Tuesday 9 November 2021
Arrangement of Business
My Lords, Members are encouraged to leave some distance between themselves and others and to wear a face covering when not speaking. If there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division bells are rung and resume after 10 minutes.
Green Gas Support Scheme Regulations 2021
Considered in Grand Committee
My Lords, since this draft SI was laid before the House on 9 September, a minor correction has been made to the Explanatory Note to highlight that the scheme is intended to end in March 2041.
The UK is the first major economy in the world to set a legally binding target to achieve net zero greenhouse gas emissions by 2050. Between 1990 and 2019, our emissions have decreased by 44%, which is the fastest reduction in the G7, and we are continuing to advance sustainability through the Government’s Ten Point Plan for a Green Industrial Revolution, the net-zero strategy and, most relevant to this policy, the heat and buildings strategy.
Currently, the heating of our homes, businesses and industry is responsible for 21% of the UK’s greenhouse gas emissions. The decarbonisation of heat is recognised as one of the biggest challenges in meeting our climate targets, requiring virtually all heat and buildings to be decarbonised. Increasing the proportion of green gas in the grid is a practical, established and cost-effective way of reducing carbon emissions and contributing to the UK’s net-zero target, lowering carbon emissions from both domestic and industrial gas boiler use.
The green gas support scheme is a Great Britain-wide tariff-based scheme supporting new biomethane plants injecting biomethane produced by anaerobic digestion into the mains gas grid. It is expected to contribute 3.7 million tonnes of CO equivalent of carbon savings over carbon budgets 4 and 5, and 8.2 million tonnes of CO equivalent of carbon savings over its total lifetime. This is equivalent to taking approximately 3.6 million cars off the road for a year. The green gas support scheme is expected to help support high quality jobs in the renewable energy sector at a time when economic recovery is, of course, so important. It is anticipated that, when taking into account both direct and indirect jobs, the green gas support scheme could support up to 1,600 jobs per year during the construction phase of plants and up to 1,000 jobs once plants are fully operational.
Our analysis suggests that over two-thirds of existing biomethane plants are in fact located in rural areas, with 80% of all GB plants located in areas with a lower than average gross value added. We expect plants supported by the scheme to follow similar trends and therefore contribute to the Government’s levelling-up agenda. The Government believe that it is appropriate for gas consumers to pay towards decarbonising the gas grid, and therefore we have taken the decision to fund the green gas support scheme through a levy. The levy will be the sole funding source for the green gas support scheme and will be applied to all licensed fuel gas suppliers.
Of course, the Government acknowledge the impact of rising gas prices on consumer energy bills, and we are implementing stringent budget control measures to ensure that the costs of the levy are as low as possible and cannot rise unexpectedly. The cost to an annual gas bill will be relatively low, starting at around £2.50 per year, and it will peak at around £4.70 per year in 2028 for an average gas bill, assuming that we make a transition to a volumetric levy.
During peak years of production, biomethane plants incentivised by the green gas support scheme will produce enough green gas to heat around 200,000 homes, which would otherwise have been heated by natural gas.
While we are launching with a per-meter point levy that provides a high certainty of costs to both suppliers and consumers, the Government recognise the benefits of a volumetric levy that aligns costs more closely to gas consumption. We have committed to transition to a volumetric levy as soon as possible, subject to overcoming the feasibility issues, which include the impact on energy-intensive industries and other important UK businesses.
In conclusion, the scheme established by this statutory instrument will support ongoing investment in the biomethane industry and enable the development of new production plants for the injection of biomethane into the gas grid. In supporting this investment in new anaerobic digestion capacity, we expect to support more jobs, growth and innovation in the biomethane industry, while delivering important carbon savings, which are a vital part of meeting our overall net zero targets. I therefore commend these draft regulations to the House.
My Lords, I have come to learn rather than to criticise or analyse in much depth. I was on the Select Committee on energy in the other place and I have tried to keep up to date with developments. I congratulate my noble friend on the fact that, according to his statement, we are the first in the world to go down this track.
My questions are really exploratory. I looked particularly at page 70 of the extensive documentation. First, I have a question about energy crops. It seems that if we are starting in a new area, the bringing together of waste collection is quite a challenge, whereas energy crops by definition are probably on a 12-month cycle. Therefore, the 50% limitation that is mentioned here, while probably the right strategy in the medium term, seems a bit of wishful thinking, certainly in the initial stages. You have to have energy crops to get the thing going.
Secondly, what is the estimated time required to set up any of these plants? Are we talking about a year, 18 months or two years? That is fairly key.
Thirdly, there is the question of the intermix of the gas provided by this route alongside gas from the North Sea. As far as I can see—I have not done an in-depth analysis—there is no reference to this. Is there complete compatibility or does there need to be treatment one way or the other to ensure compatibility in the mix of gases going into the grid?
There is another area that concerns me. Like so many others, I was previously in local government. How will we ensure that local government waste collections collect food waste and other waste suitable to feed these new plants? I do not know the proportions, but at this point in time we in central Bedfordshire are separating only recyclable and non-recyclable waste. I do not know what is happening in the rest of the country, and an update on that would be very helpful.
I thank my noble friend for taking this forward; it is crucially important. I will do my very best to help him on the journey forward.
I thank the Minister for his explanation of the regulations before the Committee. They are important, because they establish the new green gas support scheme as a replacement for the renewable heat incentive, which closed to new applicants on 31 March this year. This scheme will begin on 1 April 2022, with a reach back to the scheme’s launch date, due to be 30 November this year.
This new scheme is for new deployment and excludes equipment and plants used to register under the RHI scheme, so can the Minister confirm that there will be no crossover of payments between the schemes and that there is therefore little likelihood of much new biomethane coming forward, certainly during the retrospective six months but also for some time to come as new plants come on stream? How soon, and in what number, does the Minister’s department expect applications for new plants to be built and come on stream? It would appear to be quite quickly, as payments will last for only 15 years in a scheme of 19 years until 2041. I presume that the department has confidence in the speed of decision-making, the planning process and the construction phase, all of which will need to go smoothly to encourage speedy deployment.
I must also admit to having some déjà vu moments as I read through the details of the scheme, with recollections of how Conservative Governments regarded such schemes in the past. When I read under paragraph 7.3 of the Explanatory Memorandum that tariff rates
“will be set at a level that aims to encourage continued deployment and ensure value for money”,
and, then, under the very next paragraph, that
“a degression mechanism … will reduce tariffs if certain triggers are met”,
I recall the devastating cutbacks introduced by the Conservative Cameron Government, which slashed support for wind and solar, devastating the industry and undermining investor confidence so tragically. The misprint in paragraph 7.4—
“compromise of an annual tariff review”—
only underlines the impression that undermining support for deployment, especially in conjunction with some sort of levy control framework coming back disguised as a budget cap, will be another feature of this scheme.
It also suggests that few lessons have been learned by the Government. The levy control framework became a politicised mechanism that defied industry understanding and eventually had to be scrapped. Can the Minister give more details today to give confidence that the balance between encouraging deployment and payback to investors will not suddenly lurch towards ill-defined value-for-money analysis being undertaken at the stroke of the department’s pen? Those lost years after those experiences for the solar industry, as well the jobs that were lost, have contributed to the climate emergency that is yet to be recognised fully across government.
Continuing further into the details, I commend the Government on the impact assessment accompanying the regulations. It gave greater insight into the set-up of the scheme and the changes from the RHI regime. This scheme will mandate biomethane producers to produce at least 50% of their biomethane from waste. On page 70 of the impact assessment, the full feedstock energy mix is identified, with 50% of the waste expected to be food waste. Can the Minister confirm whether there is a full definition of food waste that includes food waste in all its various unfortunate and distinguishing forms? My understanding is that this refers not merely to restaurant, domestic household and other post-consumption end-of-the-food-chain waste. It should also include waste that does not even reach the food chain, such as food being rejected or suddenly no longer wanted by supermarkets; this can befall farmers and growers, especially in salad crops and vegetables.
Has the Minister’s department worked closely with colleagues at Defra who are working to reduce food waste through recycling schemes and local authorities? Can he also say what analysis has been undertaken by the department to consider the effects on the renewable fuel obligation undertaken by the Department for Transport, which reuses cooking oils?
I am not aware of the definitions and analysis of “food waste” under the RHI scheme, but I remember that, at one time, miscanthus growing was an important feature of biomethane production plants. In the department’s analysis, maize is the next important feedstock, at 20%, along with agricultural waste. However, I note, under “Non-monetised costs and benefits”, which the Minister mentioned in his opening remarks, the effect on the rural economy. The analysis states that
“two thirds of … plants are located in rural areas, with 80% of all GB plants located in areas with a lower than average GVA.”
I welcome the positive effect that this will have on rural areas. I also note that many properties are not on the gas grid in these rural areas.
This scheme will apply the levy to the gas grid only and will not include electricity supplies, producing enough green gas to heat about 200,000 homes. In the context of the application of the levy, which is adjudged to have minimal effect on bill payers, this does not amount to a significant impact. Does the Minister’s department see this as an interim scheme in its thinking about a framework to bring hydrogen gas to the grid? Hydrogen would certainly bring far greater benefits to, and have a greater impact on, the decarbonisation of gas and is recognised as a possibility in the memorandum. Will this be a key feature of the reviews being built into the scheme? How often will the reviews be undertaken? Will they be public documents, and will they become part of the reporting structure to Parliament that monitors progress towards reaching net zero by 2050?
Another key feature of this scheme is that payments will be made only in respect of supplies that reach the grid. The Minister will know that many plants are considered for the savings they would generate in the industrial process—for example, sugar—and that therefore do not reach the grid. The Minister will also know that tanked or bottled gas goes to many properties off the gas grid, and that there are many district heating schemes. Can he explain why this scheme is so restrictive and does not look at the decarbonisation of gas in the round? Will this type of extension be considered under a review or excluded altogether?
Finally, it is important to note that the scheme represents yet another new levy on households—a change from the Treasury-funded RHI. It is also therefore a potentially regressive scheme, affecting poorer households already in fuel poverty. According to the analysis in the document, in the initial phases the effect on consumers starts at about £1.40 per year, and at £2.50 according to the Minister’s remarks today. Nevertheless, it will increase over the lifetime of the scheme, while moving to a levy on volume consumption. I understand that the devolved Administrations have looked at the effect on their schemes and appear to be content with it.
However, there are many simultaneous dynamics. Will the department be able to assess and review each change individually, as well as the cumulative effects that could have a meaningful impact on certain income levels and households? How will these reviews be conducted?
I grant approval today for the scheme and thank your Lordships’ Secondary Legislation Scrutiny Committee for its report. Nevertheless, there are many important areas of concern as the UK moves forward with plans for net zero, and I welcome further dialogue along that pathway.
Let me start by thanking both noble Lords for their valuable contributions to this debate. The need to make progress with decarbonisation of course remains an absolute priority for the Government, so we have to keep up the pace of change to fuel what will be a green, sustainable recovery as we build back better from the pandemic. So, to keep us on track, as noble Lords will be aware, the Government recently launched a landmark net zero strategy setting out how the UK will secure 440,000 well-paid jobs and unlock £90 billion-worth of investment by 2030—all on our path to ending a contribution to climate change by 2050.
However, to meet net zero, we are of course aware that virtually all heat in buildings will need to be decarbonised. Moving away from burning fossil fuels for heating is a great challenge, but it presents enormous opportunities for jobs, growth and levelling up. We are clear that achieving net zero will require a range of technologies and solutions for buildings, and that there is no single silver bullet. It is not a question of choosing whether electrification, hydrogen or heat networks are the answer, but of doing something on all of them, and everything that we can to deliver on all these fronts.
