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Lords Chamber

Volume 832: debated on Tuesday 19 September 2023

House of Lords

Tuesday 19 September 2023

Prayers—read by the Lord Bishop of Chichester.

Local Authorities: Budgets


Asked by

To ask His Majesty’s Government what assessment they have made of the impact of inflation on local authorities’ budgets; and how many local authorities they estimate will issue Section 114 notices in this financial year.

The Government recognise the pressures that councils are facing. The 2023-24 local government finance settlement provided councils with a 9% increase in core spending power in total, demonstrating how the Government stand behind councils. Councils are responsible for managing their budgets. Any decision to issue a Section 114 notice is taken locally by the chief finance officer. The Government stand ready to speak to any council that has concerns about its ability to manage its finances.

My Lords, I thank the noble Baroness for her Answer. The Institute for Fiscal Studies report last month concluded that the current funding system is not fit for purpose. It pointed out stark geographical differences in spending for local government, with the most deprived 20% of areas receiving 9% less than their estimated needs, while the least deprived 20% received 15% more. If the Government are serious about levelling up and the 700-page Bill we have just completed on Report is not ministerial flim-flam, when will the Government set out the timeframe for funding reforms that align local government funding with levelling-up goals?

My Lords, the existing system for local government funding directs increased resource to those councils with greater need. We understand the desire for clarity on distributional reform. We have confirmed that we will not be proceeding with the review of relative needs and resources, or a business rate reset, in the current spending review period, but we remain committed to improving local government finance in the next Parliament, and we will work closely with local partners and take stock of the challenges and opportunities they face before consulting on any further potential funding reform.

My Lords, the Minister will understand that, due to the cuts that have taken place in local government, some authorities are in real terms said to be not yet back to where they were in 2010. That being so, will the Government consider a major review of the fundamental funding of local government services?

My Lords, I just set out the position on broader reform to the funding system for local government. The Government recognise the pressures that local authorities are facing. At the spending review 2021, the Government confirmed that councils in England would receive £4.8 billion of new grant funding between 2022-23 and 2024-25 to meet pressures in social care and other services. We also recognised in the Autumn Statement last year that the position on inflation had changed the position for councils, and set out additional funding to respond to that.

My Lords, is it not tragic that Birmingham—once the jewel of local government, thanks to Joseph Chamberlain and his son Neville, the reforming lord mayor in the early 20th century—should have been reduced to its present pass? What is to be done about this great council? Should it be split up? Its present position is truly tragic.

My Lords, as we speak, my right honourable friend the Secretary of State for Levelling Up is giving a Statement to the House of Commons on action to be taken on Birmingham City Council. It is the Government’s intention to appoint commissioners in that instance, but there will be a period of consultation, I believe, before that is brought forth.

My Lords, the Minister said that the Government have finally recognised that councils are facing financial difficulties. However, the Government have been defunding councils over a number of years, so even with the relatively small increase this year, they are still 25% down on the levels they had in 2010. How does that fit with the levelling-up agenda?

My Lords, I do not recognise the figures that the noble Baroness has put forward. She will know, having been part of the coalition Government in 2010, that the situation this Government inherited from the Benches opposite required difficult decisions to be taken at the time.

The Benches opposite may not like being reminded of their record, but it remains a fact. The reality is that in the recent spending review we have committed more money to local government services, and that was increased further last year at the Autumn Statement in light of the inflationary pressures that councils are facing.

My Lords, this Government can promise what they like for the next election, but the fact is that they are not going to be in power, so all those promises come to nothing. What this Government have done is to reduce council budgets and make severe cuts. I heard only today from councillors from East Hertfordshire Council that the Government have cancelled four big infrastructure projects. How can councils carry on if this Government do not support them, which they are not doing?

My Lords, the Government are supporting councils. This is not about what is happening after the next election. In this spending review period, councils will receive £4.8 billion of new grant funding—the largest annual increase in core funding in over a decade—and that was further topped up at the Autumn Statement last year, recognising the pressures that councils face. Councils are doing an excellent job up and down the country, and we support them.

My Lords, does the Minister agree that one of the reasons so many local authorities are in such financial trouble these days is because there is a lack of external scrutiny and transparency since the scrapping of the Audit Commission in 2015?

No, I do not agree. In recent years, a small number of local authorities took on excessive debt through their commercial strategies and investments. The Government have taken action both to bring this practice to an end and to revise the framework by which local authorities can borrow and invest. The levelling-up Bill expands statutory powers to directly tackle excessive risk within the local government capital system.

My Lords, the scrapping of the Audit Commission was one of the best functions of the previous coalition Government. The Audit Commission wasted billions of pounds of public money.

My noble friend sets out the rationale for the decision that was taken, and the Government have made sure that, in the commission’s place, we have strong controls so that local government spending is done in the best possible way.

My Lords, arts facilities will be among the first to go when local authorities have no money. The wonderful Lightbox gallery in Woking, not far from me, is now under threat, as indeed is funding elsewhere for symphony orchestras and much else. I repeat what others have asked: will the Government properly fund our local authorities, which have been underfunded for years, so that all our cultural and leisure amenities are allowed to survive and thrive?

My Lords, I repeat what I said about the recent spending review being the largest increase to core spending powers for local government in over a decade. Additionally, we have put significant support into the arts and culture sector through not only the culture recovery fund during the pandemic but, for example, support to swimming pools— they face high energy costs during the current period of inflation—in the last Autumn Statement. We continue to provide that specific support.

My Lords, have the Government not been fiddling with the local government finance system for years? Do we not now need an academic study to come forward with a plan for local government funding that takes into account deprivation and the need to spend?

I do not agree with the noble Lord’s analysis but, as I said to the noble Baroness in my Answer, our approach takes councils’ relative needs into account. We recognise that this may need to be looked at again but, to provide councils with certainty, that will not be done during this spending review period; it will be looked at after the next Parliament.

My Lords, we currently give three-quarters of local councils their grants from the centre. It is a higher figure than for anywhere in Europe, except tiny Malta, hence the assumption on all sides is that the solvency of local authorities is ultimately for central government. Does the Minister not agree that it would be healthier for democracy if local councils raised a higher proportion of their own budgets, so that there was a proper link between taxation, representation and expenditure?

My Lords, the Government are moving towards such steps—for example, through mayoral combined authorities and other areas where we are devolving both greater control of funding and powers to those areas to act. With that comes greater accountability.

Can my noble friend say whether the Government have received any proposals from His Majesty’s loyal Opposition on where additional funding for local government is to be provided from?

I have not received any such representations, but they have perhaps gone to the department for levelling up; I will ask it if it has ever received such representations from the Opposition Front Bench.

Minoritised Women: Pay Inequality


Asked by

To ask His Majesty’s Government what steps they plan to take to address the pay inequality experienced by Black, Asian and other minoritised women as identified in a report by the Fawcett Society, Ethnicity Motherhood Pay Penalty, published on 31 July.

My Lords, I think this demonstrates just how many Ministers it takes to do my noble friend Lady Scott’s job. I am sure the whole House joins me in wishing her well.

We are taking a number of steps to tackle unjust disparities in the workplace. We published new guidance in April to help employers measure, report and address unfair ethnicity pay differences. We are taking forward measures to improve access to flexible working, including our commitment to make the right to request flexible working apply from day one of employment. We have also launched an inclusion at work panel to develop resources to help employers achieve fairness and inclusion in the workplace more effectively and efficiently.

I thank the Minister and welcome her back to her old job, and of course I send my best wishes to the noble Baroness, Lady Scott. This Question concerns three-way discrimination at play, which this report reveals. Black and minority ethnic women face a gender pay gap, an ethnicity pay gap and, on top of that, a clear motherhood pay penalty. This is particularly so for women of Pakistani heritage. I would like to know how this can be built into the kind of review that the Minister mentioned in the last part of her Answer.

I would agree with the noble Baroness on all fronts of her analysis. I will home in on Pakistani women in particular, who seem to have the worst effects of this—there are of course other ethnic minorities who fare better than their white British counterparts—we do a number of things, including outreach work, linking up with organisations that help women furthest from the labour market that we are talking about to move closer to employment. We have developed a proof of concept that targets Pakistani and Bangladeshi women, among others, who for mainly cultural and traditional reasons have struggled to engage with the labour market. We also have support available in jobcentres to that end.

My Lords, the Minister mentioned flexible working and the right of women returning to work to request it—but it is only a request, and it is in the hands of the employer. Given that over double the proportion of women from black and other ethnic minorities reported that they had no access to flexible working, compared with white mothers, this makes them more likely to drop out of the labour market or even stay locked in very low-paid work. So will she say whether the Government will commit to a duty for employers to include reasonable flexible working options in job advertisements, and to push it through?

I thank the noble Baroness for that question. Not only will we make it a duty but we are intending to bring it into force soon, because the Employment Relations (Flexible Working) Act 2023 received Royal Assent in July of this year. It makes changes to the right to request flexible working, to better support those employers and employees that the noble Baroness is talking about.

My Lords, does the Minister agree that some pay and equality are associated with barriers to promotion, particularly in our public services? If so, what plans do His Majesty’s Government have to address improving promotion equity for women from black, Asian and other minority backgrounds?

My Lords, I am pleased to say that I think the workplace has totally changed, and that large organisations in particular do not want a homogenous workforce; they want a diverse workforce that actually represents this country and the various people who live in it. I have completely forgotten what the noble Baroness asked me now.

Promotion, absolutely. There should be no glass ceiling, my Lords. We have broken through it and we should continue to do so.

My Lords, I welcome the guidance that the noble Baroness mentioned, which the Government set out earlier this year, on how to collect ethnicity pay data for employees. I note that the equal pay alliance, of which the Fawcett Society is a member, has today published a manifesto arguing for mandatory ethnicity and disability pay gap reporting, along with mandatory action plans. Could my noble friend say what steps the Government are taking to publicise their guidance, and whether they have any plans to make the reporting of ethnicity pay data mandatory?

My Lords, mandatory reporting sounds like the perfect situation, but actually if you look into the granularity of it, as I just spoke about, it can actually be a bit of a blunt instrument that misses certain things: locational differences, regional pay differences and, as I said, there are differences within ethnicities themselves. The gender pay gap was a very simple binary reporting system, because we are talking about two groups. Ethnicity pay gap reporting involves maybe up to 19 groups, which makes it much more difficult, and for firms with small numbers it is less informative than one might think. The guidance that my noble friend was talking about was published on GOV.UK on 17 April and we have promoted it through employer engagement, including asking employer representative bodies to promote it through their networks.

My Lords, it is 50 years since we introduced equal pay law in this country and we are nowhere near equal pay, not just for minority women but women in general. When we care about regulation in a modern, democratic economy, whether it is health and safety standards, food standards or school standards, we give a state agency some responsibility both for monitoring, given the granularity issues the noble Baroness referred to, and enforcement. Is it not high time, as we approach 55 years of this equal pay principle, that we gave an agency such as the Revenue some responsibility for monitoring payroll and enforcing equal pay?

My Lords, that is quite complex, in the sense that some organisations have done it and done it very well. I recall doing it back in the day when I was a local authority leader. Some have been less good about it. Of course, equal pay discrepancies can be brought into scope, but I remain to be convinced about handing it to another agency.

My Lords, when, at the current rate of progress, do His Majesty’s Government envisage that the ethnicity pay gap will be closed?

My noble friend might be interested to know that the ethnicity pay gap between white and ethnic minority employees in England and Wales is actually only 2.3%. It goes back to the point raised by the Question from the noble Baroness, Lady Thornton, which is that it does not show the full picture. We have done a lot but there is further to go.

