authority mayor if there is more than one authority in the functional economic area, or if that area comprises a single unitary council or an elected mayor of that council.

I would take that point if the elected mayor had substantial powers and there was a substantial devolution of the budget. As I understand it, in my county—I could be wrong and I am quite happy to be corrected by the noble Lord’s officials—Mr Berry is talking about a devolution deal that might give Cumbria £10 million a year. That is a very small amount of money compared with the county council’s revenue and capital budgets, never mind the other district councils. I think that our net revenue budget is more than £400 million; the districts must have another £80 million. We have a LEP, of course, which is already in place and deals with economic development. I do not quite understand whether the Government are saying that, if there is a reorganisation in areas such as Cumbria, the mayor will replace the LEP. I was against the abolition of regional development agencies—it was a mistake for the coalition to do that—but the emphasis then was put on local enterprise partnerships. Are we now, hardly a decade later, shifting on to mayors as something completely different?

That just proves that there are different views; the noble Lord will have his views and other noble Lords will have theirs. Setting up mayoral authorities is not a case of one system fits all—it comes down to the ongoing discussions that are taking place. My understanding is that the mayors would not replace the LEPs, but I do not want to prejudge the negotiations. There are going to be different setups. As the noble Lord will know, there are already different setups in existing mayoral authorities. Regarding the figures that have been mentioned, a substantial deal would be one on the size and scale of that for Greater Manchester or the West Midlands.

I used to keep saying these things when the noble Lord, Lord Bourne, was the Minister: the idea is that these things just evolve, but it always looks like a confused mess to me. Local government looks like a real mess in England outside of London. It is all over the place and I really do not think this is good. I know it is not the Minister’s fault, but the department is not clear on what it is trying to achieve. I remember discussions with the noble Lord, Lord Lansley, who lives in Cambridge. He described all the tiers of government in his county—and next door, there was just one tier. It is just shambolic.

I cannot agree with the noble Lord. Surely, he would agree that there is good sense in talking to the locals to work through the issues and to get their buy-in to what they want, within the parameters I have set out. I cannot see the problem with that. Already, a format is evolving: that this is the wish of local people all around the country, particularly up north, where 37% of people are under the aegis of mayoral authorities; that this is actually what local people want.

This is not so much a philosophical thing, but as the noble Lord will know, we have announced the devolution White Paper. This is an opportunity to reflect and review. I do not know what is going to be in it or what will come out of it, but we are going to look at all aspects of local government in the White Paper, which will be produced in due course. I hope it will help to allay the noble Lord’s fears. It might answer the question of my noble friend Lord Deben as to why Northamptonshire is treated differently from Cornwall. There is no one-size-fits-all solution. For example, discussions are going on in North Yorkshire about York being a unitary. Cornwall, as we know, is treated differently. It is important to come back to the point that this has got to be driven by local people deciding what they wish.

Again, I would agree with that statement, but the problem is that it is not the case. The Minister says that local people can decide, but they are given only one or two options. The Government are not letting them decide; they are narrowing down the options to a specific number and ruling things out before people get the chance to decide. They are setting a rigid framework and saying, “You can have that or nothing at all”. That is not letting local people decide, and that is the basic problem.

I take note of what the noble Lord has said. Actually, it falls in line with what I said at the beginning, which is that a letter is due. I will do my best to set out our approach in more detail, because there is sense in what we are doing. This is not a scattergun approach and nor is it chaotic.

I want to answer a question raised by the noble Lord, Lord Kennedy, concerning Northamptonshire and the new arrangements. He asked: why not one or three unitaries, rather than two? The inspector recommended that a two-unitary solution was best because a one-unitary council was perceived as replicating and rewarding the failing county council, and three was seen as not meeting the criteria on credible geography with councils of adequate size.

I urge the Government to look again at the issue of consulting. I fully agree that it is about consulting local communities, local people. I have a problem when we take too much notice of those district and county authorities that are still there. With the greatest respect, they are trying to protect themselves, their officers—which is understandable —their members and their authority. Their views are sometimes challenged by that. It should be local communities that make the decision, not the local authorities within them.

I promise that this will be my last comment. The argument that we could not have a unitary authority for the whole county because it would be seen as rewarding the county council that has failed is rather weak. There was a failure of political leadership. The way to deal with that is to remove the people and not let them stand again. Not going forward with the one-council option because it could be seen as a replica of the failed county council is a weak reason.

I pledge to write on that point and to tie it in with the point made by the noble Lord, Lord Kennedy. I have not addressed the review of savings made. In my letter, I will attempt to give the noble Baroness, Lady Pinnock, a response on that matter and address the point raised by the noble Lord, Lord Liddle, on the position of ministerial powers. That comes down to giving a coherent view of how ministerial powers juxtapose with local ones.

I hope that that is helpful and that I have addressed the many points raised. As I said, a letter will be coming that fully addresses the points that were made. Once again, I thank noble Lords for their contributions.

Motion agreed.

Committee adjourned at 6.38 pm.