As I said in my introduction, within that framework biomethane has a clear role to play in decarbonising our energy supplies. The Committee on Climate Change stated that biomethane will be valuable across all decarbonisation pathways and recommended continued government support. Injecting biomethane into the gas grid means that more of the gas used in a gas boiler in a home or in industrial processes across Great Britain will be from renewable sources, meaning lower carbon emissions and a lower impact on climate change. Continued policy action is essential for maintaining investment in the biomethane industry and enabling the development of new production plants for biomethane to allow injection into the gas grid.
The green gas support scheme will also help to meet our commitments made in the 2019 Spring Statement and 2020 Budget to increase the proportion of green gas in the grid. It will help to promote a circular economy by encouraging the use of domestic and industrial food waste to heat our homes and businesses. It will contribute to achieving short-term carbon budgets and our broader target of net zero emissions by 2050. In addition, it will support high-quality jobs in the renewable energy sector as well as the development and diversification of the rural economy, in line with our net zero levelling-up agenda.
My noble friend Lord Naseby made a point about energy crops. Using waste feedstocks can contribute to carbon savings and to a circular economy, but given the uncertainty around food waste availability, a higher threshold could have had a negative impact on plant deployment and encouraged unintended competition within the anaerobic digestion industry. We will undertake a mid-scheme review in 2023 to review the waste feedstock thresholds, and we will adjust if necessary. My noble friend asked about the length of time needed to set up a plant. The answer depends on the size of the plant and the location, but in general it is about 12 to 18 months. He also asked how we will ensure that local government will collect waste to feed the new plants. We certainly expect food waste volumes to increase significantly over the lifetime of the green gas support scheme as a result of Defra’s household food waste collection policies. Those are outlined in the Environment Bill, which the House is debating as we speak.
I turn to the noble Lord, Lord Grantchester, who asked whether there will be crossover payments from the NDRHI and the green gas support scheme. We have carefully ensured that the regulations do not allow one plant to receive payments from both schemes; that would clearly be unfair to the taxpayer. We understand from market intelligence that roughly 53 plants will be deployed on the scheme, and we hope that building will begin on several of them later this year. The noble Lord also asked about value for money for the scheme. The degression mechanism will act to prevent the risk of overcompensation for deployment that exceeds forecast expenditure thresholds in year. The mechanism has been designed specially and revised in the light of the lessons learned under the RHI—for example, the degression triggers have been adjusted to mitigate some of the dynamics that were seen under the RHI. As always with these schemes, we need to balance our ambitions for biomethane plant deployment against the possible impact the scheme will have on the bills of domestic and industrial consumers. Budget management measures are designed to ensure that the decarbonisation of the gas grid occurs at the best possible value for money for bill payers.
Moving on to the noble Lord’s question about the definition of food waste, my department works closely with Defra, including on the waste hierarchy. This requires the prevention of waste in the first place; that is a good starting principle. Where that is not possible, we support the reuse, reduction or recycling of materials before, ultimately, disposing of any remaining waste safely through incineration, with the appropriate energy recovery. My department also works closely with the Department for Transport to ensure that the green gas support scheme and the renewable transport fuel obligation seamlessly work together to support industry, again ensuring no element of double subsidy.
On the question about miscanthus, energy crops are allowed on the scheme—up to 50%. As I said earlier, that threshold will be part of the mid-scheme review. On the noble Lord’s question about whether this levy will bring about any new levies on hydrogen, it is important to confirm that the green gas levy is the sole source of funding for the green gas support scheme. The Government have set out separate hydrogen and net-zero strategies, with the intention that, from 2025 at the latest, all revenue support for hydrogen production will be levy-funded. This is subject to consultation and the appropriate legislation being in place.
The noble Lord also asked me about reviews of the scheme and, as I said, a mid-scheme review will take place to ensure that it is meeting its aim to look at the balance of food stocks and energy crops. The broader decarbonisation of gas in the round is considered in the recently published Heat and Buildings Strategy and the various consultations alongside it.
On the noble Lord’s question about how this will impact households in fuel poverty, the Government’s impact assessment found that, even at the peak of the levy, the impact on both the number of people in fuel poverty and the size of the fuel poverty gap was minimal across Great Britain compared to the baseline scenario, where the levy is not imposed. The Government recognise the benefits of a volumetric levy, as opposed to a meter-point levy, which aligns cost more closely with gas consumption. We have committed to transitioning to a volumetric levy as soon as possible, subject to overcoming the various feasibility studies of which the noble Lord is aware, including the impact on energy-intensive industries and other important UK businesses. We are clear that any volumetric levy design must be simple to administer and must deliver and minimise the costs to consumers. Before we proceed on this, we will ensure that we fully consult on any new proposals in this area.
The noble Lord also asked how the Government will manage the cumulative impact of levies. The Government are committed to ensuring that the costs of decarbonising the energy system are fair and affordable for all energy users. We are considering the benefits and costs of the different approaches and, as always, are committed to working with industry and consumers to keep costs down and identify ways to incentivise behaviour change towards decarbonisation. As we announced, we will launch a fairness and affordability call for evidence on options for energy levies and obligations to help rebalance prices and support green choices, with a view to taking final decisions on that next year.
I think I have dealt with all the questions that were asked of me and, with that, I commend these draft regulations to the Committee.
Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10) (No. 2) Regulations 2021
Considered in Grand Committee
My Lords, the regulations were laid before the House on the 28 September 2021.
Following the emergence of Covid-19, the Government quickly implemented the Corporate Insolvency and Governance Act 2020, which introduced a set of permanent and temporary measures aimed at helping companies through the shock effects of the pandemic. In addition, many businesses have also benefited from an exceptional economic package of support from the Government in excess of £400 billion through the furlough and self-employed income support schemes, and through various grants and loans, and business rates and VAT relief.
Since their introduction last year, these measures have proved invaluable in protecting many businesses that were unable to trade from unnecessary insolvency due to the restrictions imposed in the national lockdown periods to deal with the pandemic. Most of the temporary insolvency measures, including the relaxation of wrongful trading, lapsed at the end of June this year, but the restrictions on company winding-up petitions were extended for a further three months until the end of September.
Without doubt, the pandemic has presented a huge challenge for us all, but we have listened and taken action to protect businesses whose very existence has been threatened by the lockdown restrictions that were necessary to keep us all safe. However, we recognise that these measures, and in particular the restrictions on the use of company winding-up petitions, are a severe restriction on creditors’ rights to enforce recovery of their debts and as such should not remain in place for longer than is necessary.
Now that we are back to full trading following the successful completion of the Government’s four-step roadmap out of lockdown on 19 July, all businesses are able to fully reopen without restriction. The signs are indicative of a strong economic bounce-back and the time is right to begin to restore the insolvency regime to its normal operation by returning some creditor rights.
We must bear in mind, however, that many businesses, particularly those sectors that were most affected by the lockdown restrictions for over a year, such as retail and hospitality, have been severely impacted and their solvency will be endangered by accrued debts and low cash reserves before they have been given a chance to trade back to profitability and financial health. As such, it is crucial that we do not pull the rug completely at this pivotal moment and instead allow the previous measures to end in a controlled way that provides affected businesses with a further period of protections.
These regulations therefore introduce a new kind of temporary restriction on winding up companies that is less of an impediment to creditors and tapers the version that has been in place since last year. The instrument replaces the previous high bar for winding-up petitions on the grounds of inability to pay debts, which required that petitioners satisfy a court that the debts were not Covid-19 related, with new targeted criteria for creditors which seek to encourage dialogue with their debtors prior to pursuing a winding up.
The new and temporary criteria for petitioning creditors, which came into force on 1 October 2021 for a period of six months, are: first, a requirement for creditors to demonstrate that they have sought to negotiate repayment of a debt before seeking to wind a company up; secondly, that the debt owed must be at least £10,000; and, thirdly, that a company winding-up petition cannot be brought in respect of a commercial rent as described by the provisions in the Coronavirus Act 2020.
On the first of those criteria—a new requirement for creditors to demonstrate that they have sought to negotiate the repayment of a debt—before presenting a winding-up petition a creditor must send a notice to the company giving it 21 days to respond with proposals for paying the debt. Creditors will then be required to confirm to the court that they have sent the notice, whether they have received any proposals from the company and, if so, state why they are not satisfactory. A creditor is not obliged to agree to the proposals put forward by the company. However, the court will be able to draw on its existing discretion to refuse to make a winding-up order where it appears that a creditor is attempting to abuse the winding-up process.
I am aware that, throughout the pandemic, many creditors and debtors have continued to work closely to find solutions together. I know that many businesses have come to agreements, and I thank them for their efforts in what are challenging circumstances for both sides. This measure reinforces the Government’s message that creditors and debtors should collaborate to find solutions to address arrears that have accrued as a result of the pandemic.
The second of the temporary criteria is that to present a company winding-up petition the debt owed must be at least £10,000. Ordinarily, there is no minimum amount that must be owed before a winding-up petition can be brought, although, when it is based on a statutory demand, the debt owed must be at least £750. A temporary increase in the minimum debt level to £10,000 will prevent petitions for relatively small debts that would otherwise be presented. In particular, this is likely to reduce the number of petitions presented against SMEs, which tend to have smaller debts and less cash reserves, making them most in need of additional support. The £10,000 limit also aligns with the current £10,000 limit for issuing proceedings in the small claims court and is easily identifiable as a measure to prevent winding-up petitions being presented for small debts and to allow businesses to focus on recovery.
The final element of the criteria is that a company winding-up petition cannot be presented in respect of commercial rent. The Committee will be aware that, during the summer, the Department for Levelling Up, Housing and Communities announced an extension of the moratorium on the forfeiture of commercial tenancies until 25 March 2022. This is to allow time for the implementation through primary legislation—the Commercial Rent (Coronavirus) Bill, which is being introduced to Parliament today—of a rent arbitration scheme to help industry deal with commercial rental debts that have accrued to a significant level during the national restrictions periods. Subject to parliamentary passage, it will come into force next year.
The restrictions on the commercial rent arrears recovery scheme have also been extended to 25 March 2022. This carve-out in relation to winding up is necessary in order not to destabilise the proposed rent arbitration scheme before it is introduced, and again reinforces the Government’s message that, wherever possible, creditors and their debtors should work together to find a way to come to amicable agreements on rent debt accrued during the periods of national lockdown. We recognise that this could cause continuing uncertainty for commercial landlords who themselves may be under pressure as a result of the pandemic. However, the rent arbitration scheme will deliver certainty to both the landlord and the tenant when an agreement to pay lockdown rent arrears has been unachievable. Furthermore, while rent debts accrued during lockdown are ring-fenced for the purpose of the arbitration scheme, all commercial rent owed after 19 July 2021 should be paid in full as and when it falls due.
In conclusion, these new targeted criteria demonstrate that the Government have listened and taken into account the concerns raised repeatedly about the potential cliff-edge scenario leading to a sharp increase in insolvencies when government regulatory and fiscal support end. The new targeted criteria reinforce the importance of striking a balance between the rights of creditors and the further protections needed by businesses most affected by the pandemic. I cannot stress enough that discussion is crucial between creditors and their debtors, as the best way to recovery will be the one where they work together. I ask them please to continue to negotiate and find solutions together, wherever possible. That would be my message to both sides. With that, I commend these regulations to the Committee.
My Lords, this is the latest instalment of long-running legislation, which may well come to an end fairly soon. None the less, there are a number of issues, and I should be grateful for clarification.