We always leave class out of this issue. I hate this idea of turning white against black by talking about doing something for black people when there are so many white people who are also left behind because of the nature of their class and where they come from.

My Lords, some of the recently arrived women care workers from Asian and African countries are being exploited by their employers because they have limited negotiating power. They are not fully aware of their rights, are less likely to join a union and are less assertive of their rights due to the fear of job insecurity and their immigration status. They are verging on modern slavery. Are the Government aware of their plight?

I think the Government are aware of the plight of anyone who might be in danger of slavery, exploitation and all the things the noble Lord talks about. I do not think that it is necessary to belong to a union to be protected from such exploitation.

I very much value what my noble friend said regarding the 2% ethnicity pay gap compared with white counterparts, but, once again, we must not treat all ethnic minority people as a homogenous group. That figure will be better for men, in terms of the differentials in pay gap, and worse for ethnic minority women. So, although I understand that there is variation and that there are lots of groups of ethnic minority women, nevertheless I think that there is merit in having a statutory requirement for businesses to say what those pay gaps are. That would be a start.

We do not intend to go down that route, for all the reasons I outlined earlier, but my noble friend is absolutely right that there is a big disparity within ethnic minority groups, with some people earning more than their ethnic white counterparts and others earning less. I think that is what the noble Baroness, Lady Thornton, was trying to get at.

Nursing Courses: Reduction in Applications


Asked by

To ask His Majesty’s Government what assessment they have made of the causes of a reduction of 16 per cent in applications to nursing courses in England compared to last year, according to UCAS data for the 2023 application cycle.

The drop in nursing applicants reflects an expected rebalancing following unprecedented demand for healthcare courses during the Covid-19 pandemic. Nursing is still a popular career choice. Applicant numbers remain 15% higher than pre-pandemic levels. We also continue to see growth in the number of people pursuing nursing apprenticeships. This is not final data; figures are accurate as at the end of June application deadline, but the application cycle remains open through clearing until mid-October.

My Lords, I am very grateful to the Minister, but I think he would accept that any drop-off in applications is something to worry about, alongside the current drop-out rate for student nurses in the UK of around 24%. On that basis, surely the NHS workforce plan in relation to nursing is simply not sustainable. If the Minister does accept that, is there not a case for looking at writing off debt run up by student nurses through tuition fees if they commit to working in the NHS for a length of time?

We are delivering on a number of routes to recruit nurses. Obviously, the graduate route is one route, which, as mentioned, is above pre-pandemic levels; apprenticeships is another route, which is proving very successful; and associates is another route again. So there are many routes in, and the result is that our applications are 20% up on pre-pandemic levels. We set ourselves a target of recruiting 50,000 more nurses by the end of this Parliament and we are currently on 45,000, so we are going to hit it.

My Lords, I welcome what my noble friend the Minister said regarding the number of nurses joining; nevertheless, the number of nurses leaving the NHS is higher than we would expect. Would my noble friend say exactly whether we are collating this information and understanding why those people are leaving, because they have a very valued skill?

Yes, absolutely. Clearly, we want to recruit, but we also want to retain our workforce and again that is what the long-term workforce plan is all about—trying to look at a clear professional development path and other things we can help with, such as childcare support and the culture and leadership, and really make nursing a very successful and rewarding career structure. There is a lot to do on it, but I think there has been a lot of good progress as well.

My Lords, the NHS Long Term Workforce Plan will make funding available for an increased number of nurse training places, which is of course welcome, but the increase in capacity for the NHS will happen only if there are sufficiently qualified candidates applying for those places and completing the training. Would the Minister be willing to share the assumptions his department made about application and attrition rates when setting the targets in the workforce plan, so that we can compare those assumptions with reality as revealed by the numbers in the Question today?

Yes, my understanding is that all the workings behind the long-term workforce plan are currently being analysed by another body— I am not quite sure whether it is the NAO, the ONS or whoever. The point is that all the modelling and the underlying assumptions are being analysed, and I believe there will then be a report on them so that everyone can see what we are trying to do and how reasonable those assumptions are.

My Lords, the University of Salford, where I am chair of council, has seen applications for adult nursing down by 28%, children’s nursing down by 27% and mental health nursing down by 6%, with an overall drop of 23%. From the feedback the university is receiving, the main barrier is that the financial support needed to undertake a highly intensive course, which leaves little time for part-time working, is insufficient to meet the current cost of living. Does the Minister accept that this is a factor in the drop in applications, and will the Government review the financial package of support available to nursing applicants to ensure, as we have heard, that the NHS workforce plan is deliverable?

Clearly, as the largest employer in the UK—if not most of the world—the NHS always has to be looking at the whole package that it is offering its staff to make it an attractive place to recruit good talent and retain it. The point that the noble Lord makes is absolutely correct, and those are all things that need to go into the mix. As I say, recent data is encouraging. We have increased the numbers by 45,000 and are on course to hit the 50,000 target, but, as ever, we need to be vigilant because we want to recruit a lot more.

My Lords, following on from the noble Lord who spoke about his university, the University of Chichester—in the diocese where I serve—is now developing practice-focused nursing courses, including a new nursing associate apprenticeship scheme, even though the cost of living in the south-east is a disincentive to seeking to work in the healthcare sector. However, the university is finding that the current funding and availability of external placements are restricting the growth of these courses, despite the university’s capacity to take more students. What measures are the Government taking to support education and placement expansion at the pace requested by the NHS Long Term Workforce Plan?

The whole long-term workforce plan is supported by a £2.4 billion investment to make sure that we hit our ambitious targets. It takes into account things like apprenticeships: we want to see the proportion of people coming through the apprenticeship route increase from 9% to 28%. On nursing associates—noble Lords will remember that this is a subject close to my heart, because for my mother, who had children when she was very young, nursing was a route for her to get back into the workforce, so this is something that I am glad to see us now picking up again—we have seen nursing associates increase from 1,000 to 10,000 over the last few years. These are all key routes, which we are backing up with investment behind them.

My Lords, it appears that the reduction in student nurses was most prominent among mature students. Applications from those aged 30 to 34 dropped by 25%. Out of nearly 49,000 qualified entrants to teaching last year, fewer than 12,000 were over the age of 39. As someone who retrained as a teacher at the age of 50, can I ask what the Government are doing to attract more mature students to both professions—a group of people who might be under less financial pressure and are able to see these professions as the incredibly important and rewarding careers that they are?

As I just mentioned, the whole point around nursing associates is to try to attract those more mature recruits as well. As I was trying to show with the example of my mother, there are lots of people who have a lot of value that they can give later on in their life. That is definitely the sense of direction that we are trying to achieve. I repeat that, while people are talking as if numbers are going down, across the field of graduates, apprenticeships and associates we are looking at a 20% increase since pre-pandemic levels.

My Lords, would my noble friend consider making it much easier for young people to get work experience in the NHS, so that they can see what a wonderful career it is, rather than having to rely on the chance of someone they know working in that industry?

Absolutely. We are trying to adopt a modular approach so that you can have units that can build towards getting in there. For people who go into social care, for instance, there is a modular unit that can add towards going into nursing later on. That is a means of attracting people to nursing by having more routes in and making a career such as social care attractive in terms of career progression.

My Lords, the noble Lord, Lord Hunt, mentioned the attrition rate among student nurses, but I understand that the attrition rate among student mental health nurses is even greater. That is a particularly challenging specialist course, and one of the problems is that very often the clinical placements are a long way from where the student nurse lives. Is there any programme of support available to make sure that we do not lose the student nurses who undertake this very challenging route to nursing?

The noble Baroness is quite correct that mental health is a particular case in point. When we introduced the £5,000 grant for all nurses each year, we gave additional add-ons, and mental health nurses get an add-on in addition to that £5,000 a year. We also increased the travel and accommodation costs allowance by 50% to cater for those who have to travel far and wide.

My Lords, the figures on overall declining numbers are concerning, particularly since this is the second successive steep fall, with, as the Minister said, the Department of Health relying on the UCAS clearing system and future nurse apprenticeships to try to make up the numbers. What changes does the Minister consider need to be made to the NHS workforce plan in the light of escalating problems with both the recruitment and retention of key staff?

I am sorry to keep coming back to the data, but it suggests a 45,000 increase, which shows that we are doing pretty well. A 20% increase across all the different fields since the pandemic also shows that we are doing a good job on recruitment. Clearly, we cannot rest on our laurels, so we need to look at all those routes in, but I do not understand why people characterise the numbers as dropping when in fact the data shows the overall increase is far greater.

NATS: Staffing


Asked by

To ask His Majesty’s Government what discussions they have had had with NATS (formerly National Air Traffic Services) regarding their staffing issues which resulted in delays and cancellations in flights at Gatwick Airport on Thursday 14 September.

My Lords, the Government regret the delays caused by staffing issues in the Gatwick air traffic control tower last Thursday. UK airport air traffic control services are a commercial matter in the UK—in the case of Gatwick, between NATS and the airport operator. We continue to engage with stakeholders to review plans for disruption mitigation, and I shall meet the CEOs of NATS, Gatwick, easyJet and the CAA shortly.

My Lords, for the third time in three weeks, travellers have faced immense inconvenience due to air traffic control issues, with flights cancelled, delayed or diverted. The latest incident, as the Minister referred to, was only last week, caused apparently by the untimely sickness of one air traffic controller, and a replacement could not be put in place quickly. Given that NATS is a public/private partnership where the Government own 49%, can the Minister outline what staffing resilience measures NATS will put in place as a result of her current or future discussions? The issues include the framework for staff training, current and future recruitment schemes for air traffic controllers, and the number of staff and vacancies in NATS. Further, will she emphasise whether the Department of Transport is directly involved in building sustainability in the new staffing requirements for NATS?

There are plenty of questions there for me to get my teeth into. I shall focus on staffing and staffing resilience at Gatwick in the tower. Two unrelated operational incidents caused withdrawal pending review, which is a standard safety procedure, and that impacted the flow on that day. However, when NATS took over air traffic control at Gatwick in October 2022, it inherited a staffing shortage. It takes at least 13 months to train an air traffic controller at a specific airport, and as I am sure the noble Baroness realises, 13 months have not yet elapsed. We have reviewed NATS’ plans, we are continuing to do so, and we believe that progress is being made.

My Lords, a fortnight ago, I asked my noble friend whether NATS should be liable to pay compensation for its failures in the same way as the airlines are, but she resisted. In defence, she said that NATS’ licence conditions allow penalties to be imposed for its failures. However, in a Written Answer, my noble friend told me that over the past five years, those penalties amounted only to £600,000, whereas this month the airlines have had to pay £100 million for NATS’ failures. Surely NATS should have to pay compensation in the same way as the airlines.

I thank my noble friend for his continued questions on this matter. There are 55 licensed air navigation service providers in the UK. I am not saying that all of them could look after Gatwick, because it is incredibly complicated, but it is a commercial operation, entirely separate and different from what happens in upper air space, which is what I think my noble friend was questioning me about last week. There is a contractual arrangement between the airport and NATS which will include service level agreements and, I am sure, financial penalties, but it is a commercial matter of which the Government do not have oversight.

My Lords, as someone who uses the airport regularly to come to this House, I have to say that this is not a one-off. Flights are delayed or cancelled regularly each week. Last Thursday was an embarrassment for the airport—more than 17 flights were cancelled with an equal number of flights delayed. What was annoying was the lack of information—passengers were treated with total contempt when trying to find out what was happening. How many flights have been cancelled or delayed over the past two to three years? That information would be important in finding out exactly what is happening at the airport and who is managing it. When flights are cancelled or delayed, who is responsible for sharing that information with passengers?