A recurring issue has been the relative absence of any cliff-edge arrangements to prevent a high number of business and personal bankruptcies. With the relaxation of the insolvency constraints from 1 October, the number of bankruptcies has already begun to accelerate and may well get worse. Further problems will come when businesses need to repay their Covid loans and, inevitably, their cash flows will be squeezed. The Government made a fundamental mistake in not taking an equity stake in large businesses; if they had done so, those businesses would not have to repay the loans and interest and their cash flows would have been preserved for productive use and investment in productive assets.
As far as I can make out, the statutory instrument does not amend the sections of the Insolvency Act 1986 that deal with the disposition of property between the presentation of a winding-up petition and the date of the winding-up order. This suggests to me that banks are perhaps already able to freeze the accounts of their clients, which might actually force some into bankruptcy. Perhaps the Minister could clarify whether that is the case.
The Minister also referred in passing to the 16 January 2021 announcement in a press release entitled Eviction Protection Extended for Businesses Most in Need, in which the Government promised that they would legislate to ring-fence Covid-related rent arrears that had been accrued as a result of trading restrictions placed on businesses, and introduce a system of binding arbitration for landlords and tenants who cannot come to a negotiated settlement on payment. Could the Minister say when this legislation will be enacted? I might have missed something; I am not aware that it has been enacted.
It has been.
It has been? You may be right; I probably missed it.
Why are the same arbitrations terms not available to individuals? Why are they restricted to commercial landlords and commercial property? The increase in the threshold—from £750 to £10,000—for presenting a winding-up petition may give temporary reprieve to some small businesses, but the Government have missed an opportunity to offer permanent help to small businesses in matters of bankruptcy. This would have required a change in the order in which the creditors of an insolvent business are paid. Currently, secured creditors, which include banks, private equity, hedge funds and wealthy individuals, walk off with most of the proceeds from the sale of the assets of a bankrupt business, leaving little, if anything, for unsecured creditors, comprising employee pension schemes and supply-chain creditors, including many small businesses.
The insolvency law is forcing employees to forgo some of their pension rights. It also strangles many small businesses, because, in their capacity as unsecured creditors, they will receive next to nothing from the bankruptcy of a large customer. So, unlike financial conglomerates, they are forced to bear a highly disproportionate amount of risk arising from the bankruptcy of their clients. I cannot think of any moral or economic reason that justifies financial conglomerates being able to walk away with most of the assets of a bankrupt business, leaving small businesses and pension schemes with little or nothing.
It would be helpful to hear what moral and economic justification the Minister can offer; it is actually strangling SMEs and damaging employee pension interests. Could the Minister indicate whether, perhaps before the end of this Parliament, the Government have any plan to introduce legislation that will facilitate the equitable sharing of bankruptcy risks among all creditors? As I said, there is no economic or moral reason why secured creditors have to be prioritised. That law goes back to the 18th century, and here we are in the 21st century still not having changed it. Is it not time that we did?
My Lords, as the Minister has said, the statutory instrument introduces new temporary tapering measures that restrict the use of winding-up petitions. From 1 October, this instrument introduced a tapering effect, we are told by government, to protect companies from aggressive creditor enforcement as the economy opens up. The new temporary measures will be in place until 31 March 2022, but, ultimately, it is an extension of some support and a withdrawal of other support in the way it has been tapered.
We believe that it is right to maintain restrictions on serving winding-up petitions under Schedule 10 to the Corporate Insolvency and Governance Act 2020. It is vital that businesses that have sustained so much pressure during the last 18 months be supported right through to the end of the pandemic. This pressure was clearly demonstrated by the recently published annual report from the Insolvency Service, which found that although some measures had mitigated the impact of the pandemic on businesses, the number of people who have accessed the Redundancy Payments Service was up around 20% on normal levels.
Turning to the SI, we acknowledge and welcome the raised limit. At least there is considerable protection now for small businesses with debts below £10,000. This is important and is in line with the measures we have called for since June, when other support was withdrawn, to ensure that there are effective ways to deal with debt through the period of recovery. Without it, many more businesses would go bust. We have to remember that the economy is nowhere near out of the woods just yet: Covid is not over, and there is still uncertainty about what might happen going forward and whether there will be further restrictions.
So I hope that the Minister will be able to answer some questions on the specifics of the SI today. How many businesses did the Government speak to before moving forward with this tapering measure? The SI details the process of notice that needs to be given—21 days of consultation, allowing a response from the debtor then to be taken into account. What happens if, unreasonably, the creditor does not wish to accept the proposal? Would it then be for the courts to decide? Could any court fees then be payable? If the debtor does not win the case against them, will they then have to pay court fees as well as, possibly, the creditor? If the 21-day period begins just a few days before the measures are due to end in March next year, what does that mean for any of the disagreements going through between a creditor and a debtor? Will the 21 days that might start with the end of these provisions continue, with those rights secured? What are the Government doing to ensure that those who are concerned about the ending of the temporary insolvency measures seek effective advice early? How will the Government keep the measures under review?
The Joint Committee on Statutory Instruments drew this SI to the special attention of the House because it failed to comply with proper legislative practice. The most serious incident was a drafting error in a previous version, which meant that there would be a brief period during which no restrictions would apply, with the revocation provisions coming into force at the beginning of 28 September, before they were laid before Parliament. Does the Minister accept that the Government’s drafting mistake meant that Parliament was sidelined? With regard to the two-day gap—28 to 30 September—that was created by the initial version of this instrument, how many businesses were issued with winding-up orders on 29 and 30 September?
The Explanatory Memorandum states that the instrument is intended to
“help business get back to normal without facing a ‘cliff edge’”,
but Ministers need to recognise that the tail of recovery is set to continue well into next year and even the year after that. Therefore, I would like to hear from the Minister what assessment has been made of additional support that might be needed to get businesses through the next few months—especially when we place this statutory instrument in the context of the fuel supply, HGV and supply-chain crisis or crises in general. With a tough winter ahead and given the high number of Covid cases, the Government must ensure that support is not removed from businesses prematurely, which would have a catastrophic effect on businesses, high streets and communities across the country.
I first thank both noble Lords for their interesting and valuable contributions. Throughout this pandemic the Government have helped the companies that have been most affected by the restrictions that were necessary and were introduced to keep us all safe. Some of the issues raised today highlight how essential it is that we do not withdraw prematurely the help and support for those companies, now that they are able to reopen. We do not want to risk allowing them to fail now, because to do so would mean that all the support we have given so far is rendered pointless; and, of course, there would be a negative effect on the economy—on businesses and people’s jobs.
These new criteria seek to strike the right balance between the rights of creditors, who have not received payment for many months, and of their debtors, who would otherwise be viable were it not for the pandemic. In many cases, an unnecessary insolvency would be the worst outcome for all involved: for the company in question, for the employees and, of course, for the creditors.
These measures underpin the Government’s consistent message that discussion is essential between creditors and their debtors. They should continue to negotiate where possible to promote a return to full profitably for all involved, allowing debtors to return to their full pre-Covid financial health and to repay all their debts, not just debts to petitioning creditors.
The points raised have highlighted the importance of tapering the effects of the current temporary measures, and these targeted criteria seek to minimise the risk of unnecessary insolvencies while facilitating a gradual return to the normal operating of our world-class insolvency regime. These regulations will continue to provide much needed support for businesses, allowing them to concentrate their energies on continuing to trade and build upon the foundations of our economic recovery.
I will move on to address some of the points raised, starting with those made by the noble Lord, Lord Sikka. The SI does not amend the section of the Insolvency Act 1986 relating to winding-up orders. I note the point raised by the noble Lord about freezing bank accounts on a petition, but this was intended as part of the return of the framework back to normal operating. The noble Lord also raised several issues relating to company and insolvency law, none of which relates to this particular statutory instrument. A number of them went well beyond the scope of these regulations, but I can tell the noble Lord that we keep wider company and insolvency law frameworks under constant review and will not hesitate to bring forward amendments to the House if and when needed.
The noble Lord, Lord Lennie, asked how many stakeholders the Government have consulted and asked about user criteria. We have been in close dialogue with businesses and professional groups about these measures and their likely impact. Given that the effects of the Covid-19 crisis are still with us and businesses are still dealing with its impact, the consensus was that these measures are necessary to provide ongoing support to businesses that need it, while restoring some creditor powers.
The noble Lord asked how the court would decide whether a repayment proposal is reasonable. The courts are well versed in adjudicating on the grounds upon which a company winding-up order should be made and will be able to draw on their existing discretion and experience in that regard. If the company has had the time to present its proposals for repayment and still cannot satisfy the creditor, in many cases it is right that it should be wound up. However, having said that, the court will be able to refuse to make a winding-up order where it appears that a creditor is attempting to abuse the winding-up process.
The noble Lord also asked why the moratoriums preventing the forfeiture of commercial leases and the suspension of the CRAR regime end on 25 March 2022 when the rest of the measures expire on 31 March 2022. The primary objective of the tapering measures is to allow a gradual return to the normal operation of the insolvency regime, whereas the commercial rent element was included so as to not undermine the rent arbitration system before it is introduced.
I remind the noble Lord, Lord Sikka, that I said in my opening remarks that the legislation is being introduced in the House of Commons today. The Government will monitor closely how this temporary measure is working and, as ever, we will bring amendments to this House if necessary. No petitions were made during the period that the noble Lord referred to.
I think I have dealt with all the questions that were asked. I thank noble Lords again for their contributions to this debate and commend these regulations to the Committee.
Social Security (Scotland) Act 2018 (Disability Assistance for Children and Young People) (Consequential Modifications) (No. 2) Order 2021
Considered in Grand Committee
My Lords, I beg to move that the draft order, which was laid on 7 September 2021, be approved. This order, which delivers for the people of Scotland, is fully supported by the UK and Scottish Governments. It is the result of close contact between the two Governments over the past year and highlights the importance the UK Government place on the effective functioning of devolution and the strength of the union.
We have a long tradition in this country of supporting children with extra needs through disability benefits. Since the mid-1970s, we have provided support through the attendance allowance and mobility allowance and, since 1992, the disability living allowance. There are nearly 43,000 disabled children in Scotland entitled to the disability living allowance. These amendments will ensure that their treatment is equitable to the 479,000 children in England and 27,000 in Wales. Children must be able to access adequate care, including unpaid care from family members. The order before noble Lords today will ensure that can happen by making the child disability payment a qualifying benefit for the carer’s allowance in England and Wales.
The Scottish Government have the authority to deliver new forms of disability assistance, using social security powers devolved to them through the Scotland Act 2016. The Scottish Government introduced their first form of disability assistance for children and young people on 26 July 2021. This is called the child disability payment. The child disability payment will operate in a very similar way to the existing benefits currently provided by the DWP. It is therefore the intention of the UK and Scottish Governments to ensure that there is equal treatment for child disability payment recipients to those who receive similar benefits in England and Wales.
I shall explain the purpose and effect of the order. The UK Government have agreed that, as the child disability payment will operate as broadly equivalent to the disability living allowance for children, provided by the DWP, it should also act as a qualifying benefit for the Christmas bonus. The Christmas bonus is a one-off tax-free £10 payment made annually before Christmas to customers who get certain qualifying benefits in a certain qualifying week.
For this change to happen, the Social Security Contributions and Benefits Act 1992 must be changed to list the child disability payment as a qualifying benefit to determine entitlement to the Christmas bonus. This order is being taken through Parliament now to ensure that those who are in receipt of the child disability payment in the qualifying week will be eligible for the Christmas bonus. A delay to the order being in force could result in eligible people missing out on reserved payments.
The order also makes some amendments relating to the carer’s allowance for England and Wales. There is the possibility that someone living near the Scottish border but outside of Scotland may be caring for someone in receipt of the child disability payment in Scotland. Although these cases are likely to be rare, this change to legislation in England and Wales would ensure that someone in this situation would still be entitled to the carer’s allowance.
This order also amends UK legislation to ensure that the child disability payment can be treated as a qualifying benefit for entitlement to class 3 national insurance carer’s credit, which protects individuals’ state pensions. This credit can be awarded, on application, to people who are looking after one or more people for at least 20 hours a week and the person being cared for is receiving the disability living allowance for children. To ensure equal treatment, we are amending UK legislation to ensure that the child disability payment can also be treated as a qualifying benefit for entitlement to the carer’s credit.
Lastly, the Scottish Government have committed to continue to pay child disability payment for 13 weeks after a claimant has left Scotland if they have moved to another part of the UK. This will reduce the risk of claimants experiencing a break in payment. Consequential amendments are therefore required to Northern Ireland regulations to provide for the interaction of child disability payment with benefits there during the 13-week run-on period. The Scottish Government have estimated that the number of people moving from Scotland to Northern Ireland who would fall under this order is likely to be very low. However, the amendments are considered necessary and beneficial to ensure that carers can access carer’s allowance and carer’s credit during the 13-week run-on period.
The Minister for Welfare Delivery in the other place presented this instrument to its committee on 2 November. It was regarded as wholly technical and passed with no concerns. I hope the noble and learned Lord agrees with that assessment based on what I have set out today. I therefore commend the order to the Committee and beg to move.
My Lords, I hope that I have the right statutory instrument and that I am not speaking on the wrong one. I am particularly pleased to welcome this statutory instrument, which means that children will not have to go through compulsory face-to-face assessments and will not have to undergo repeated applications. I gather that clinical reports will be collected as a matter of course. I make a plea that a disabled child under three should, if eligible, be entitled to the highest mobility component so that parents are able to apply for a Motability car. It sounds as though lessons have been learned from the recent pilot and that the whole experience surrounding the benefit will be as stress free as possible.
I thank the noble Viscount, Lord Younger of Leckie, for his clear exposition. We support this order and think that it is beneficial. We understand the effect to be that the child disability payment will be treated as a qualifying benefit for Christmas bonus, carer’s allowance and carer’s credit in the same way as the disability living allowance for children is currently treated, and that that is the primary purpose of the order for Scotland. I hope the noble Viscount can confirm that that is the position.
Can the Minister help me on two issues? In accordance with the correct procedure, this is a draft order, hence the name of the Secretary of State has not been put in at the end. The noble Viscount referred to this having effect for the “qualifying week” for the Christmas bonus. Can he indicate when this will come into force? If one looks at the beginning of the draft it says “made” and “coming into force”. Obviously “made” depends upon today, but I am not sure what date is envisaged for coming into force. Can the noble Viscount indicate what it is and what the qualifying week is for the purpose of the Christmas bonus?
I understand the key bit of this measure to be paragraphs (3) and (4) of the draft order. Does paragraph (3) get the disability payment to be treated in the same way as previously? What is the significance of
“the care component of child disability payment at the middle or highest rate in accordance with regulation 11”?
What does that mean? Is there an alternative that could have been used that might have been better?
Moving on from the technical detail of the order, the noble Viscount said that the DWP was in close contact with the Scottish Government on these issues. The compounding cost of living crisis, with rising energy bills, rising taxes and cuts to universal credit, has made the position of many families in Scotland particularly difficult. Has the department or the Minister had any discussions with Scottish Ministers about why it has taken so long for the Scottish Government to use the powers afforded to them to devolve benefits in Scotland? It will now take until 2025 for some benefits to be devolved after the Scottish Government sought to delay implementation. Why is that?
In our view, the Scottish Government have not gone far enough with those benefits which have been devolved—they could have made the carer’s supplement permanent or made eligibility for disability benefits fairer, but they have failed to do either. Has the Minister or his department discussed with Scottish Ministers their approach to the social security system, which seems more in keeping with the approach of the DWP in England than with a separate system? Has the Minister or his department identified any areas where savings could be made for the Scottish taxpayer—for example, by using existing UK government infrastructure to make payments, rather than setting up costly new methods which replicate those which already exist?
I end by expressing appreciation for the approach that the noble Viscount has taken in laying this statutory instrument before Parliament. As I said, it is one we support, so that families can receive the payments they are entitled to ahead of and during what could be a very difficult winter for many.
I thank the noble Baroness, Lady Thomas of Winchester, and the noble and learned Lord, Lord Falconer, for their comments. I shall try to respond to as many of them as I can.
The first point raised by the noble Baroness was on assessments of children and how many were face to face. Although I cannot answer that, what I can say—which would be the sensible thing to say and I am sure is true—is that assessments with children must be kept to the minimum, because I have no doubt that they could be challenging or traumatic. I shall definitely write to the noble Baroness if the answer to her question is any different from that which I have given. The handling of disabled children is a very sensitive matter and must be done with great care. I hope that helps.
Perhaps I may start by making some general comments, which I hope will help with some of the points raised by the noble and learned Lord. We believe that this order is a sensible and pragmatic step on the part of the UK Government to ensure that CDP can be treated as a qualifying benefit for the Christmas bonus, carer’s allowance and carer’s credit. To reiterate what I said at the outset, the UK Government are fully committed to devolution and honouring our commitments. All sections of the Scotland Act 2016 are now in force, meaning that the Scottish Parliament is able to legislate in every area where the Act has given it the power to do so.
We continue to work closely with the Scottish Government and have made significant progress in transferring the powers devolved to the Scottish Parliament. It may help to answer one question raised by the noble and learned Lord to say that our discussions with the Scottish Government are important and ongoing, and I have no doubt that the points that he raised are discussed regularly with them.
This order comes on top of other initiatives. On the back of what we have been doing, Scottish Ministers have been able to launch the child disability payment, the job start payment, child winter heating assistance, Fair Start Scotland, carer’s allowance supplement, Best Start Foods scheme, the young carer’s grant and funeral support payment as a result of such powers having been passed to the Scottish Parliament.
Let me address the specific question asked by the noble and learned Lord about what this order does. I can confirm that it will ensure that the child disability payment is added to the list of qualifying benefits for the annual Christmas bonus payment. It will also ensure that the carer’s allowance can be paid in England or Wales to those who care for someone in Scotland who is in receipt of the child disability payment. Further, it includes some time-limited provisions in relation to the carer’s allowance and carer’s credit in Northern Ireland. I think I said that, but I want to reiterate that that is what this order is about.
The noble and learned Lord asked about timings and when the order will come into force. That is a fair question. The target in-force date for this order is 17 November 2012—quite soon—and is obviously subject to parliamentary approval. He asked about the qualifying week for the Christmas bonus. It will be the first week in December. I hope that helps.
The noble and learned Lord also asked why it has taken the Scottish Government so long to deliver this. Again, that is a fair question. It is, as he will expect me to say, a matter for the Scottish Government. To give a little more breadth to this answer, let me say, as the noble and learned Lord might expect me to, that, to be fair to the Scottish Government, Covid-19 has had a major impact on the delivery of this measure. It is complex. Both the Scottish and UK Governments are committed to delivering this in a safe and secure way that makes sure that people continue to get the right money at the right time. However, as I say, it is for the Scottish Government to answer the noble and learned Lord’s question.
I was asked why the Scottish Government are not doing more and whether they are doing enough on these particular measures. I would argue that that is a little outside the scope of this order, but let me finish by saying what I said at the outset: we believe that the order is a sensible and pragmatic step in continuing the devolution of social security powers.
I believe that I have answered most of the questions from noble Lords. I hope that I have satisfied the noble and learned Lord. I will look carefully at Hansard to make sure that everything has been covered. I finish by thanking the noble and learned Lord for his time and interest in this order.
Motor Vehicles (Driving Licences) (Amendment) (No. 4) Regulations 2021
Considered in Grand Committee
My Lords, first, I bring to your Lordships’ attention a matter relating to one of the SIs to be debated in Grand Committee today. It relates to the SI that covers the removal of the car and trailer driving test, which was due to come into force on 15 November and was debated in the other place yesterday. For procedural reasons, the SI will now be unable to be approved by the other place by 15 November, so we are exploring all options with the House authorities about bringing in an identical SI with an amended date in the future. I hope that noble Lords agree with me that it remains appropriate to debate the substance of these SIs, as planned, in Grand Committee today.
These two statutory instruments, along with the Motor Vehicles (Driving Licences) (Amendment) (No. 3) Regulations 2021, which follows the negative procedure, are a package of measures designed to increase driving examiner availability and allocate this time to test heavy goods vehicle drivers, thereby helping to reduce the acute HGV driver shortage in this country. This is a global issue. It has affected the haulage industry for many years, but it has been further exacerbated by the coronavirus pandemic, which meant that driver testing had to be suspended for much of last year. During this time, the shortage increased further as new drivers could not join the industry to replace those leaving.
The shortage of HGV drivers affects the supply chains not only of fresh food but of fuel, medicines and medical equipment across Great Britain. We therefore need to tackle this matter with urgency, and these SIs are part of the 30 interventions that the Government are putting in place to tackle the shortage of drivers.
I turn to the contents of the SIs. The Motor Vehicles (Driving Licences) (Amendment) (No. 2) Regulations 2021 will remove the requirement for drivers who hold a category B licence, namely for driving a car, to take a separate car and trailer— category B + E—test before they can drive a vehicle combination in that class. Instead, category B + E entitlement will automatically be granted to car drivers and backdated to all valid category B car licences that have been obtained since the 1 January 1997. Of course, licences prior to that date already have that entitlement. Removing the test will free up around 2,400 more tests each month that can then be allocated to those wishing to take an HGV driving test. The public consultation showed support for the change, with 65% responding positively to the removal of the trailer test.
Road safety is, of course, of the utmost importance, and I understand why road safety concerns have been raised. That is why we have committed to review this legislation at regular intervals, initially after three years have passed and thereafter at five-year intervals. We recommend that all car licence holders—that is, anyone with a B licence and not only those issued after 1997 and so impacted by these changes—should undertake training to safely tow and manage trailers. We are developing an accreditation scheme, with help from the trailer industry and testing providers, to further incentivise drivers to get training and so maintain our excellent road safety record. This scheme, planned to launch early next year, will focus on specific driver needs when towing different types of trailers through the provision of specialised modules and will provide an opportunity to offer standardised training to any driver who wishes to tow a trailer, thereby enhancing road safety standards and delivering the specific skills that drivers who tow need.
I take road safety very seriously, and we should be proud that the UK has some of the safest roads in the world. I would like to reassure noble Lords that our support for the #towsafe4freddie campaign will continue, and we will draw attention to the importance of motorists doing safety checks whenever they are towing. We will also encourage drivers through our existing campaigns and will work with leisure and towing groups, as we already do, to reach out through their communications to offer training.
The second instrument, the Motor Vehicles (Driving Licences) (Amendment) (No. 4) Regulations 2021, will similarly free up driving examiner time, which can be reallocated to more driving tests. This SI will remove the staging element for provisional vocational licence holders wishing to obtain a licence to drive an articulated HGV, which is a category C + E vehicle, or a bus and heavy trailer licence, which is category D + E. Currently, a test for a rigid HGV or bus, a category C and D respectively, must first be passed before a person may then take a test for the articulated or trailer-towing vehicle.
This SI will remove the requirement for the trailer-less stage, although of course that does not mean that people will not still take that test, because many people drive a category C vehicle. However, people will not then have to get that before they get to the articulated licence. Anyone issued with a provisional licence for an HGV or a provisional bus licence will be issued with this + E entitlement from 15 November. Of course, the option remains for a person to stage their training, if they wish, or to take the category C test and stop there, because it is a very popular type of vehicle.