The reasons for cancellations and delays in the aviation system are numerous, including industrial action in France, adverse weather, wildfires and airspace restrictions owing to the situation in Ukraine. They are more numerous than I can elicit. The noble Lord asked how many flight cancellations there have been. I can tell him that, so far in 2023, there have been 74 flight cancellations due to tower staffing issues at London Gatwick; that is 74 out of 180,000 flights, so it is fewer than 0.1% of movements. I accept his premise that there will have been cancellations for other reasons and have noted some of them, but those are not within Gatwick’s or the airlines’ control. In those circumstances, we have to understand that the aviation system is complex and that many different factors can impact the flight schedule.

My Lords, the noble Lord, Lord Young, has outlined one way in which the penalties that can be imposed on NATS are inadequate, but that is not the only inadequacy. If things are so bad that flights are not delayed but cancelled then the current legislation ensures, ironically, that NATS will not suffer penalties. It suffers penalties only for delays and not for cancellations. When are the Government going to deal with that important loophole in the legislation?

The issue that the noble Baroness raises will be covered when the CAA completes its review of the outage in upper airspace that NATS suffered recently. I will await the independent regulator’s views on that, and we will obviously take action if needed. The noble Baroness said that the penalties are inadequate, but I also want to stress that when it comes to Gatwick tower control, the Government have no oversight of or insight into what those penalties are. They may well be adequate, as they are negotiated on a commercial footing.

My Lords, the Government seem to have a problem with people, because there is a shortage of people in this, as we have heard from many noble Lords already. It is a similar problem to what we will be debating later: a shortage of drivers on the west coast main line. Both those problems involve businesses which the Government say are commercial but in fact, behind the scenes, they make very sure that nobody is allowed to recruit enough people to ensure that there is a contingency. What are the Government going to do about that?

The noble Lord conflates two of my favourite topics. As he knows, both those companies are privately run and can recruit as many people as they like. However, they suffer the same thing: during the Covid pandemic, it was very difficult to train traffic controllers and train drivers. To a certain extent, there is a bit of catch-up going on. As I say, for train drivers as for air traffic controllers, training takes a very long time. It is at least 18 months before that person is operational.

My Lords, this is a very complex and almost unique issue. We have the failure of a small unit, with perhaps three people on duty, impacting on the enterprise as a whole. The problem is: what is the adequate reserve? When NATS took over in October last year, Gatwick saw the need to agree staffing levels. As an increase in staff was needed, recruitment and training were put in hand, but it has not yet delivered. That was 11 months ago. It may be that ab initio to on duty is 13 months, but surely more energy should be put into finding a bridging solution to that problem. We also need to worry about who should be financially responsible. I caution against putting the responsibility on NATS on the day, because the runway is the most dangerous part of any operation, especially into Gatwick. But is the present situation equitable and, in the final analysis, is not Gatwick responsible for Gatwick?

In the final analysis, Gatwick is indeed responsible for Gatwick. As the noble Lord will know, there are numerous London airports which, I am sure, would be happy to provide services. Therefore, there is a rationale for Gatwick management making sure that their operations run very smoothly. The noble Lord mentioned a bridging solution. I agree; I wish there were one. However, the simple fact is that Gatwick is the busiest single-runway airport in the world. Even an experienced air traffic controller still needs that 13 months to train in order to take up their role. Even worse than that, at 13 months the success rate is still 50%, because safety always comes first.

Libya Floods

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Thursday 14 September.

“The situation is very concerning, and I send sincere condolences on behalf of the Government to the people of Libya. I am sure that is true for everyone in the House. On Wednesday, eastern administration officials reported that the death toll had risen to at least 5,300, and newspaper reports this morning suggest the number could reach 20,000.

Storm Daniel hit Libya on Sunday 10 September after causing floods and chaos in Bulgaria, Greece and Turkey, and then, early on Monday morning, two dams burst, which we know caused major flooding that submerged parts of the city and wiped out entire neighbourhoods. The attempt to recover the situation has been made worse by a lack of road access and by communication channels being down. We stand ready to help as best we can.

The UK has committed to supporting Libya following these devastating floods, and yesterday the Foreign Secretary announced an initial package worth up to £1 million to provide life-saving assistance to meet the immediate needs of those most affected by the floods. The UN Central Emergency Response Fund, to which the UK is the third largest donor, has announced that it will deliver $10 million of support to Libya. We are also working with trusted partners on the ground to identify the most urgent basic needs, including shelter, healthcare and sanitation. We stand ready to provide further support.

The UK remains in close contact with authorities across Libya to help respond to this tragic crisis, and Lord Ahmad, the Minister for the Middle East and North Africa, has reiterated the UK’s commitment to Libya in a call with the chair of Libya’s Presidential Council. UN officials have said that the western and eastern Governments are working together and communicating on this, which will be important, and we stand ready to help the people of Libya in these very challenging times.”

My Lords, I appreciate that the Minister has been focused on the huge disaster in Libya, and of course the situation is incredibly complex. Last Thursday, David Rutley said that

“the UN is … finalising its needs assessment”,—[Official Report, Commons, 14/9/23; col. 1002.]

and that the UK stood ready to assist in is response. I take it that that assessment has now been received, so can the Minister update us on what the UK’s support will be for the disaster response team and whether this includes technical and expert advice and support? Finally, I know the Minister is on his way to UNGA at some point. Can he reassure the House that the UK will be mobilising global support for the disaster relief efforts in Libya?

My Lords, I am sure I speak for all of us in your Lordships’ House as I extend the condolences of the Government and the whole House to the people of Libya and, if I may, to the people of Morocco. Two absolutely shocking events have taken place and the human suffering has been immense.

I assure the noble Lord that we have been very much seized of the situation. Two days ago, I spoke directly to the OCHA co-ordinator, Martin Griffiths, to understand fully the work of the UN. We are routing our support through the UN agencies on the ground because of the complexity of the situation. Over the weekend, the United Kingdom’s Foreign Secretary immediately announced £1 million of funding to provide life-saving assistance, based on a needs assessment. I announced a further package of £10 million to bolster UK support in the region to cover the situation in Libya, as well as in Morocco. I can report to the House that the first flight carrying UK-funded support landed in Benghazi on the morning of Monday 18 September, including shelter items, portable solar lanterns and, importantly, water filters.

My Lords, I associate myself with the sympathies from the Minister to the people of Morocco and Libya. Regarding the UK response, the Government depleted the humanitarian relief fund to less than 10% of its previous levels—has that now been fully replenished, to ensure that we can respond to natural disasters such as these going forward? On the specific response to Libya, the Minister will be aware that there have been reports of warnings which could have potentially saved thousands of lives. Which institutions within Libya do the British Government trust to ensure that any reconstruction and humanitarian relief work will be done in a corrupt-free way, to ensure that people do not have their suffering prolonged?

My Lords, I am sure the noble Lord would acknowledge that the response to the crisis in Morocco and in Libya has ensured that we have stood up funding based on the needs assessment and in line with the conversations we have had through UN agencies and, importantly, with the Libyan Administration. I spoke to the head of the Presidential Council, Mohamed al-Menfi, and extended the condolences of the United Kingdom. His Majesty the King has also sent a note. My right honourable friend the Foreign Secretary has spoken to Prime Minister Dabaiba in this regard. I am also looking to meet the appropriate Libyan Minister on the ground in New York when I depart for the UN later today.

We have ensured immediate, life-saving funding. As the noble Lord recognises, the situation in Libya is extremely complex. There are two warring sides. I have spoken directly to our chargé on the ground in Libya to ensure there is good co-ordination with all sides. We are hearing some reports, in this desperate situation, of good co-ordination, but so much more needs to be done. The main issues are of access and logistics. On the eastern side of the country, from Benghazi, aid to all the affected areas has been hindered by people who are stopping it being delivered. They are hindering the important humanitarian work as well.

My Lords, the Minister referenced the role of the United Nations. He will have seen reports that UNICEF says that some 300,000 children have been affected and that the number is rising. Is he able to give the House any more information about this? He will have also seen that UNICEF has launched its own appeal. Can he tell us whether the disasters appeal in the United Kingdom is concentrating on both Libya and Morocco? Is he confident that the aid needed in Morocco is now reaching its desired intentions and purposes at first hand? As the Minister knows, there were complaints about how slowly it was being taken up.

On the noble Lord’s latter point, on the Saturday evening and overnight into Sunday I engaged directly with the Moroccan Foreign Minister to ensure we knew exactly what was required. I pay tribute to our emergency response teams, which mobilised overnight to ensure that the required assistance went out on two RAF planes. I am grateful to my colleagues in the Ministry of Defence for their strong co-operation. Those planes landed and the aid got through to the key parts of Marrakesh, which many noble Lords will know well, and the Atlas Mountains. We are also working with key agencies on the ground. I know that the Moroccan ambassador has embraced the NGOs which stand ready to assist, and which are working with local partners.

The UN has launched a flash fund for Libya. There are several UN agencies on the ground such as the World Health Organization and UNICEF, as the noble Lord said, and the World Food Programme has begun delivering food assistance. It is very difficult, particularly in Derna, which has been totally and utterly devastated. Once the assessments that the noble Lord, Lord Collins, mentioned are made and materialise, we will be able to stand up further support according to need.

My Lords, Libya is an oil-rich country. Surely the problem is not just one of money but of governance and neglect of the infrastructure over a long period. Is there any prospect that this tragedy might bring together the two warring factions in Tripolitania and Cyrenaica? Can the international community bring pressure on both sides and their sponsors at least to recognise the problem and try to reconcile it?

I totally agree with the noble Lord and his premise that Libya is economically very rich. Since the disputes broke out, which continue to plague the country, there has been corruption and a lack of co-ordination and administration. Some reports suggest that that led to the collapse of the infrastructure—particularly the two dams which directly impacted and devastated Derna. I can assure the noble Lord that we are working with the UN. Prior to this crisis, I had engaged with SRSG Bathily on reconciliation and bringing the two sides together. I hope to meet him again when I am in New York later today and during the next two days.

My Lords, the apocalyptic floods in Libya are now estimated to have killed 11,000 people, with 10,000 still missing. Their intensity and impact have been aggravated by global warming. Since 2020, the UK’s aid budget has fallen from 0.7% to 0.5% of GNI. I implore the Minister to think again, particularly as the original aid budget was set before the world had to respond to regular climate disasters.

We have talked many a time about the need for aid, and the Government are committed to returning to 0.7% at the appropriate time. I am sure the noble Earl would acknowledge that the United Kingdom has been at the forefront of support in both Libya and Morocco, and we continue to engage in this respect. I am sure the noble Earl has been following media and other reports and will know that this is not just about climate. There are some serious issues around accountability, particularly about the maintenance of the dam. We are awaiting a full assessment in that regard. There is an acute responsibility on the part of those who administer this part of Libya.

Does my noble friend agree that these two things coming together is a terrible warning for the rest of the world? The mixture of climate change and inadequate protection, as well as inadequate dealing with the maintenance of infrastructure, ought to be a clarion call throughout the world, including in this country. Would he undertake to make sure that our adaptation report, which the Climate Change Committee said was entirely inadequate, can be looked at again?

My Lords, I shall take my noble friend’s suggestion, because I know that he makes it in a very constructive way. Certainly, I think that we need to. The discussions that have taken place in the UN over the past couple of days have been focused very much on climate and the environment. I am delighted that His Royal Highness the Prince of Wales has been directly involved with this matter. It is important to note that we are only half way towards the fulfilment—or lack of fulfilment—of the SDGs. The performance is very low, and we need a concerted effort to ensure that the SDGs get back on track. I am sure that the report to which the noble Lord referred serves as an important contributor in this respect.

My Lords, I declare an interest, as I have had a lot to do with setting up medical schools in Libya. I would be very interested to know whether the Minister has any information on the original construction of the two dams.

My Lords, I can share with my noble friend that the dams were actually constructed by Yugoslavia, which in itself reflects how dated they are. Of course, any infrastructure that was built requires regular maintenance. The early reports that have come out, particularly with the complex situation in the eastern part of Libya, suggest that those dams had not been sustained in the way that was required. There are lots of reports of early warning signals and cracks in the dams, and we will assess those. What is required now is a concerted effort on the ground, and for the two sides in Libya to come together in the interests of the Libyan people.

Online Safety Bill

Commons Amendments and Reasons

Motion A

Moved by

That this House do not insist on its Amendment 17 and do agree with the Commons in their Amendments 17A and 17B in lieu.

17A: Clause 10, page 9, line 30, leave out paragraph (e) and insert—

“(e) the extent to which the design of the service, in particular its functionalities, affects the level of risk of harm that might be suffered by children, identifying and assessing those functionalities that present higher levels of risk, including functionalities—

(i) enabling adults to search for other users of the service (including children), or

(ii) enabling adults to contact other users (including children) by means of the service;”

17B: Clause 10, page 9, line 38, after “used,” insert “including functionalities or other features of the service that affect how much children use the service (for example a feature that enables content to play automatically),”

My Lords, I beg to move Motion A and, with the leave of the House, I shall also speak to Motions B to H.

I am pleased to say that the amendments made in your Lordships’ House to strengthen the Bill’s provisions were accepted in another place. His Majesty’s Government presented a number of amendments in lieu of changes proposed by noble Lords, which are before your Lordships today.

I am grateful to my noble friend Lady Morgan of Cotes for her continued engagement on the issue of small but high-risk platforms. The Government were happy to accept her proposed changes to the rules for determining the conditions that establish which services will be designated as category 1 or 2B services. In making the regulations, the Secretary of State will now have the discretion to decide whether to set a threshold based on either the number of users or the functionalities offered, or on both factors. Previously, the threshold had to be based on a combination of both.

It remains the expectation that services will be designated as category 1 services only where it is appropriate to do so, to ensure that the regime remains proportionate. We do not, for example, expect to apply these duties to large companies with very limited functionalities. This change, however, provides greater flexibility to bring smaller services with particular functionalities into scope of category 1 duties, should it be necessary to do so. As a result of this amendment, we have also made a small change to Clause 98—the emerging services list—to ensure that it makes operational sense. Before my noble friend’s amendment, a service would be placed on the emerging services list if it met the functionality condition and 75% of the user number threshold. Under the clause as amended, a service could be designated as category 1 without meeting both a functionality and a user condition. Without this change, Ofcom would, in such an instance, be required to list only services which meet the 75% condition.

We have heard from both Houses about the importance of ensuring that technology platforms are held to account for the impact of their design choices on children’s safety. We agree and the amendments we proposed in another place make it absolutely clear that providers must assess the impact of their design choices on the risk of harm to children, and that they deliver robust protections for children on all areas of their service. I thank in particular the noble Baroness, Lady Kidron, the noble Lords, Lord Stevenson of Balmacara and Lord Clement-Jones, my noble friend Lady Harding of Winscombe and the right reverend Prelate the Bishop of Oxford for their hard work to find an acceptable way forward. I also thank Sir Jeremy Wright MP for his helpful contributions to this endeavour.

Noble Lords will remember that an amendment from the noble Baroness, Lady Merron, sought to require the Secretary of State to review certain offences relating to animals and, depending on the outcome of that review, to list these as priority offences. To accelerate protections in this important area, the Government have tabled an amendment in lieu listing Section 4(1) of the Animal Welfare Act 2006 as a priority offence. This will mean that users can be protected from animal torture material more swiftly. Officials at the Department for Environment, Food and Rural Affairs have worked closely with the RSPCA and are confident that the Section 4 offence, unnecessary suffering of an animal, will capture a broad swathe of illegal activity. Adding this offence to Schedule 7 will also mean that linked inchoate offences, such as encouraging or assisting this behaviour, are captured by the illegal content duties. I am grateful to the noble Baroness for raising this matter, for her discussions on them with my noble friend Lord Camrose and for her support for the amendment we are making in lieu.

To ensure the speedy implementation of the Bill’s regime, we have added Clauses 116 to 118, which relate to the disclosure of information by Ofcom, and Clauses 170 and 171, which relate to super-complaints, to the provisions to be commenced immediately on Royal Assent. These changes will allow Ofcom and the Government to hold the necessary consultations as quickly as possible after Royal Assent. As noble Lords know, the intention of the Bill is to make the UK the safest place in the world to be online, particularly for children. I firmly believe that the Bill before your Lordships today will do that, strengthened by the changes made in this House and by the collaborative approach that has been shown, not just in all quarters of this Chamber but between both Houses of Parliament. I beg to move.

My Lords, I thank the Minister very warmly for his introduction today. I shall speak in support of Motions A to H inclusive. Yes, I am very glad that we have agreement at this final milestone of the Bill before Royal Assent. I pay tribute to the Minister and his colleagues, to the Secretary of State, to the noble Baronesses, Lady Morgan, Lady Kidron and Lady Merron, who have brought us to this point with their persistence over issues such as functionalities, categorisation and animal cruelty.

This is not the time for rehearsing any reservations about the Bill. The Bill must succeed and implementation must take place swiftly. So, with many thanks to the very many, both inside and outside this House, who have worked so hard on the Bill for such a long period, we on these Benches wish the Bill every possible success. He is in his place, so I can say that it is over to the noble Lord, Lord Grade, and his colleagues at Ofcom, in whom we all have a great deal of confidence.

My Lords, I shall contribute briefly from these Benches because it is important for us all to be aware of just how much people outside have been watching the progress of the Bill. Indeed, today in the Public Gallery we have some bereaved parents who have suffered at the hands of things that have come up on the internet. We have been very privileged, all the way through the Bill, to be able to hear from people who have been victims and who have genuinely wanted to improve things for others and avoid other problems. The collaborative nature with which everyone has approached the Bill has, we hope, achieved those goals for everyone.

We all need to wish the noble Lord, Lord Grade, good luck and all the best as he takes on an incredibly important scrutiny role. I am sure that in years to come we will be looking at post-legislative scrutiny. In the meantime, I shall not name everybody, apart from putting the Minister in prime position; I thank him and everyone for having worked so hard, because I hear from outside that that work is greatly appreciated.

My Lords, I too thank the Minister for his swift and concise introduction, which very carefully covered the ground without raising any issues that we have to respond to directly. I am grateful for that as well.

The noble Lord, Lord Clement-Jones, was his usual self. The only thing that I missed, of course, was the quotation that I was sure he was going to give from the pre-legislative scrutiny report on the Bill, which has been his constant prompt. I also think that the noble Baroness, Lady Finlay, was very right to remind us of those outside the House who we must remember as we reach the end of this stage.

Strangely, although we are at the momentous point of allowing this Bill to go forward for Royal Assent, I find that there is actually very little that needs to be said. In fact, everything has been said by many people over the period; trying to make any additional points would be meretricious persiflage. So I will make two brief points to wind up this debate.

First, is it not odd to reflect on the fact that this historic Parliament, with all our archaic rules and traditions, has the capacity to deal with a Bill that is regulating a technology which most of us have difficulty in comprehending, let alone keeping up with? However, we have done a very good job and, as a result, I echo the words that have already been said; I think the internet will now be a much safer place for children to enjoy and explore, and the public interest will be well served by this Bill, even though we accept that it is likely to only be the first of a number of Bills that will be needed in the years to come.

Secondly, I have been reflecting on the offer I made to the Government at Second Reading, challenging them to work together with the whole House to get the best Bill that we could out of what the Commons had presented to us. That of course could have turned out to be a slightly pointless gesture if nobody had responded positively—but they did. I particularly thank the Minister and the Bill team for rising to the challenge. There were problems initially, but we got there in the end.

More widely, there was, I know, a worry that committing to working together would actually stifle debate and somehow limit our crucial role of scrutiny. But actually I think it had the opposite effect. Some of the debates we had in Committee, from across the House, were of the highest standard, and opened up issues which needed to be resolved. People listened to each other and responded as the debate progressed. The discussion extended to the other place. It is very good to see Sir Jeremy Wright here; he has played a considerable role in resolving the final points.

It will not work for all Bills, but if the politics can be ignored, or at least put aside, it seems to make it easier to get at the issues that need to be debated in the round. In suggesting this approach, I think we may have found a way of getting the best out of our House —something that does not always occur. I hope that lesson can be listened to by all groups and parties.

For myself, participating in this Bill and the pre-legislative scrutiny committee which preceded it has been a terrific experience. Sadly, a lot of people who contributed to our discussions over that period cannot be here today, but I hope they read this speech in Hansard, because I want to end by thanking them, and those here today, for being part of this whole process. We support the amendments before the House today and wish good luck to the noble Lord, Lord Grade.

My Lords, I am very conscious that this is not the end of the road. As noble Lords have rightly pointed out in wishing the Bill well, attention now moves very swiftly to Ofcom, under the able chairmanship of the noble Lord, Lord Grade of Yarmouth, who has participated, albeit silently, in our proceedings before, and to the team of officials who stand ready to implement this swiftly. The Bill benefited from pre-legislative scrutiny. A number of noble Lords who have spoken throughout our deliberations took part in the Joint Committee of both Houses which did that. It will also benefit from post-legislative scrutiny, through the Secretary of State’s review, which will take place between two and five years after Royal Assent. I know that the noble Lords who have worked so hard on this Bill for many years will be watching it closely as it becomes an Act of Parliament, to ensure that it delivers what we all want it to.

The noble Lord, Lord Stevenson, reminded us of the challenge he set us at Second Reading: to minimise the votes in dissent and to deliver this Bill without pushing anything to ping-pong. I think I was not the only one in the Chamber who was sceptical about our ability to do so, but it is thanks to the collaborative approach and the tone that he has set that we have been able to do that. That is a credit to everybody involved.

I am conscious that the noble Lord is just one of many people in both Houses who have followed the Bill very closely since it was first published in draft in May 2021, and indeed since the White Paper was published in April 2019. No shortage of people in both Houses have devoted many hours to considering and improving it, informed of course by the discussions and correspondence they have had with countless people from beyond your Lordships’ House. The noble Baroness, Lady Finlay, is right to draw our attention to those watching, both here and at home, and who have high hopes for the Bill. No shortage of Ministers have played its part in listening to those representations and steering the Bill through Parliament. It is a privilege to be the last one to do so, to have the final word and to say, for one last time, that I beg to move.

Motion A agreed.

Motion B

Moved by

That this House do not insist on its Amendment 20, to which the Commons have disagreed for their Reason 20A.

20A: Because the Bill already makes sufficient provision requiring providers of user-to-user- services to mitigate the impact of harm to children online.

Motion C

Moved by

That this House do not insist on its Amendment 22, to which the Commons have disagreed for their Reason 22A.

22A: Because the Bill already makes sufficient provision requiring providers of user-to-user- services to mitigate the impact of harm to children online.