Streamlining in this way has the support of the haulage industry and received significant support in our public consultation, with more than 70% of people either agreeing or strongly agreeing with the proposals. It will free around 900 more tests every month and decrease the amount of time, and probably the cost, relating to becoming qualified. This will be achieved without losing the integrity of the full test or reducing road safety standards.
The final instrument in the package, which is subject to the negative resolution procedure, is the Motor Vehicles (Driving Licences) (Amendment) (No. 3) Regulations 2021. This allows for the off-road elements of the practical driving test for large vehicles to take place with a third-party examiner, overseen by the DVSA.
As we have seen in recent weeks, the HGV driver shortage has the potential to impact every aspect of our daily lives, so we must deal with it urgently. This is what we are doing today. Together, these measures free an additional 3,300 test appointments every month, which will help to reduce the acute driver shortage. I commend these regulations to the Committee.
My Lords, I very much welcome these proposals. Having said that, I have a number of questions to ask my noble friend. First, why is Northern Ireland not included? I am sure there is an obvious reason, but it is not clear to me. I note that, in paragraph 7.1 of the Explanatory Memorandum to the Motor Vehicles (Driving Licences) (Amendment) (No. 2) Regulations 2021, there is a statement, allegedly from the industry,
“reporting shortages of around 76,000 drivers.”
From the inquiries I have made within the industry, it is nearer to 100,000, so I wonder what the evidence really is for 76,000. Was that figure given to the department some months ago, before the build-up we have now? That is a concern.
I also made some inquiries about the EU. Quite frankly, it appears that we are top of the list of shortages. I have not covered the whole of the EU, but it seems that the major countries with which we are competing do not have the extent of shortages that we have now. That is a major worry. I put it to my noble friend that if we did not know about the challenge from Brexit in January 2020, we must have known of the beginnings of these difficulties in the summer of 2020. Here we are, well past the summer of 2021, and, at best, we will see the benefits of this early in 2022. Somehow or other, we have allowed ourselves to drift, which seems particularly damaging to the UK economy at this time.
I come on to timing specifically. Let us assume these go through, as I am sure they will, as they are welcome, how long before we can expect to see some change on the ground with new people driving heavy goods vehicles? Do we anticipate this will be in three, six or nine months? It cannot be a very short time, certainly not before the middle of 2022.
While one should always be cautious about one’s position, I declare an interest in that I applied for my driving licence. I was advised that it was speedier to do it online, so I carefully did it online towards the end of September. I got an acknowledgement online on 1 October, saying that it had been received, so I have the reference and everything. Here we are on 9 November, which is nearly six weeks later. I am no different from others; I have talked to some colleagues in my former constituency and they are all waiting six, eight or 10 weeks. I would like to know from my noble friend whether this is because the processing is being done by staff at home or is because the staff are in the department, but something is holding up the issue of these licences. To the best of my knowledge, my licence is clean, so this should be straightforward. My application was accepted. I am having a problem, as are others in my former constituency. This is a real problem, and I wonder whether my noble friend can address it.
I come back to two other areas that I have raised before. I put it to my noble friend that the loan scheme that was closed in 2019 should be reopened. Is it not to be reopened because Her Majesty’s Government think that the industry should do all that work, or is it that the Co-op, which was mentioned in the briefing I got, was helping to sponsor it? As a member of the Co-op, I am certainly more than happy to go back to it and suggest that it should continue to sponsor the scheme, if it was the sponsor. I say to my noble friend that, at this particular point in time, when there is a huge difficulty that will be there for a long time, it does not make sense that those people who would benefit from the loan scheme, particularly some of the younger people, should have to rely on what is currently available. I know what is currently available, and I do not think that it is sufficient.
Finally, I understand that drivers coming in from the continent on a short-term basis—that is to be welcomed—are doing so on a cabotage basis. I must say that that has gone down like a lead balloon among UK drivers, who are now asking, “Why can’t we have cabotage for a short period in this difficult time?” All is not well in this area. There are huge difficulties. I recognise that the Minister is doing her best but, nevertheless, this is a huge challenge. It seems to me that it will not get any easier for a considerable time, unless I have missed some particular point. I will listen to my noble friend when she replies.
My Lords, my first task is to apologise most profusely to the Committee for not being here at the start of the Minister’s comments. I am sorry about that; business progressed a bit faster than I anticipated.
I am extremely grateful to the Minister for her careful explanation of the new regulations. I should declare my interest: I hold a C+E HGV driving licence and am a qualified HGV driving instructor, albeit out of date. In addition, I hold what is called an H licence, which covers a track-laying vehicle that is steered by its tracks. From time to time, I drive vehicles in circumstances that require an H licence on behalf of the REME Museum and others. In the past few months, I have driven a tank transporter with a gross train weight of around 80 tonnes, so I think I know what I am talking about.
The Minister explained the reasons why these changes are desirable. I do not disagree with her thinking. She has also made changes to the drivers’ hours regulations, to which I and the noble Baroness, Lady Randerson, have tabled fatal amendments. I know that the usual channels are working hard to find us time to debate those regulations, but part of the problem is that the debate would not fit into a 60-minute dinner break business slot. It is unfortunate that, despite the severe problems arising from the shortage of HGV drivers, we still have not debated those regulations.
The regulations before the Committee are fairly technical. The No. 2 regulations dispense with the requirement for a separate test to drive a light vehicle towing a trailer. Since I passed my car test in the 1970s, I have always had a B+E entitlement. The proposed changes are relatively low risk and worth while, although the Minister should monitor the effect carefully. I do not believe that it is worth the effort of an additional test for light trailers. The vast majority of drivers would seek advice from a more experienced person before attempting to tow a trailer, but it is not a hugely complicated issue. The Committee should note that the regulations make a review at the three-year point mandatory. I point out that I see quite a few incidents involving light vehicles and trailers and know not whether inexperience was a factor, although I think that it is unlikely.
A more urgent issue with light trailers is the fact that such trailers are not subject to statutory annual testing. Furthermore, these trailers are often shared between friends and colleagues. In the past, I borrowed one and it collapsed under a modest load—it was quite a surprise. This would be a much more profitable area to regulate, rather than an additional driving test.
Turning now to the HGV testing regime and the Motor Vehicles (Driving Licences) (Amendment) (No. 4) Regulations, I can provide strong support to my noble friend the Minister. I shall explain why. In the past, I have trained both military personnel and civilians within a commercial context to drive all types of heavy goods vehicles. One of my pupils, whom I will call Paul, went on to drive articulated vehicles carrying Formula 1 motor racing teams and their precious cars around Europe.
It is important to understand that passing an HGV driving test does not make someone a professional lorry driver; that takes far longer. I want to make it clear that I have never supported a two-stage process for acquiring a C+E licence. I have always regarded this as a wasteful process with no road safety benefits. The gap between the two tests is often only an opportunity to gain bad habits that need to be eradicated before the pupil is ready for the C+E test with the trailer. Unfortunately, for a long time, it has not been possible to gain a car licence by passing an HGV test. My ideal HGV pupil would be someone who had never driven a car and was aged about 25. I would start them off on a full-size artic, initially off the public road.
The other changes the Minister proposes are merely simple efficiencies. To gain the HGV licence, the candidate has to reach a certain high standard of driving that is objectively measured by the examiner. The HGV test is not a short run out. It is an extended test that will expose any weaknesses in skill and competence. When I was undertaking commercial HGV driver training, I was always confident in the skill and objectivity of the department’s examiners. I have no recollection of any of my pupils failing their test when, in my assessment, they were up to the required standard. I assure the Committee that, in my opinion, these changes to the HGV testing regime are desirable, irrespective of the driver shortage.
There is a further saving on examiner effort that might be available. At one point, I was driving a tank transporter carrying a tank grossing 100 tonnes. However, I could not drive the tank in public because, at the time, I did not have an H licence, which covers track-laying vehicles steered by their tracks. This does not make sense. I will not weary the Committee with further technical details, but will the Minister agree to meet me and officials to discuss this matter? I do not think that the H licence test is required at all.
My Lords, I thank the Minister for her explanation. I have some sympathy with the noble Lord, Lord Naseby, because, as the Minister knows, I waited five months for my licence.
Listening to the noble Earl, Lord Attlee, it is important to bear in mind that he has considerable experience. To me, experience is at the centre of all this. I note, and bear in mind in my comments, that one of the things he said was that passing the test does not make someone an HGV driver because this takes a lot longer.
Taken together, these SIs set out to simplify driving tests. They are part of the litany of what I understood to be 25 crisis actions—I gather it is now 30—that the Government are taking to try to tackle the shortage of HGV drivers. The logic is that, if you streamline driving tests, this will free up slots for tests, enabling more people to qualify. They will make the process of training to qualification quicker and easier, so the staged process is being abandoned.
I will make some general comments then ask some specific questions. Here, I bear in mind what the noble Lord, Lord Naseby, said. How has this crisis been allowed to get so bad? In a previous debate, the Minister told us that there had been a shortage since 2010, so it has hardly happened suddenly. The Government say that the crisis is of long standing and worldwide, but we are the worst in Europe. In percentage terms, only Poland has a greater percentage shortage of drivers, and that is a totally artificial situation because it services the rest of Europe—a very high percentage of Polish lorry drivers drive almost entirely, if not entirely, abroad—so we have the most acute shortage. The No. 2 order blames Covid, although the No. 4 order has the grace to admit that Brexit might be a factor and quotes shortage figures of between 39,000 and 100,000 drivers. To put that in context, the total requirement is estimated to be around 300,000.
Clearly the noble Earl, Lord Attlee, has driven trailers on many occasions, but I ask how many people in this Room—there is no need for noble Lords to put up their hands—have driven trailers? I reckon backing a trailer to be the trickiest driving manoeuvre that I have ever undertaken. It takes experience, judgment and the kind of steady nerve that only comes with practice. I wonder whether anyone has seen a trailer jack-knife? I have, on the M5. It blocked the road in both directions for two hours and led to some serious injuries. The cause, although one can observe only from the outside, was that it was a windy day and the driver was going very fast. That was probably the cause, and it was probably due to a lack of experience. Frankly, I am astonished that, having got themselves into this mess, and despite warnings from the haulage industry, the Government’s reaction is to simplify tests in a way that could have an impact on road safety. The Government admit that themselves. The Explanatory Memorandum to the No. 4 order says:
“Any impact on road safety ... may therefore be marginal”.
That is a hopeful statement, but it implies that there will be an impact.
However, although the consultation was held over the summer period and was relatively short—four weeks—it led to 9,541 responses, some of which, we are told, led to serious concerns about road safety. There has been no response by the Government to the public consultation yet; when can we expect that? The Explanatory Memorandum says that, of those who responded,
“the majority of people supported this proposal”.
I would be interested to know the percentage of people and organisations that supported the proposal because haulage organisations have expressed serious concerns. On 4 November, the Parliamentary Advisory Council for Transport Safety, of which I am a deputy chair, took note of the concerns of its road user behaviour group that the changes to the testing system and the relaxation of drivers’ hours, to which the noble Earl has referred, are a threat to safety. So why did the Department for Transport rush to announce these changes to driver training and testing two days before the end of the consultation period?
The Government have said that they will review this, which I am very pleased to hear, but the review period is very long—an awful lot of driving is going on in a period of three years. I believe that we can see a pattern very much sooner than that. Is the Minister in a position to give us a commitment that the Government, informally at the very least, will keep this under continuous review and take swift action if there are problems with safety?
There is a clear interaction between the availability of HGV drivers and that of bus drivers. Bus companies are already complaining about a shortage of drivers, who are being attracted into lorry driving because the pay has gone up recently. I am afraid to say to noble Lords that bus drivers’ wages are one of my hobby horses; I think they are seriously underpaid for the level of responsibility they take on. A shortage of bus drivers is having an impact on bus services, but I am concerned about any impact on the levels of experience and expertise that we can expect in future from newly qualified bus drivers. We are talking here about the safety of passengers as well as that of other road users.
One way in which the Government are trying to simplify the system is by reducing the required levels of expertise and qualification for those who can supervise a learner driver. This is a very risky path. Some years ago, a previous Government recognised the need for a certain level of experience before you could supervise. Decades of evidence indicate that you are much more likely to have an accident in the early years of your driving career. That underlines my point that experience counts.
One of the actions proposed to be taken is that backing the trailer should not be part of the main test but should be assessed by training organisations. Can the Minister explain in detail how this will work? I noted that she said that the Government “recommend” that people undertake this training rather than it being compulsory. I thought that it was going to be compulsory, but that it would happen not as part of the test but as part of training with a training organisation. If my original understanding is correct, can the Minister explain how the organisations will be chosen and accredited and how we can be sure that individual drivers have passed that aspect of the training?
One is endlessly concerned these days about the ability of organisations to fulfil the contracts they are awarded. A major question is whether these new tests and licences will be fully recognised in Northern Ireland and hence in the Republic of Ireland. Paragraph 7.6 of the Explanatory Memorandum for the No. 2 regulations refers to the fact that people may wish to take the B + E test for employment purposes. Is the implication therefore that some companies will still demand full qualification? It also refers to people wanting to take both tests in order to drive outside Great Britain.
Are the Government saying that the provision will not be recognised in the EU? The noble Lord, Lord Naseby, raised that, I believe. That will not just have implications for commercial HGV drivers; it will also have implications for people towing horseboxes, and dozens of other examples. When we left the EU, we were promised that there would be no watering down of standards, but here we are in a situation where that is effectively what is happening. Last night, in the police Bill, we concentrated on road safety, as the noble Earl, Lord Attlee, and the noble Lord, Lord Rosser, know. The message of that was that we should be dedicated to raising standards, yet that is not the message that we are getting with these two SIs.
Some weeks ago, I asked a Written Question about the number of people who had applied under the visa scheme to drive lorries in the UK. The Government have gone beyond the normal period of time for answering; it is on the list as not having been answered. If it is possible to answer it here, it would be good to get that information as well.
My Lords, most of my comments will be directed towards the (Amendment) (No.2) regulations and to the report of the Secondary Legislation Scrutiny Committee, which homed in particular on that order.
Under these regulations, the obligation is removed for some car drivers towing a trailer to have to take the additional test. As the Minister said, that is to free up capacity and enable more test appointments to be fitted in each month for heavy goods vehicle licences in a bid to address the current shortage of HGV drivers. No doubt the Minister in her response may wish to comment on the extent to which that shortage has been eased or the extent to which it continues.
The regulations also remove the requirement in relation to the staged access route to licence acquisition for heavy goods vehicle and bus licences, which will also free up driving examiner time and shorten the amount of time that it takes for a driver to become qualified to drive the largest heavy goods vehicles.
I understand that the category B towing test will not be abolished, because it is still needed by anyone wishing to drive a trailer in the EU. The regulations simply remove the obligation to take the test before towing in the UK, and will be reviewed after three years and then every five years after that, which frankly suggests that the Department for Transport see these changes to all intents and purposes as being permanent, rather than being a short-term measure to address the current heavy goods vehicle driver shortage—unless, of course, the Department for Transport envisages that shortage going on for years and years.
The Secondary Legislation Scrutiny Committee has drawn the attention of the House to the regulations, not least in respect of the potential safety implications. There are, apparently, about 1,000 collision injury accidents or incidents involving trailers each year. It is not clear whether the Government do or do not expect that figure to be affected by the removal of the towing test. Frankly, at the moment, I do not think the Government even have a view, since the Department for Transport has indicated that a risk assessment on road safety will form part of the impact assessment, which is fine, apart from the fact that the impact assessment will not be cleared for publication until the end of this month at the earliest. I note what the Minister said at the beginning, and that the regulations were intended to come into effect this coming Monday.
The Secondary Legislation Scrutiny Committee said:
“We view this as poor practice.”
It is right. Once again, the Department for Transport has been slow to react, caught out by a driver shortage that it did not address in time, despite it being in large measure of the Government’s own making, thanks to their own particular brand of hard Brexit. The committee commented:
“It is part of the purpose of an IA”—
an impact assessment—
“to provide information on what options, including non-legislative options, were considered and why they were not adopted. Because the IA has not been made available to the House alongside the instrument, we are unclear about why possible alternatives were rejected … From the date this instrument comes into effect, any car driver will be able to tow a trailer but DfT has provided no estimate of the additional numbers that that might attract or the likelihood of incidents that might follow.”
However, the department asserts:
“There is not currently any statistical evidence to suggest that competence and skills will worsen if drivers do not take a statutory test to tow a trailer … it is therefore difficult to identify how much the car trailer test … has made a difference since it was introduced in 1997 or that there is a causal link between road safety and the test.”
I do not know for how many years that has been the Department for Transport’s view—perhaps the Minister could respond to that point in the Government’s reply—but if the Government do not know whether there are any safety benefits to the statutory test to tow a trailer, and have not taken any steps over the past 11 years to find out, that does not appear to say much for their much-vaunted campaign to reduce bureaucracy and unnecessary red tape.
Safety was, however, a concern of a significant percentage of those responding to the consultation on the amendment to the regulations: a third of the 8,750-odd respondents expressed safety concerns. As I understand it—I am sure that I will be corrected if I am wrong—the DVSA advises that anyone intending to drive a car with a trailer for the first time should still first take training from a driving instructor. What steps are being taken to publicise this advice?
Moving on, is it not the reality that the Government hope that people affected by these regulations will, either individually or through their firms, still undertake the aspects of the required training that these regulations will remove? This was indicated frankly in the Minister’s response to the chair of the Secondary Legislation Scrutiny Committee, in which there was a reference to the Driver and Vehicle Standards Agency
“exploring industry-led accredited training that could offer a standardised non-statutory testing approach. The DVSA has received strong support for an accreditation training scheme which is also generating considerable interest from companies who tow as part of their business and we are progressing discussions urgently.”
That letter also stated:
“We know through DVSA’s stakeholder engagement, that there is a strong indication from professional business users that they will continue to undergo Category B+E training to ensure staff are safe and competent and that their corporate responsibilities are fulfilled.”
This certainly indicates that, as far as professional businesses are concerned, they regard the B+E training as necessary to ensure that staff are safe and competent. The Secondary Legislation Scrutiny Committee concluded:
“The Department failed to provide any indication of the instrument’s wider effects when the instrument was laid and, in response to our follow-up questions, DfT was unable to explain what effect the removal of the BE licence will have on road safety.”
I conclude by simply asking whether the Government will in their response comment on the recommendations of the Secondary Legislation Scrutiny Committee in its report on the Motor Vehicles (Driving Licences) (Amendment) (No. 2) Regulations 2021. The first was,
“We recommend that the DfT should review the current complex arrangements for what car and van drivers are permitted to tow and, if needed, replace them with a simpler licensing system. That decision should be based on evidence rather than the current experimental approach”.
Secondly, it said that the department should
“provide an annual Written Statement setting out towing accident figures as a reassurance that it will be in a position to undertake remedial action swiftly if a problem emerges”
and, thirdly, that the Minister should provide “more specific details about” the “wider safety implications” of the instrument, since the House
“has insufficient information to enable proper assessment of the policy”.
I thank all noble Lords for their contributions today and for enabling this debate to go ahead in the circumstances. I am very grateful, and I have appreciated the input of all noble Lords. I have listened to their concerns and suggestions very carefully, and I will write, as there is a bit of extra detail that I will give.
Returning to the overall driver shortage, the Government have been aware of it since 2010, but the issue is that it so is multifaceted that it is very difficult to pin down. We estimate the size of the acute shortage to be around 39,000, but there are numbers out there of 70,000 and 100,000, so what is not being delivered if those drivers are not available? I have asked the sector many times. The reality is that the lack of those drivers is about sector resilience and ensuring that people who are in the sector are not feeling that their shifts are too long, or whatever. We believe that the acute shortage is around 39,000. I am not going play EU bingo with the various shortages in the other countries. Suffice it to say that there are shortages in other countries, and they are something we are all dealing with.
To briefly pick up on the point made by the noble Baroness, Lady Randerson, about visas, I will check that, because we do not do late parliamentary questions. I think it is because it might have gone to Defra, and that will be the reason—not that it does late parliamentary questions, but there is the transfer, if you know what I mean.
There is an international shortage. We sort of know the size of the shortage, but I would love firmer data on it. It is incredibly difficult to assess a precise number in this fast-moving environment. It has got better. One of the things that I have been following very closely is the number of people asking for application forms from the DVLA to apply for an HGV provisional licence, which has gone up massively, as has the number of licences and provisional licences going out of the other end. Now we have to get those people into the training system and then into the testing system. Having sorted out DVLA and testing, I am now turning my attention to the bit in the middle, which is obviously a private sector affair, but we will be working with it so that it increases its capacity as much as possible.
I am so sorry to hear about my noble friend’s issue with his driving licence. I have some good news: my daughter passed her driving test a couple of days ago, and she received her licence like that. I am happy to take up any concerns noble Lords have about their treatment by the DVLA, but I am pleased to say that on HGV licences it is back to normal processing times. That also applies to buses.
On the road safety aspect of this, it is incredibly complicated and we are working at pace. I appreciate that we do not have an impact assessment that noble Lords can point to, so I will do what I can to assuage noble Lords’ concerns.
Again, there is a significant challenge with data here. People will often come up with anecdotes about how they saw a trailer doing X, Y, Z—I have seen cars and buses doing all sorts of dreadful things—but actual data is one of our big challenges. As the noble Lord, Lord Rosser, pointed out, in STATS19, 865 incidents involved a car or vehicle with a trailer, which is 0.45% of the total incidents in the entire year. That is a very small amount, but it does not matter; it still has to be considered.
The issue then becomes how you disaggregate the fact that the vehicle was towing a trailer from it being a contributing factor to the incident in the first place. Police officers can put down six contributing factors but, if they put down speeding, that was not the fault of the trailer; it was the fault of the driver. The same incident could have happened to a car. That is the challenge we face: we are looking to disaggregate the data such that we can see the impact on whether the trailer was a factor or it was just that the vehicle happened to be towing a trailer at the time.
It is important for noble Lords to understand that the B+E test is relevant only to a certain type of trailer, not all trailers. It is for the heavier, not the lighter, end. Some of these incidents would be people towing around their garden waste in a 750-kilogram trailer.
My Lords, may I make a suggestion? I believe the noble Baroness has ministerial responsibility for the Highways Agency. Will she ask it to do 100% reporting to the department on incidents involving trailers, because then she would find out whether we are having a sudden influx of accidents caused by novice drivers? I do not think that will happen, but it would give her some data to which we could return later on.
My noble friend makes a good suggestion. I am responsible for National Highways, but it does not collect incident data; it all comes from the police. We will of course look at any data that we can get from various sources. This will be part of the work we do in the coming period because the other issue in all this is that incidents often happen because of poor trailer maintenance. That has nothing to do with the B+E test; it is caused by people driving around trailers that are not roadworthy. DVSA enforcement picks up vehicles that are not roadworthy all the time, and may prohibit them from being on the road, but again, that is not related to the B+E driving test. I am happy to have a meeting with my noble friend about the H licence.