Motion D

Moved by

That this House do not insist on its Amendment 81 and do agree with the Commons in their Amendments 81A, 81B and 81C in lieu.

81A: Clause 25, page 26, line 31, leave out paragraph (c) and insert—

“(c) the extent to which the design of the service, in particular its functionalities, affects the level of risk of harm that might be suffered by children, identifying and assessing those functionalities that present higher levels of risk, including a functionality that makes suggestions relating to users’ search requests (predictive search functionality);”

81B: Clause 25, page 26, line 33, at end insert—

“(ca) the different ways in which the service is used, including functionalities or other features of the service that affect how much children use the service, and the impact of such use on the level of risk of harm that might be suffered by children;”

81C: Clause 25, page 26, line 35, leave out “(c)” and insert “(ca)”

Motion E

Moved by

That this House do not insist on its Amendment 148 and do agree with the Commons in their Amendment 148A in lieu.

148A: Page 205, line 36, at end insert—

“Animal welfare

32A An offence under section 4(1) of the Animal Welfare Act 2006 (unnecessary suffering of an animal).”

Motion F

Moved by

182A (as an amendment to Amendment 182): Line 1, leave out ““presented by content”” and insert ““content on””

Motion G

Moved by

349A (as an amendment to Amendment 349): Line 20, at end insert—

“(qa) sections 104 to 106;”

349B (as an amendment to Amendment 349): Line 24, at end insert—

“(ta) sections 150 and 151;”

Motion H

Moved by

391A (as an amendment to Amendment 391): Line 1, after ““and” insert “at least one specified condition about”

391B: Schedule 11, page 78, line 21, at end insert—

“(3A) If the regulations under paragraph 1(1) of Schedule 11 specify that a service meets the Category 1 threshold conditions if any one condition about number of users or functionality is met (as mentioned in paragraph 1(4)(a) of that Schedule)—

(a) subsection (2) applies as if paragraph (b) were omitted, and

(b) subsections (3) and (7) apply as if the reference to the conditions in subsection (2) were to the condition in subsection (2)(a).”

Motions B to H agreed.

Non-Domestic Rating Bill


Welsh Legislative Consent granted.

Clause 1: Local rating: liability and mandatory reliefs for occupied hereditaments

Amendment 1

Moved by

1: Clause 1, page 2, line 25, at end insert—

“(za) the chargeable day falls after the day on which qualifying energy efficiency improvements are completed,”Member’s explanatory statement

This amendment, and others to Clause 1 in the name of Lord Ravensdale, would allow qualifying energy efficiency improvements improvement rate relief until at least 1 April 2029.

My Lords, the noble Lord, Lord Ravensdale, is unable to join your Lordships’ House today due to work commitments, so he has asked me to introduce his amendments in the first group as I have added my name to them. Amendments 1, 2 and 3 in this group all relate to rate relief for energy efficiency improvements. Specifically, they allow qualifying energy efficiency improvements improvement rate relief until at least 1 April 2029. That contrasts with the current position of the Government, who have previously made it clear that they intend to offer improvement relief for only one year.

I understand from the noble Lord, Lord Ravensdale, that he has had constructive meetings with the Minister, but that during those meetings she raised two particular concerns about the implementation of his amendments, if the Government were to accept them. First, she raised the issue of the reduction in rates revenue that would come if the amendments were passed. The noble Lord asked me to draw attention to the fact that that would be offset by the increased investment in energy efficiency that would therefore result, including a reduction in the cost of bills, as well as the ensuing energy security and sustainability benefits that would come from the introduction of his amendments.

The second concern the Minister raised was about the classification of energy efficiency measures for valuation purposes when compared with renewables and energy storage. The argument here is that this would mean that almost any building works could potentially qualify: for example, replacement windows and anything to do with the fabric of the building itself. We understand what the Minister is saying about this and why she raised that point, but we would add that, while an insulated extension might have an incidental efficiency benefit, we believe—as does the noble Lord, Lord Ravensdale—that it should be possible to distinguish between changes that are mainly or wholly for the purpose of improving energy efficiency and those where the improvement is incidental. We should be able to differentiate between the two. The suggestion the noble Lord made is that the Government could look at tweaking the draft regulations on which they have recently consulted. It would be very constructive for the Government to discuss this further with the noble Lord to see whether this is an option going forward and whether it could actually be achieved.

We support the steps that the noble Lord is suggesting to encourage businesses to carry out energy-efficiency improvements. They are important because that would not only align with the UK’s climate and emissions targets but lead to long-term savings for ratepayers and bring about efficiencies all round. The recent increases in energy bills have created enormous uncertainties —very much so for high street retailers, who have been in a volatile market for some time since Covid—and the Government should explore incentives such as this. I beg to move.

My Lords, I listened carefully to what the noble Baroness, Lady Hayman of Ullock, said in support of the amendments tabled by the noble Lord, Lord Ravensdale. Looking at those amendments and their context, I think they present a viable option for the Minister to examine and respond to. It is important to consider where the benefit is likely to fall should these amendments be accepted. As I see it, it will primarily benefit SMEs above the small business rate relief threshold. That is not a guaranteed threshold, by the way; it is at the discretion of the Government of the day, from time to time.

For many of those smaller SMEs above that threshold, business rate costs easily exceed energy costs, even in this day and age. Therefore, for many of those businesses, their focus is on getting their rates down and getting the Government to do that, perhaps overlooking the need to make energy improvements, which they perhaps do not see as central to their business operation, nor producing a dividend that they can cash in good time. This amendment skilfully joins those two things. It offers, to those who find the rates burden excessive—and perhaps we could add “Who doesn’t?”—a mechanism for reducing them by investing in energy performance measures. I certainly agree with what the noble Baroness said about the shape of the guidelines, which would obviously be produced if these amendments were passed, and what those energy improvement measures should be and how they might be properly measured.

There is a clear incentive mechanism here, which is clearly needed because there is no doubt that businesses in that sector in particular are lagging behind on energy efficiency—for the reasons I have outlined: they have other business pressures on them and it is certainly not at the top of their to-do list. Also, they probably do not have an ESG policy or a policy statement committing their enterprise to getting to zero carbon by 2050. These are a band of enterprises which are core to the British economy, but they are not exactly headline-making businesses when it comes to developing their social and environmental policies. They need a nudge. To give them a nudge which reduces their rates bill seems a mechanism which merits careful exploration.

The measures in these amendments would be helpful in that hard-to-reach SME sector, often occupying hard-to-improve premises. To join those two things up would be very worth while. We cannot rely on reaching our 2050 targets for the built environment purely on the good will and common sense of hard-pressed SMEs, which have so much else to do.

There is a greater public good to be achieved. If the Government feel that there is any element of giving money away that they do not need to do, I would simply argue that this is, or could be, an important step in delivering that public good, which is reaching zero carbon by 2050—reducing our carbon emissions and avoiding climate extinction. I very much look forward to what the Minister has to say by way of response on behalf of the Government.

My Lords, I support these amendments. As we are at this stage of the Bill, I declare that I am a chartered surveyor, a registered valuer and a member of the Rating Surveyors’ Association. It is some time since my bread and butter was generated from dealing with non-domestic ratings; the concepts are well trod, but I will not claim to have any up-to-date knowledge on some of the finer points.

The noble Baroness, Lady Hayman of Ullock, mentioned some of the concerns that the Minister has put forward. My ears pricked up a bit, as they always do when I hear about ministerial concerns. The first was a reduction in revenue. Let us be clear: we are talking about not making an increase—not actually losing something that was there before. It is the increase created in value that is discounted under the Government’s proposals, for no more than one year. The purpose of these amendments is that the increase should not bite for a longer period. That is important, because the work to improve energy efficiency of buildings is sometimes only really justifiable over quite a long period of time. There is no instant fix. In the meantime, it has to be funded, by a loan or an imputed opportunity cost of money for that period. As I said at an earlier stage of the Bill, one year is simply too short and would be no incentive. The other question about the reduction in revenue is: what is better, not to be able to charge the increase in rates, or someone not to do the work at all because they consider that they should defer the evil day for doing it? There has to be some incentive all round.

The second point that the noble Baroness referred to about what the Minister had said was on the classification of energy-efficiency works in valuation terms. I really do not see that there is any particular difficulty with that. Valuers are dealing with these sorts of things all the time, whether they be tenants’ improvements that are disregarded for rental value purposes, which is actually the nearest open-market analogy to what one is dealing with in business rates valuation, or whether it be for some other purpose—the cost-benefit of some scheme or other. One obviously has to look at these things in the round. If somebody is just replacing the windows and nothing else, clearly they are doing a bit to the U-value to make it more efficient, but it is not a holistic approach. Alternately, if they are part of any type of scheme that one would put forward—that may come out of the further guidance that was referred to by the noble Lord, Lord Stunell—they will have to look at these things on a holistic basis, because you cannot just put a draught-proof strip on a door and expect your bills to go down. It does not happen like that.

These amendments are very important. I do not see the difficulties that the Minister raised in discussions with the noble Lord, Lord Ravensdale, so I wholeheartedly support this. The Government could afford to be a little more generous-minded over the whole thing. I encourage the Minister, when she is replying, to perhaps apply that metric.

My Lords, I am grateful for the amendments in this group presented by the noble Baroness, Lady Hayman of Ullock, and tabled by the noble Lord, Lord Ravensdale. They give us the opportunity to discuss this important matter again.

I assure noble Lords that we can and do keep under review the system of business rates reliefs and, in particular, how it impacts on matters such as energy efficiency. Where we see an opportunity to support energy efficiency and net zero through the business rates system, it is carefully considered.

The recent business rates review looked at this. As a result, eligible plant and machinery used at on-site renewable energy generation and storage, such as rooftop solar panels, wind turbines and battery storage, are now exempt from business rates until 31 March 2035. On-site storage used with electric vehicle charging points is also exempt. Low-carbon heat networks have also benefited from 100% relief from 1 April 2022, and this Bill will put that relief on a firm statutory footing.

Furthermore, any energy-efficiency improvements that meet the conditions for improvement relief will benefit from the measures in the Bill and not pay business rates for 12 months. Broadly speaking, these include energy-efficiency improvements added to the property by occupiers that improve the physical state or add rateable plant and machinery. In 2028, the Government will review the improvement relief scheme and I reassure the noble Earl, Lord Lytton, that the Bill includes a power to extend the relief beyond 2028. Additionally, energy-efficiency improvements that take the form of non-rateable items, which includes most process plant and machinery, will have no impact on the rates bill.

We understand the desire to go further and provide a more general relief for energy efficiency in buildings, but we do not consider this to be something that we can agree to, at this time, in this Bill. First, there are necessary practical questions about when and how energy-efficiency improvements impact rateable values and rates bills. Many energy-efficiency improvements are to the fabric of buildings, such as to the walls, windows and roofs, and how these improvements impact the rateable value of the property would be far from clear. We would need to be confident that the value of such energy-efficiency improvements could be accurately measured and captured in order to then provide a properly targeted relief.

As previously mentioned by my noble friend Lady Scott of Bybrook, and as was referred to by the noble Baroness, Lady Hayman, in her introduction, the Treasury also has to balance the desire for tax breaks against the need to fund local government and balance the books. These are difficult tax decisions, and it is correct that they should be considered by the Chancellor having regard to the full picture of the country’s revenue and spending.

However, given the interventions this afternoon, it seems appropriate to say a little more about the Government’s wider approach to energy efficiency in buildings. Last year, we announced a new long-term commitment to drive improvements in energy efficiency to bring down bills for households, businesses and the public sector. Our stated ambition is, by 2030, to reduce the UK’s final energy consumption from buildings and industry by 15% against 2021 levels.

For small and medium-sized enterprises, the Government have also sponsored an energy management standard publication to help businesses understand their energy usage and identify where they can make savings. We are also establishing a dedicated energy advice offering for smaller businesses to help them to reduce their energy costs.

Several capital allowances may also help businesses to make energy-efficient investments. For example, this year the Chancellor announced that we will allow companies to write off the full cost of qualifying plant and machinery investment in the year of investment. This is in addition to the annual investment allowance, which has been set permanently at £1 million, and the structures and buildings allowance.

I hope it is helpful to have this wider context on the record, alongside our reasoning about why a new relief is not necessary. I thank noble Lords and hope that they will not press these amendments.

My Lords, I thank noble Lords who took part in this debate and gave their strong support for the amendments of the noble Lord, Lord Ravensdale. It is much appreciated.

I feel that the Minister gave the reasons for the Government not doing this that I mentioned at the beginning, when I explained why we thought that they could, so I am not hugely convinced. It is good that the Government are looking at energy efficiency—it is really important and has not been taken seriously enough in the past—but, as the other areas that the Minister mentioned have been included, why not expand this to include the amendments from the noble Lord, Lord Ravensdale, and what they would achieve? Anything that improves energy efficiency should be encouraged, in a nutshell.

I hear what the Minister has said and I am sure that the noble Lord, Lord Ravensdale, will look carefully at Hansard, but I think it would be good if the door to discussion could be kept open. On that note, I withdraw the amendment.

Amendment 1 withdrawn.

Amendments 2 and 3 not moved.

Clause 4: Local rating: discretionary relief

Amendment 4

Moved by

4: Clause 4, page 15, line 36, at end insert—

“(4) Omit subsections (8A) and (9).”Member's explanatory statement

The intention of this amendment is to remove the prohibition on a billing authority giving relief on a hereditament occupied by a billing authority, a precepting authority or a GLA functional body.

My Lords, now that we have begun Report, I remind the House that I am a vice-president of the Local Government Association.

I have said previously that there are many good things in this Bill. When we have moved amendments, as we are doing today, the aim is to make it a better Bill. The Government—any Government—face huge challenges with business rates. Inflation-linked rises in the cost of business rates is one challenge, and I think it is generally acknowledged that business rates have simply got too high for many businesses to cope with. Proportionately, when you go back one or two decades, business rates are indeed very high.

A second problem lies with internet sales, which, frankly, are destroying the high street. One-third of retail sales are now online, and that is having a devastating effect. Just two days ago, the British Retail Consortium wrote to the Chancellor, calling on him to freeze property taxes in order to prevent further high-street closures. As the consortium said, a rise would have the impact of

“threatening the viability of many shops and hindering the industry’s capacity to invest”.

I subscribe to that view, and I hope that when we come to the Autumn Statement some indication will be given that that will be the Government’s intention.

As I said in Committee, while I welcome revaluations moving to every three years, I would prefer them to be every two years, because valuations that are more up to date reduce costs and confusion and make life easier for lots of businesses. I see this Bill as a staging post to getting to two years—we shall look at that in a future group. I would also prefer locally set multipliers and would like to think that the Government would look at greater fiscal powers for local government over the next two or three years. That said, this Bill makes positive changes, and I would now like to address the amendments that I have put down to make the Bill even better.

In moving Amendment 4, I will also speak to Amendments 16, 17 and 18. The intention of Amendment 4 is to remove the prohibition on a billing authority giving relief on a hereditament occupied by a billing authority, precepting authority or GLA functional body. These prohibitions prevent authorities awarding relief to premises such as markets which they own. This was a particular issue in the 2020 retail, leisure and hospitality relief, where billing authorities found that they could not give relief to premises of which they, or a precepting authority, were the occupier—including, for example, local authority markets. My amendment, which is supported by the Local Government Association and by the National Association of British Market Authorities, would address this problem.

There are in the country some 1,150 markets, of which 84% are operated or controlled by local authorities. They perform a vital role in the retail sector and our community infrastructure, and many have long histories. During the recent Covid pandemic, however, these markets were unable to enjoy the substantial financial help provided by the Government on business rates because of a restriction in Section 47 of the Local Government Finance Act 1988 that prevents a local authority giving relief to itself or to a precepting authority. Local authority markets were obliged to bear the full burden of business rates while many businesses and, indeed, markets operated by private and community organisations were able to take advantage of the substantial help provided by the Government.

In 2022, the National Association of British Market Authorities carried out a major survey of our markets. Stall occupation in many markets has fallen significantly from 2018, when the last survey took place. The number of traders continues to fall: five years ago, there were 32,000 market traders; last year, the number had fallen below 30,000. Many local authorities report having to subsidise their markets to enable them to continue operating. With the many demands on local authority budgets, there is a prospect of these subsidies being withdrawn to protect front-line services, which could threaten the continued existence of many markets, many of which are a venue for information on a wide range of public services, making available banking, library and health services where such services are no longer represented at other venues in the area.

The Government have previously changed their position on this general issue as they granted a specific exemption to Section 47, providing that local authority public conveniences should no longer be liable for business rates. This earlier concession provides added support for the amendment now being sought.

Amendment 16 would require the Secretary of State to consult on the benefits and practicality of a system of accreditation for rating advisers. This amendment seeks to explore an avenue to combat the rogue and unprofessional practices of some rating advisers. It is about having a consultation, because the new system defined in the Bill will get more complex, with new reporting requirements and demands for greater accuracy. There will be greater demand for rating advisers. In my view, such rating advisers should be accredited and maintain professional standards if they offer commercial services. Therefore, I advocate a consultation on what steps should be taken.

Amendment 17, supported by the noble Lord, Lord Black of Brentwood, who is unable to be here today but whom I thank for his support, provides that advertising rights in respect of social infrastructure sites, including bus shelters, other advertising rights granted by contracting authorities and public telephone kiosks shall be exempt from local non-domestic rating. The current business rates system is challenging the viability of advertising-funded social infrastructure and community services. It is now increasingly at risk. Yet these sites return value to local communities through rental payments, service provision, their installation, their very existence, their cleaning and their maintenance, as well as any other social investment, including living roofs, air quality sensors and solar panels, all of which help local authorities meet their net-zero targets. If a business rates exemption applied, it could lead to higher investment directly into local communities. Councils can benefit from rent, revenue and profit sharing currently amounting to around £143 million a year, paid directly to them, but it is claimed that the new legislation that the Bill represents puts this at risk.

From a recent article I read on the matter, the problem seems to be that business rates may increase every three years. If I had my way, there would be a two-yearly review, so it is possible that in some cases business rates would increase every two years. Industry agreements with councils, however, typically have a term of seven to 15 years, so business rates may therefore increase at least five times during a standard contract term. That assumes that business rates are increasing—which they could—so regular changes to business rates would make financial planning for such contracts much more difficult than it currently is and would require the industry to hedge against future rates increases. It may well impact on the amount of support that local authorities have.

There are 36,000 advertising sites subject to business rates. Every one is valued, invoiced and paid individually. There is a huge amount of work for the Valuation Office Agency, local councils and operators. Yet social infrastructure sites are low-value, accounting for only a quarter of all business rates income generated by advertising rights. This amendment is about only social infrastructure sites. I hope the Minister will be able to respond positively to doing some further work on this. I accept that we need to build support across all parties and levels of government, but there is an interest here in supporting our social infrastructure.

Finally, I come very briefly to Amendment 18, which states:

“The intention of this amendment is to introduce into law the power to make anti-avoidance regulations, as provided for in Part 4 of the Non-Domestic Rates (Scotland) Act 2020. The amendment mirrors Part 4, with such changes as to make it applicable to UK law”.

It would help to have further action on business rates avoidance, along the lines introduced in Wales and Scotland, to ensure that the rules on reliefs, such as empty property and charitable relief, are applied fairly. I know the Government are considering this issue and any update the Minister can give would be helpful. It is estimated that around 1% of total business rates income—around £250 million—is lost to business rates avoidance each year. It may be only 1% but it is a substantial sum and therefore anything the Government do to replicate what is now happening in Scotland and Wales would be very helpful in England. I beg to move Amendment 4.

My Lords, I want briefly to address some of the amendments in this group, so ably moved and spoken to by the noble Lord, Lord Shipley. I note that in his Amendment 4—and to some extent in the question of social advertising—he is referring to the purposes for which a hereditament is occupied. We already have this situation in the sense that if a charity occupies a shop for charitable purposes, it gets a degree of mandatory relief. Possibly the only difference is that the charity must have a Charity Commission registration number, and therefore its whole constitution, terms of engagement and memorandum and articles of association are clearly laid out.

The only thing I would say about Amendment 4 is that it is important to make sure that some sort of asymmetry does not come in as a result of using the purposes of occupation approach; otherwise, I can see that there might be accusations of unfair competition. I therefore see no reason to object to the billing authority’s discretion being exercised in its own favour, subject to there being a properly laid out policy that makes it clear to everybody what it is doing and is possibly subject to democratic processes.

I suppose that Amendment 16 should warm the cockles of my heart in terms of the accreditation of non-domestic rating advisers. Of course, I come from the background of being a fellow of the Royal Institution of Chartered Surveyors, which is an accreditation body in its own right. Indeed, a large amount of the edifice of “check, challenge and appeal”, which was put in place by the Government to deal with the huge backlog of rating appeals many years ago, was to do with the fact that unqualified people were putting in blanket appeals and clogging up the system. The accusation was that many of these were totally unmeritorious and were simply wasting everyone’s time—so there is a case for doing it. There was a case for doing it instead of going through the malarkey of “check, challenge and appeal” in the first place, and all the powder and shot and grief occasioned thereby—but we are where we are and if it can help streamline the business so that people are bound by codes of conduct and can be called to account for their actions, all well and good.

I shall comment a bit on Amendment 18, which is also in the name of the noble Lord, Lord Shipley. I sent him today—I apologise to him for not having sent it a lot earlier—the consultation that is going on regarding avoidance and evasion. In that is some business about who does rating work and rogue rating surveyors. I believe that the consultation finishes on 28 September. I hope there will be further discussion with the industry and stakeholders about how it is going to formulate—but the point made by the noble Lord is well made, and I am glad to see that something is in progress.

My Lords, I think the noble Lord, Lord Shipley, for his amendments and for his clear introduction to them. I also thank the noble Earl, Lord Lytton, for his contribution.

As we have heard, these amendments relate to rating agents, anti-avoidance, discretionary relief and viability rights, all of which are really important issues that we need to discuss. Amendment 4 would remove the ban that currently prevents relief being given to certain buildings. We know that the Local Government Association is very supportive of that amendment, because the current rules prevent councils from giving discretionary relief to their own hereditaments. As we have heard, both now and in Committee, this is particularly an issue with local authority markets. It became problematic particularly during Covid-19 because local authorities were unable to give those markets the business rates relief that other businesses were able to benefit from, which meant that many local authorities had to subsidise those rates in order for the markets to continue operating.

I am assuming that the ban is to prevent conflicts of interest; perhaps the Minister could confirm why it is in place. If that is the case, will the Minister consider whether there any added flexibility should brought into this prohibition so that, in times of particular need, councils can be flexible? If the Government are not going to accept the amendment, let us look at what else we could do to help.