The noble Baroness, Lady Randerson, brought up the response to the consultation. The consultation closed on 7 September and we announced it on 10 September. We were able to do that so quickly because much of it came through electronically, and we were monitoring responses as we went. There is a short summary of our response on the web, but we will issue a fuller response in due course.
I am not entirely sure about the issue with us reducing the standard of bus driver trainers. If the noble Baroness writes to me, I will look into that more, because we have not changed the standards for trainers in the bus sector at all. Again, they have no delay in getting licences or tests; it is the bit in the middle. But many bus companies have good training departments, so I am pleased about that.
A number of noble Lords mentioned the impact assessment. We recognise that we need one and that it cannot be rushed because it requires an awful lot of analysis. We will try to publish it as soon as possible, once it has been through the Regulatory Policy Committee. Once again, I am happy to have a meeting with noble Lords once that is available.
On recognition overseas, my noble friend Lord Naseby asked about Northern Ireland, which is responsible for its own road regulations. It would therefore make its own decision about this. GB licences continue to be recognised in Northern Ireland. Drivers who travel abroad will be covered under international road traffic regulations. We are in discussions with other countries to make them aware of these changes and will report back if there are significant changes to this.
The accreditation scheme is one of the other factors we need to think about when it comes to road safety. When it is set up, it will be targeted at everybody who wants to tow a trailer of any weight when, previously, training was very much for people who needed it to pass the test or tow a heavier trailer. We will be looking at all people towing trailers, particularly the 16 million of us—I sense noble Lords are in the same bucket as me—who have grandfather rights: “I am going to tow a trailer. I have always been able to tow a trailer. I have just chosen not to, as I prefer larger articulated lorries when I am given the opportunity”. This is one of the other factors that we need to consider. It may well be that we will see a significant increase because all sorts of people will take up this accredited scheme because it is available and widely communicated. We will work with the industry and all sorts of people to make sure that people are aware of the scheme.
The noble Lord, Lord Rosser, asked about employers, who we know are very keen on this—but that is not unusual. Employers often provide a higher level of training for their workforce for all sorts of different reasons. It is not just the case that you pass your driving test and head into a haulage firm, for example, and that is it, your training is done. So, whether it be for a vehicle and a trailer or an articulated lorry, it is always the case that more training goes on, so I am not surprised to hear that that is what the industry will do.
I have rattled through most of what I wanted to say. I will definitely pick up Hansard to make sure that I have gone through all of the points, and I would be very happy to meet noble Lords in due course, perhaps to chat about this again, when the accreditation scheme is developed a bit further and when we have the impact assessment. We can look through all of the information we have at that time.
Motor Vehicles (Driving Licences) (Amendment) (No. 2) Regulations 2021
Considered in Grand Committee
School Admissions Code 2021
School Information (England) (Amendment) Regulations 2021
Motion to Take Note
My Lords, I am not so much concerned with these regulations, which seem to me to be a good thing, but I really want to encourage the Government to go further because the school admissions system needs some attention. If it were a set of teeth, it would not need a trip to the dentist, but it would certainly need the attentions of a hygienist. It has accumulated a lot of tartar, is not working well and needs improving.
Admissions regulations perform a set of very important functions in the education system. They are there to give everybody a chance of getting to a decent school and of knowing how to get there. Parents need to be able to tell what the chances of getting into an individual school are and what they have to do to establish their rights to do that. They also have a strong role as a driver for school improvement. Parental choice works well only if parents are actively choosing.
As things are, this does not work. If you look at an ordinary local authority publication on school admissions, you will find that most of the data is not there. So many schools are now their own admissions authorities that all the central source of information says is that information is available from the school. You cannot look at one document, in one place, and begin to have an idea of which schools you might actually get into.
You have to go round each individual school and ask it for the information—it is often not easy to find. You have to compare this year’s admissions policies with last year’s, to guess at how these are working. This is hard work for someone who is time-rich and capable and absolutely impossible for someone whose life is at all stressful or who does not have the necessary resources to do it. They are thrown back on going to the local school, because that is the only thing they can be sure of in the time they have. The whole business of school choice ceases to operate.
This is really just a matter of getting schools to do as they should and provide their local authority with the data on how their admissions structure works, so that the local authority can put it in its brochures. It is a matter of enforcement. Parents need this and it should not be hard to do. I really hope that the Department for Education will take that step.
The second set of problems comes from a lack of consistency between local authorities. Each local authority displays its information in its own way and with its own structure. There is no common format. If you live close to the border of a local authority, you are faced with learning two different ways of interpreting schools data and looking at what is going on. This also prevents anybody producing a coherent, consolidated app or website which could really inform a parent as to which schools they might have a chance of getting into and how to go about applying to them.
One company tried to gather this data once and it cost it £250,000. That was in the days when there were not a lot of individual schools that you had to “FoI” to get the data out of them. It is now completely impossible for anybody to gather this data and look at ways of making life easier for parents, which is why nobody does it. However, it would not be difficult or costly. All that has to be done is to require local authorities to make this data available in a standard format. They all have this data in an electronic form and converting data from one electronic format to another is not an expensive thing. All you have to do is produce a database that they can dump the stuff into and there it would be.
The immediate consequence of that is that there would be a scramble by commercial companies—I rather suspect that my own Good Schools Guide would be one of them—to pick up this data, make useful tools for parents with it and allow them free access to them. The department would not have to spend anything on using the data. This would happen because it is such an obviously wonderful thing for parents to have and quite a lot of organisations want parents to look at their websites.
Without doing anything that requires investment—and it does not require much effort—the Government could make huge improvements to the effectiveness of the school admissions information system and make it work much better for parents individually, in terms of finding the best school for their child and really knowing what schools are available, and for the operation of parental choice as a mechanism for improving what is going on in schools.
I hope that the Government will also take the chance to study how the current system works. There is a great deal of data out there. We have had several years’ experience of a very diverse system of school admissions; it should be possible to use that data to find out what is working well and what is not. To my mind, one key objective in school admissions is to give as many people as possible a chance of getting to a good school. Where is that working? What forms of school admissions actually achieve that and what forms achieve the opposite? That ought to be something that the department wants to know, and I very much hope that it is something that the department will set out to find out. I beg to move.
My Lords, I want to make a number of comments about school admissions, and follow up on some of the points that the noble Lord, Lord Lucas, made. On the statutory instrument, I do not have any particular issues, although maybe there are a couple of questions. On the issue about catch-up and the code, that will help parents, particularly those of disadvantaged pupils.
The whole business of school admissions is fraught with all sorts of problems. You cannot just wave a magic wand, even with increased data, and expect that everybody will get the school that they want. That just does not happen. What is true is that parents who can afford it will often move house to get into the catchment area of a local school so they can get their child or children into that school, whereas disadvantaged parents and pupils obviously cannot do that.
I remember from my experiences in Liverpool before the advent of academies that it was an absolute nightmare. Often, decisions were made not on what a school was achieving or not achieving; it was often the case that inner-city schools with very successful examination results were disregarded by parents, who wanted to go to the leafy suburbs. So you had the leafy suburbs and aided schools with huge waiting lists, while inner-city schools such as Paddington Comprehensive, which was built in the early 1970s, a 10-form entry school with state-of-the-art equipment, ended up with one and a half forms of entry. As an aside, I remember trying to persuade Shirley Williams, who at the time was Secretary of State for Education, to turn it into a tertiary college—but she was having none of that.
I make these comments just to show how difficult the whole situation is. Yes, it is important to have all the data, and the composite way in which the data is portrayed will help parents. But when the noble Lord, Lord Lucas, talks about local authority schools he is, presumably, talking about academies as well. Academies choose their own admission requirements so, if we are going to have a standardised approach, it should be for all schools. He made the point, which I do not disagree with, that from looking at the various websites you realise that the workload of the staff means that it is something that they have not given their full attention to. Equally, when looking at the websites of academies, one might say the same as well.
The school admissions process, especially where it helps disadvantaged children or children in care, is hugely important. It is one way in which we can change life chances. We want to ensure that every child is treated in a fair and accountable manner, with local schools and local authorities working together to make sure that the needs of young people in that community are met. Sadly, we often see that that is not the case where schools almost jealously guard their independence from a local authority, and both sides do not want to collaborate in the way they should. Local authorities should have responsibility for place planning to ensure that academies co-operate in providing places. While it is slightly beyond this SI, we think that schools should be able to set aspects of their own admissions policy in compliance with the national code that allow them to specialise in, for example, music or business if they so wish. However, the local admissions process to administer the policy and allocate individual children to schools should be carried out by the local authority rather than by individual schools.
Where the code refers to the oversubscription criteria, are we talking about the waiting list? Is that what we mean? When I have had parents contact me and say, “Oh, I didn’t get a place, but the school’s put me on the waiting list”, is that what we mean by the oversubscription criteria? Would looked-after children be top of that list of criteria, irrespective of the type of school it is? If not, why not?
We talk about admission for disadvantaged children, but we do not define what we mean by disadvantaged children. Perhaps we ought to. It is a very general term. I presume that we are talking about looked-after children, or are we talking about children with special needs? Can they be in separate categories? The explanatory note just talks about disadvantaged children. Maybe I have missed something.
I welcome the fact that mid-term admissions are more codified—that absolutely makes sense, so I do not have any problem with this SI.
I did not realise that the year 7 catch-up premium had been discontinued, for the reasons stated. I presume that there was an SI to establish it. When we have the arts premium, will there be an SI for that?
My Lords, may I start by saying how grand it is to be back in the Grand Committee Room after pretty close to two years? I always enjoy debates in this particular Room.
I should declare an interest of sorts, in that I have a son, aged 10, and we have just made an application for his senior school through the admissions policy applying in our London borough. I have no reason to believe that we will not be successful, but it has sharpened my preparations for this debate.
I am grateful to the noble Lord, Lord Lucas, for tabling this take-note Motion allowing noble Lords to debate these regulations and the wider issues around school admissions that he outlined, with which I would agree. I found the Explanatory Memorandum to the school information regulations very helpful in providing clarity on links with the new admissions code.
I shall not say much today about the removal of the year 7 catch-up premium grant. I challenged the Minister’s predecessor on this on more than one occasion last year, principally concerning fears that the overall amount allocated from the national funding formula would not meet the level of support provided by the year 7 grant. However, I noted that, in July this year, the Government announced that the amount allocated through the secondary low prior attainment factor for the 2020-21 academic year would increase from £924 million to £973 million, so it is only fair that we give the benefit of the doubt and reassess that position in a year’s time.
I think it is fair to say that there have long been concerns about the fairness of in-year admissions. The DfE’s own Review of Children in Need, published in June 2019, found that such children
“were more likely to seek a school place outside the normal admissions round and that delays in securing a school place in-year could lead to children missing education.”
Children in care are among the most vulnerable in society, of course. Surely it is of paramount importance that a school place that is in the child’s best interests is found as quickly as possible. We therefore welcome the DfE’s decision to reform the admissions code to give priority to children in care, or those who have previously been in care, in its oversubscription criteria. It is hoped that this will improve the clarity, timeliness and transparency of the in-year admissions process to ensure that all vulnerable children can access a school place without delay.
We also welcome the additions to the fair access protocol outlined in chapter 3 of the code. There are, it is fair to say, more serious deficiencies in the admissions code, which raise questions about social inequality. That is why Labour believes that local authorities should have responsibility for school places, with oversight and control of all admissions within their boundaries. I was pleased to hear the noble Lord, Lord Storey, support that change. Surely it is nonsense that, at present, councils have legal responsibility for finding a school place for any child arriving in their area, yet they cannot force an academy to accept a child even if the academy is not at capacity. Surely that is not an efficient way to operate school admissions.
All too often, the current system results in school segregation by family income, which has implications for social mobility—or social justice, as I prefer to call it. The point here is the extent to which a child’s family background determines their success. If a child’s chance of attending a high-performing school is effectively determined by their family income, that will clearly act as a major brake on social improvement. There is also a further issue around the social and political implications of young people from different socioeconomic backgrounds being educated separately. That hardly seems likely to assist in building a fair and cohesive society—something that, it might be assumed, is a key component of the Government’s much-vaunted levelling-up agenda.
The Minister will know that many education specialists, commentators and school leaders have called on the department to make further changes to the admission code to close the disadvantage gap, which has spiralled due to the impact of the coronavirus pandemic. The leaked presentation on the needs of schools and pupils following the pandemic from the Government’s sadly short-lived recovery tsar, Sir Kevan Collins, revealed:
“Children from poorer households, who have often struggled most to learn from home, have lost most learning with the attainment gap expected to widen by 10-24%”.
Labour has committed to an education recovery premium, which would support every child to reach their potential by investing in the children who faced the greatest disruption during the pandemic, from early years to further education. We also advocate doubling the pupil premium for children in key transition years, delivering additional support for the children who need it most.
The former Chief Schools Adjudicator, Sir Philip Hunter, has warned that, although the admissions code requires schools
“to adopt, publish and administer admission criteria which are objective and reasonable”,
the very criteria that allow schools to
“give priority to children who live closest to the school, live in a defined catchment area, have siblings already at the school or, in the case of aided schools, are members of a particular church or religion … will, if unregulated over time, result in priority being given to children from privileged backgrounds”
at the expense of their disadvantaged counterparts,
“so the criteria will need to be even more rigorously applied”
as this will lead to schools becoming “yet more selective” and “more elitist”.
On disadvantage, the Minister may have had drawn to her attention by her officials what I regard as a worrying report, published three months ago by Humanists UK. Entitled Careless or Uncaring? How Faith Schools Turn Away Children Who Are or Were in Care, the report found that, in their admissions policies,
“41% of all state secondary schools of a religious character discriminate against children who are or were in care not of their faith … In Kensington and Chelsea, 50% of all state secondaries (religious or otherwise) discriminate against children who are or were in care not of their faith.”
As others have highlighted, the school a child attends makes a difference to their academic success. Estimates vary, but about 10% to 20% of the difference in pupils’ academic outcomes is down to the school they went to. As academic achievement, in turn, strongly influences life chances, particularly earnings, the effectiveness of the school a student attends potentially has life-long implications, so it would be unwise to assume that the current system is fair.
There are many excellent schools in disadvantaged areas, but the economics of property ownership mean that disadvantaged families lack the ability to afford homes in areas near popular schools that are rated as good or outstanding. In Great Education for Every Child – The ASCL Blueprint for a Fairer Education System, published last month, the Association of School and College Leaders demonstrated that this injustice is entrenched and reinforces an unhealthy division between affluent and disadvantaged areas and their children.
In some areas, high-performing schools are located close to schools that have been struggling to produce good results for years. Sometimes, an underperforming school can take action to improve results and thereby attract more pupils, but many cannot overcome the disadvantage of reputation or of serving areas where families have low expectations for their children. This can also impact on school funding, with fewer pupils remaining in school or being put on a pathway to higher education. What consideration have the Government given to contextualising school admissions, perhaps by increasing the number of pupils prioritised for school places based on their home circumstances or extending priority rights to children eligible for the pupil premium to all those living in persistent poverty?
In conclusion, on their own, the changes to the admissions code in these regulations are minor, and we are perfectly happy with them, although they are not unimportant, but for reasons including those that I have enunciated, the code itself is in need of a wider overhaul. Although I am an optimist, that is not a development I expect to see from a Conservative Government.
My Lords, I thank my noble friend Lord Lucas for the welcome he gave at the beginning of this debate and the Secondary Legislation Scrutiny Committee for its consideration of the new school admission code and the School Information (England) (Amendment) Regulations 2021, which came into force this September, without objections from either House. I depart from my noble friend on his dentist analogy but, apart from that, we are in agreement on the new code.
Our priority as a Government is to ensure that the admissions system fully supports parents to secure a suitable school place for their child. It is important, as the noble Lords, Lord Watson and Lord Storey, emphasised, that the admissions process works effectively for all children, particularly the most vulnerable, so that children can secure places in a timely way.
In contrast to the description given by my noble friend, we believe that, on the whole, the normal admissions round and the overall admissions process work well. However, there have been delays to in-year admissions, which can have a particular impact on vulnerable children, who we know are more likely to move school in year. That is why our recent changes focused on improving in-year admissions.
The noble Lord, Lord Storey, talked about the importance of co-operation and stressed the role of the local authority on admissions in an area. The anecdotal feedback I received is that, particularly during the pandemic, there was much closer co-operation between local authorities and multi-academy trusts, which all would like to see continue.
The changes that we have made involve setting a clear process for in-year admissions, including clear deadlines for processing applications and strengthening requirements to make better information available, which I know my noble friend will be particularly pleased to know. This will enable parents to navigate the system more easily and to secure places more quickly. We have also made changes to improve the fair access protocols, which are of course the safety net used for the most vulnerable children.
The noble Lords, Lord Storey and Lord Watson, asked about where the focus has been in ensuring that the most vulnerable children get school places quickly. The top of the list in this regard are looked-after children and previously looked-after children, including those who have been adopted from state care outside England. For other children, priority was increased or the mandatory category was extended to include them: children on a child-in-need or child-protection plan, children in refuge, children in formal kinship care arrangements and children who have been out of education for four or more weeks. There are other categories, which the noble Lord, Lord Watson, is aware of, I am sure, including homeless children, which go some way to addressing the points about disadvantage that he rightly raised.
As I mentioned, overwhelming support has been shown for these changes, and we now know that schools and local authorities are taking the necessary steps to ensure that they are being implemented. We have had a bit of anecdotal feedback about how that early implementation is going. Inevitably, there are some teething issues in some areas, but I was very encouraged to hear that we have had direct feedback saying that local authorities felt that they had been supported to get really quick decisions for these children in a matter of days, where previously they dragged on for much longer, quickly placing children in a school, which we all know to be critically important.
I now turn to the specific points raised by my noble friend. I start by saying that, clearly, we share his ambition of having a simple admissions process and ensuring that parents have the information that they need to make the best choices for their child. As the noble Lord, Lord Storey, articulated so well, choosing a school for a child is one of the most important decisions that a parent makes. I hope that the noble Lord, Lord Watson, gets the school of his choice for his child.
A variety of information is available to support parents in making that decision. Local authorities are required to publish annually, and then keep up to date, a composite admissions prospectus that needs to be published online, with hard copies available, bringing together all the information on school admissions within their areas. I know that my noble friend suggested that this does not always happen. I agree with him that they vary in the approach that they take, and some perhaps appear more accessible than others, but I ask my noble friend perhaps to write to me with examples of where he thinks it is not happening so that we can follow that up, because I am not aware of that.
Individual admissions authorities are also required to publish a range of information on their websites, all of which is designed to support parents in making good choices. My noble friend also talked about the need for information about the likelihood of getting into a particular school. That is one of the things that is stipulated: the number of preferences expressed for places at each school for the previous admissions year is one of the elements that it is stipulated that local authorities must publish, so that, as my noble friend said, parents can judge how popular a school is.
There are also websites, such as Get Information about Schools, and the department’s performance tables, which provide links to Ofsted reports. They give easily searchable databases for parents to compare local schools, including information on performances. Finally, school open days are a key opportunity to hear directly from school leaders and teachers about local schools.
We believe that requiring the admission arrangements to be published in a machine-readable format would be another pressure on schools and local authorities and would duplicate information they already provide in formats that, we believe, are already accessible and friendly to parents.
My noble friend questioned the effectiveness of the system more broadly. As I am sure he is aware, in the past year 93.4% of secondary applicants and 98% of primary applicants received offers from one of their top three school choices. We look at appeals from parents and, on average, about 20% are upheld in favour of parents and about 2.7% of admissions are heard at an appeals panel. If we look at the role of the schools adjudicator in assessing the fairness of admissions policy, to which the noble Lord, Lord Watson, referred, 123 cases were referred last year. The other critical point in all this is that if a school has availability, it must take all the children who apply. We will continue to keep the system under review to ensure that it works effectively for parents and that they are able to navigate it and secure a good place for their child in a timely manner.
The noble Lord, Lord Storey, asked what we mean by oversubscription. Oversubscription criteria are used to judge all applicants, not those on a waiting list. We do not have an oversubscription code, but both looked-after and previously looked-after children are at the top of the oversubscription criteria. The noble Lord also asked what we mean by disadvantage; we are referring to children in receipt of the pupil premium.
The noble Lord, Lord Watson, challenged the role of faith schools. They play a very important part in our education system and have done for centuries. Faith schools remain popular with parents and are more likely than other schools to be rated by Ofsted as good or outstanding. As the noble Lord knows, schools that are designated as having a religious character are allowed to prioritise children for admission based on their membership or practice of the faith when a school is oversubscribed but, if places are available, all schools with a religious designation must admit children of other faiths or of no faith.
The noble Lord, Lord Watson, rightly challenged what the Government are doing to make sure that particularly vulnerable and disadvantaged children have access to a good school. He will be aware that the proportion of good and outstanding schools has risen over the past few years from 68% to 86%, so the best thing we can do for all children, particularly vulnerable and disadvantaged children, is to make sure that they go to a good or outstanding school.
I close by thanking all noble Lords who have contributed to the debate today. I hope I have gone some way to reassuring your Lordships that the support we have in place for parents to make informed school choices is effective and enables them to obtain a good school place for their child. We believe that the new code will greatly improve access to schools for all children, especially the most vulnerable.
My Lords, I am very grateful to my noble friend for her careful explanation of the regulations and her replies to our various comments. I will certainly take her up on the offer of writing to her with examples of information not being provided well. If she will allow me, I will also pick up again the argument about a machine-readable format. If somebody is telling my noble friend that this is difficult, what she is being told is not right.
This information is in a machine-readable format in local authority systems, so it is merely a question of flicking a switch and dropping this out into a common system. That should not take a local authority more than five minutes and, as there are only 100 of them, nationally this will take a few hours’ effort. It would do enormous good because parents need to know which schools their children might get into. If they have to research each school individually, they will never see the ones that are a little further away or a little more obscure that happen, for one reason or another, to be available to them because of their particular characteristics and admissions criteria.
You can get into some very good schools on some very odd criteria. If you are disadvantaged and not well-informed, and you have to research everything individually, you will never get there. This becomes a privilege for the middle classes. Making things available automatically means that all those who are setting out to help the disadvantaged suddenly have all the information at their fingertips; it is as easily available to them as it is to everybody else. If I may, I will put that to my noble friend.
These regulations make some decent improvements to the way that looked-after children and similar children are treated. I very much hope that my noble friend will gather information over time as to how they are working. From what hints I have been able to gather, I suspect that the previous facilities were not as well used as they should have been and that many looked-after children were not helped to take advantage of the privileges they had to get into really good schools. We should know that the advantages being given to them are being well used, or else understand why they are not. That said, I am immensely grateful to my noble friend and I thank her for the attention she has given to this Motion.
Committee adjourned at 6.33 pm.