Amendment 16 would start the process for accrediting ratings advisers. The reason I want to talk about this amendment in particular is that there seems to be an increasing number of reports of rogue agents claiming that they can help businesses. It seems to be a growing problem. There are concerns that the situation will be further exacerbated when the Government bring in annual returns and the duty to notify in their reforms, partly because that complicates the system.

Our concern is the impact of that on the smaller retail and hospitality businesses in market towns right across the country. They may not be seeing the reductions in their rates bills that they should be in the revaluation from 1 April, making them more vulnerable to approaches by rogue rating surveyors who promise that they will help them negotiate a new revaluation but do not deliver and disappear, leaving the businesses high and dry. That is our particular concern. So do the Government recognise that this is an increasing problem? If so, perhaps we should look at tackling it in the way in which the noble Lord, Lord Shipley, has proposed. We cannot allow this situation to continue and to get worse, because it will affect many small businesses that simply cannot afford it.

Amendment 17 exempts social infrastructure sites—such as bus shelters and telephone boxes—which have advertisements from paying business rates. I am not sure that the Minister will have this figure at his finger- tips, but it would be interesting to know how much is currently generated from this kind of advertising: what impact are we talking about?

Finally, Amendment 18 relates to anti-avoidance. I know that the Government have recently consulted on this, so it would be good to know exactly what action they are looking to take.

My Lords, I thank all noble Lords who have contributed to this relatively short and interesting debate on a wide-ranging subject. It is good that the noble Lord, Lord Shipley, has given us the opportunity to look into these matters a little further.

I will go through the amendments, but not necessarily in chronological order, so noble Lords will have to bear with me. I understand that the noble Lord, Lord Shipley, tabled Amendment 16 based on his concerns regarding the conduct and sharp practices of some rating advisers, as mentioned also by the noble Baroness, Lady Hayman of Ullock, and the noble Earl, Lord Lytton. I sympathise with and recognise the concerns behind this amendment and welcome the opportunity to discuss the work the Government are doing to address them.

I reiterate in the clearest terms that most rating agents are legitimate organisations registered with a professional body. Nevertheless, as my noble friend the Minister has said previously, we know that a minority of agents seek to take advantage of their clients through predatory practices and exploitative contracts, or by actively promoting rates-avoidance strategies. The Government have published a wide-ranging consultation, as mentioned by the noble Earl, Lord Lytton, on avoidance and evasion in the business rates system. The consultation includes a specific chapter on those rogue agents with whom this amendment is concerned and seeks views on how the Government could address any issues arising from their conduct. While there is no regulatory regime that covers all rating agents, a set of agent standards has been jointly published by the three professional bodies: the RICS, the Rating Surveyors’ Association and the Institute of Revenues, Rating and Valuation.

Recognising the importance of the professional bodies to the system, the Government will, as a matter of course, take the views of these organisations into account and will be engaging with them through the ongoing consultation process. The Government also provide advice on GOV.UK on how to find a reputable agent and the considerations that businesses should take into account when deciding to appoint an agent. Furthermore, the Valuation Office Agency is currently developing a standard for all rating agents, in alignment with existing HMRC agents’ standards.

The Government are keen to work collaboratively with rating agents to tackle poor practice. Our aim is to find a balanced solution that prevents sharp practice but does not impinge on the legitimate work of agents up and down the country.

Amendment 4 would remove the legislative bar which prevents local authorities awarding discretionary rate relief to their own properties. I understand that the concerns of the noble Lord and the noble Baroness are primarily with the application of business rates to local authority-run markets. The Government fully recognise the contribution that markets make to the vibrancy and diversity of our communities. We are supporting local authority-run markets with access to the £2.6 billion towns deal programme and the £1 billion Future High Streets Fund. We have also made permanent the permitted development rights which enable markets to be held by local authorities for an unlimited number of days.

However, enabling authorities to relieve their own rates costs in relation to marketplaces, and any other properties they occupy, would overturn an important and long-standing principle and not be the right way to support markets. Local authorities have a distinct dual role, as mentioned by the noble Baroness, functioning as both ratepayers and administrators of the business rates system. Given this dual role of authorities, they cannot in all circumstances be considered the same as any other ratepayer.

There is therefore a long-standing principle that local authorities should not have the power to award discretionary rate relief to the properties they own or occupy, just as central government does not, and indeed should not, hold the power to reduce its own rates liabilities. Of course, should the Government wish to relieve local authorities of specific rate costs then, subject to the will of Parliament, they can choose to do so. This could be achieved by providing a mandatory relief with the specific criteria set out in legislation, as was implemented recently for public toilets.

Amendment 18 would provide the Secretary of State with a power, subject to consultation, to lay anti-avoidance regulations. I understand that it seeks to mirror the approach taken by the Scottish Government. As I have said, we are currently consulting on business rates avoidance and evasion, so the noble Lord will understand that there will be a proper time to consider possible interventions. Through this process, we are engaging closely with those who have the clearest knowledge of these practices across business, agent and local government groups. The Scottish regulations, as mentioned by the noble Earl, Lord Lytton, have only recently come into force. However, as part of our consultation, we will work alongside the devolved nations to broaden our understanding of the issues faced and the initial impact of those regulations.

Amendment 17 seeks to remove from business rates advertising rights on structures such as bus shelters. The rating of advertising has been a normal part of business rates since the 19th century. Advertising is a non-domestic use of land which can be quite valuable. Rents—sometimes considerable rents—are often paid to secure sites for advertising, so it is quite correct that advertising is included in business rates, along with other non-domestic uses of land and buildings.

The noble Baroness, Lady Hayman of Ullock, asked about the value of those sites. For advertising sites on bus shelters, the revenue for local government is not minimal. For electronic or digital displays at bus shelters in central London, the annual rates revenue is between £1,400 and £4,000 per display, depending upon their location. Even at the other end of the scale, static paper advertising displays outside London can still see revenue in the low hundreds of pounds each.

As we have heard, the amendment would exempt advertising only at social infrastructure sites, such as bus shelters, but the logic for this is not clear. Of course, a local authority might use bus stops to advertise jobs or local initiatives, but in the same week, that screen might host adverts from mobile phone operators or fast-food chains. What, then, is the social need that justifies a tax break? It could also create a commercial advantage for advertisers at such sites compared to companies using other sites, which would continue to pay rates. Such other sites may be only across the road from a bus shelter, for example on the side of a building, and therefore be in direct competition. Accordingly, I do not think there is a case for special treatment of advertising on bus shelters compared to other sites or sectors more generally.

I am grateful for this debate and to noble Lords for raising these three important issues. I hope the noble Lord, Lord Shipley, will be prepared to consider withdrawing his Amendment 4 and not pressing others.

My Lords, I thank the Minister for his reply, which I found very helpful. I shall withdraw Amendment 4. I hope that all the amendments I have put my name to today will form part of a constant review of business and non-domestic rate structures, because the system is showing serious signs of stress. I do not think it can continue as it currently is. As a consequence, Governments of whatever persuasion will have to address the fact that reform of business rates is increasingly essential. I beg leave to withdraw my amendment.

Amendment 4 withdrawn.

Clause 5: Frequency with which lists are compiled

Amendment 5

Moved by

5: Clause 5, page 16, line 4, leave out “third” and insert “second”

Member's explanatory statement

This amendment would require central non-domestic rating lists to be compiled every two years.

My Lords, I move Amendment 5 in my name, and will speak also to Amendments 6 and 7, which would, in effect, do the same thing. My name also appears on Amendment 15, which is in the name of the noble Baroness, Lady Hayman of Ullock. I will leave her to speak mostly to that amendment. It is about review and the point I made a moment ago—that we have to keep reviewing business rates and how they operate because of the challenges currently faced.

I have tabled these amendments so that we can hear again from the Government the justification for a three-year review, as opposed to the two-year review which I would prefer. I prefer two years because it has many advantages. It would be more efficient and reflect changes in valuations more quickly. It could reduce work and it would be really good if it could be done.

I understand that there is already a reduction to three years and to reduce it further would be pretty hard to do as quickly as it would have to be done. Therefore, I would probably accept the Government’s advice that they are mindful of the need to move to two years, that there are major advantages to it and that that is the sense of the journey they are following. It would be very helpful. I have tabled Amendments 5, 6 and 7 so that the Minister can respond and confirm again that it is the intention to get towards a system that does a business rates review every two years. I beg to move.

My Lords, I thank the noble Lord, Lord Shipley, for his amendments. This group is all about revaluations and reviews of rates. The first three amendments, which the noble Lord, Lord Shipley, has introduced, would change the timeframe for compiling non-domestic rating lists. I thank the noble Lord, Lord Thurlow, for his support and encouragement for my Amendment 15, and I support his Amendment 19. Those amendments are looking for broader reviews of the business rates policy. The intention is to look at how frequently we should review our business rates.

One reason we have concerns about the current system—and it is good that the Government have looked at this and reduced it to a certain extent—is that if reviews are done only over a certain period, the rest of the system needs to be fit for purpose. We are concerned that the current system makes it extremely hard for businesses to appeal their assessments. If you have an assessment that is high, it is difficult to appeal and to manage that, which creates difficulties, particularly for small businesses. The whole system needs to be much more fit for purpose if it is to work for businesses and for local authorities.

The Labour Party’s policy is to scrap business rates altogether and to replace the current system with one which works to incentivise investment. We think there should be more frequent revaluations. If property values drop for particular reasons outside a business’s control, there should be the ability to do more frequent revaluations. Where businesses are caught out in this way, bills should be reduced. There should be incentives and rewards for businesses which, for example, move into and invest in empty properties. It is about encouragement. Earlier, we talked about green improvements and energy efficiency and how you encourage businesses to invest in this way. The whole system needs to be a bit more nimble and more effective in supporting small businesses. The Government need to work with businesses, people working for those businesses and public bodies in order to get a system that is genuinely fit for purpose and supports local businesses and local authorities in the way it needs to.

My Lords, I declare my interest as a former chartered surveyor with interests in rating. This amendment and the rest of the amendments in this group clearly call for a review of business rates. I am pleased to add my name to the amendment in the names of the noble Baroness, Lady Hayman of Ullock, and the noble Lord, Lord Shipley.

A change which had been promised and which was long overdue is this review of business rates. It is particularly disappointing that the result of the review will be declared so shortly after the end of the progress of the Bill. It is the wrong way around. A redefinition of use classes—not for planning but for non-domestic rates purposes—is certainly required in order to reflect the changes that have taken place in the real world. Should Airbnb properties which are professionally managed as such be subject to council tax or to non-domestic rates? Likewise, one can follow that thought process through to the high street. Some of the changes of use in the high street to non-retail property do have specific use classes, but this needs to be brought up to date.

Should a sole trader with one or only a handful of outlets receive start-up incentives to boost their chances of survival? As Amendment 15 seeks, small retailers really should have the thresholds for relief purposes reviewed urgently. Dozens and dozens are going bust in the high street every month, on the watch of a Conservative Government whose mantra is to support business, and particularly small businesses. I just do not understand why there has been such neglect.

I turn to Amendment 19 in my name. This is one of several amendments requesting a general review of non-domestic rates. As part of this, I support the reference in Amendment 15 to a two-year review. That is taking it at quite a racy pace compared with the current five-year programme, but I think we should see it as the objective in the process of increasing the frequency of reviews.

We also need the Government to address the imbalance of the rates burden between the high street retailers and the big-box dark retailers—the internet retailers. We know, of course, that many smaller high street retailers operate mail order businesses. That is not what I am referring to; I am referring to enormous warehouses, measuring hundreds of thousands of square feet. We all know of Amazon—this is effectively the Amazon amendment. The small retailers in the high street cannot compete, and rates alone create a massive disadvantage to the high street retailer. What are we doing? We are doing nothing, and we should be doing something about it.

The impact is felt in the high street as retailers lose competitiveness and the unfairly subsidised competition gains more and more market share. It is not just small, independent businesses; it is the national chains as well. It was in yesterday’s Times that the chief exec of one of the largest national retailers, controlling numerous brands across the country, including hundreds and hundreds of high street units, explained that, for them, in a number of cases, the rates that they pay are now as high as the rents that they pay. That implies that rateable value is 200% of where it should be. Rateable value is meant to be a reflection of rental value. We then apply the rate poundage, or whatever the latest phrase is for it, which is approximately 50% above. That should take it back, at best, to 50% of rent paid by a retailer. That article, from a chief executive, said that the rent and rates payable were the same in many cases for their properties on the high street. It is a disgrace, and it should not be accepted.

Revising non-domestic rates is not going to be easy, but the review—which we all look forward to with great anticipation—will no doubt tell us how the Government think that it can be done, if indeed they want to do anything about it. My Amendment 19 simply asks the Government to assess the potential to address the injustice. Experts will assist—and we have been talking about the regulation of experts and cutting out the rogues and rogue agents. Those experts are the specialists, and they should have an important role in redesigning the current system of NDR.

As the noble Lord, Lord Shipley, stated, the system of non-domestic rates is effectively broken. The heart of my Amendment 19—the Amazon amendment—is simply to introduce fairness for high street retailers and the small businesses in the high street. I hope that the Government will respond with their intentions, specifically to address what I describe as the Amazon factor.

I strongly support Amendment 19 from the noble Lord, Lord Thurlow. I too read the article in the Times yesterday to which he referred. The fact of the matter is that, while rents have decreased substantially due to inflation and other measures, rateable values are very high and the rates payable are now no indication at all of the actual rental value of the properties. That is one of the reasons why, in an unstable market, it is very important to have the valuations done as often as possible, to reflect the actual rental value of properties.

The second point on which I very strongly support the noble Lord, Lord Thurlow, relates to what he has called the Amazon amendment. This is the one critical factor that would bring rates into the modern world. Unless we address this critical issue, we are ignoring the reality of modern-day retail life. It is critical that the Government address this Amazon amendment as soon as they possibly can. If one reads the professional press—such magazines as the Estates Gazette—this is always raised by every retailer as one of the greatest iniquities, and possibly the greatest iniquity, of the current rates system.

My Lords, I congratulate the noble Lord, Lord Thurlow, particularly on Amendment 19. It is a pleasure to follow the noble and learned Lord, Lord Etherton, on this because it strikes at the heart of what I have always felt about the rating philosophy. The noble Lord, Lord Shipley, inferred a few minutes ago that rating is demanding too much of the tax base to which it is applied. I have made the same point myself over many years. I remember one eminent rating surveyor telling me, “You know, once the rate in the pound starts to get near to 50%, things start changing. People’s attitudes start changing”.

I am afraid that HMRC, which has global responsibility for this, has been extremely slow to catch up with what is happening and to realise the paradigm shifts created by the increasing burden of business rates. Leaving aside things such as small business relief and so on, I did a calculation—a few years ago, so the analogy is even more potent now—showing that business rate payers in small premises of between 1,000 square feet and 3,000 square feet were paying materially more by reference to property value and square footage occupied, by some considerable factor, than their residential counterparts. I use that because when I first started working in this area, in what was then known as the Valuation Office, all those years ago, there was a common rating system, and residential and commercial had a common base. That is why I got little old ladies in cottages in Lewes High Street in Sussex complaining that the pub next door, which sold all this liquor, had a rating assessment that was half theirs.

What has happened is that, because of the burdens, markets have shifted. The noble Lord, Lord Thurlow, referred to traders who operate from industrial estates— I think that was one of his examples. I used to joke about this, because the archetypal online operation was a stockroom that was a van on the motorway somewhere, a showroom that was a glossy website, a till that was an online payment portal and a communications system that was a pocket mobile and an email address—this was how the thing operated. People have got very slick, because now you have a big industrial shed at the front of which is a retail and trade counter, which occupies quite a small part of the footprint, and the rest is a big storage shed. We all know the names they have. They sell plumbing, electrical equipment, household goods, all of which you can order online. This is one of the difficulties, because seeing the opportunities of online, many of these operators have seen that the two operate very beneficially with the physical hereditament they occupy as well: the two have a synergy that works effectively. This is absolutely a moment when the Government need to take stock.

The amendment of the noble Lord, Lord Thurlow, refers to high streets. I will return to this in a few minutes when I get to amendments of mine. Unless we get this right, the attrition of high streets will continue, and they will change into something that is not a general purpose destination for people wanting to shop for everyday goods. They will become a sort of entertainment centre with restaurants and bars and the night-time economy. That may be a good idea, but there is an area of conflict here. If we want to bring residential property back into town centres, then residential occupiers do not relish the thought of people turning out at eleven o’clock at night, having had a jolly good time at the bar. That is one of the issues. Another issue is that a lot of these places need to be serviced; they need to have their bins emptied. If there is a local authority or contractor refuse lorry turning up at 6 o’clock in the morning, people will get fed up with that.

We have to start getting this right, as to what the complementary uses are and how to deal with them. More particularly, how do we reverse this process of the alienation of people—who are otherwise willing and able traders—from our traditional high streets? This matters because that is how they are designed and built. That is the social construct that led to the buildings being built and appearing the way they are. I shudder at trying to transform them into totally different uses. When I see things like permitted development for change of uses in town centres, I worry about what will happen and whether that is an irreversible change that will produce more of the conflicts that I have referred to.

Although I slightly shudder every time somebody mentions a review of business rates, because we seem to have an awful lot of them, I think that this is a body of work that needs some serious thought from academics, practitioners and particularly from people like valuers and retailers, because that is where this analysis comes in. The valuers are not making the roles; they are simply interpreting how people go about their business and do their trade. The derivative is a value, and whether it is a rateable value, a capital value or for investment purposes, we need not alienate these purposes. I congratulate the noble Lord, Lord Thurlow, because he has raised an absolutely fundamental point in relation to non-domestic rates.

I thank noble Lords for their passionate speeches. It is clear to me that we share the same objectives; we may just have slightly different ways of getting there. I hope I can satisfy noble Lords by the end of my speech.

This group of amendments returns to the theme of the effectiveness of the business rates system as a whole. Amendment 15 in the name of the noble Baroness, Lady Hayman of Ullock, and Amendment 19 from the noble Lord, Lord Thurlow, would require a further review of the business rates system to, respectively, expand small business rate relief or rebalance the tax burden between high street and internet retail. Amendments 5, 6 and 7 from the noble Lord, Lord Shipley, concern the frequency of revaluations.

I turn first to whether we should conduct a review of the tax. As noble Lords are aware, the Bill is the product of the Government’s own comprehensive review of the business rates system. That review was delivered in around 18 months in 2020 and 2021, which allowed us to do justice to the significance and complexity of the exercise. The review considered a wide range of evidence and reached clear conclusions about the effectiveness of a tax as a means of funding local services and the limited evidence in support of a fundamental overhaul, but also the opportunities for reform.

The Bill seeks to deliver more frequent revaluations and to enable the abolition of downward transitional relief—two of stakeholders’ key asks—alongside other measures. Making these revaluations more frequent, as we are doing with the new three-yearly cycle, will make the tax more up-to-date and therefore fairer. We agree with noble Lords. I accept that some would like us to go further, but a majority of respondents to the review supported a three-yearly revaluation cycle. Moving from every five to every three years is a major reform of the system, and to do this we must implement significant changes to how ratepayers and the VOA interact, which will take several years to bed in.

I repeat that we will keep the frequency of revaluations under review. It is also our aspiration to go further by shortening the antecedent valuation date gap, where possible. I recognise that, even with more frequent revaluations, there are many who are concerned by the tax burden on our high streets and the potential competitive advantage of internet retailers, but I do not think that this justifies—as the amendment from the noble Lord, Lord Thurlow, implies—departing from the common standard of rateable value. There is a core principle in rating that all properties subject to business rates are assessed to the same standard of rateable value.

In the Government’s review of business rates, there was a strong majority support for retaining the existing basis of rateable value and industry-recognised methodology. Valuing properties by reference to the evidence on the level of rents, which is agreed by landlords and tenants for that property class, provides a trusted and credible basis for taxation. That is especially so when combined with more frequent revaluations, so that relative changes in the open market rental values result in rateable values updating promptly.

By way of addressing the imbalances between high street and mainly online retailers, as well as ensuring that properties are taxed fairly, based on more accurate valuations, the Government also provide extensive reliefs where support is most needed. Some 720,000 properties, including many smaller retailers, continue to pay no rates thanks to the small business rates relief. That is over one-third of properties, with an additional 76,000 benefiting from reduced bills.

On the amendment from the noble Baroness, Lady Hayman, the Government’s view is that the existing eligibility criteria ensure that the relief effectively targets the smallest businesses, where help is needed most, and provides a good balance between support and the costs to the Exchequer. In addition to that existing relief, we have chosen to provide extensive support where it is needed, with £13.6 billion announced last autumn.

It is important for businesses to understand whether they are eligible for reliefs such as the small business rates relief, and the sources of information that they can rely on. Local authorities have a vital role in communicating with local businesses, including high- lighting available reliefs and explaining other changes in the business rates system. Businesses are encouraged to approach their local billing authority for advice on what support is available. This year the Government updated their own extensive guidance on GOV.UK about business rates reliefs, including the small business rates relief. We work closely with the Local Government Association, the Institute of Revenues, Rating and Valuation and individual authorities to understand what works locally, and we will continue to engage with the sector to ensure that aspects of the rates system, such as the small business rates relief, are working effectively.

In the absence of the Minister, my noble friend Lady Scott of Bybrook, I have attempted to explain the context of the Government’s review, how the Government continue to support small businesses with their tax liabilities, and the sources of practical information available to ratepayers. The Government’s firm view is that the recent comprehensive review was thorough and its conclusions clear, and therefore that no further review is needed at this time. On that basis, I hope that noble Lords will not press their amendments.

Before the Minister sits down, perhaps I might clarify something I said that, I think, might have been misunderstood. In the context of Amazon—I am sorry to use a particular company, but we all know what I mean by it—I did not say that I wanted to redefine the way in which the non-domestic rating system works; I simply want to redefine the use of the property. A property such as an Amazon warehouse is being used for retail and should therefore be described in the rating register as retail property in some form, not as warehousing: it bears no relation to warehousing use.

As the noble Lord will probably appreciate, I am not an expert in this area, unlike him. But I will contact the team and make sure that he has a thorough answer in writing. I believe that some of these issues have already been addressed in this review, but I will confirm that in writing to him.

My Lords, I am grateful to the Minister for her reply, and I was pleased to hear her say that we share the same objectives. I very much hope that we do and that we can continue to do so, because there are some fundamental issues here. Theoretically, I do not regard business rates as a good tax, in the sense that I think there are other ways in which taxation could be raised from businesses. However, it is the system that we have, and altering it would take a large amount of time: it would take several years to get movement on that. For that reason, I ask the Government to look very carefully at some of the suggestions that have been made in your Lordships’ Chamber this afternoon. The point that has been made by the noble Lord, Lord Thurlow, is very important. A warehouse should not be counted as a warehouse for business rates taxation if it is delivering a retail function. That is my first point.

My second point is on Amendment 15, moved by the noble Baroness, Lady Hayman of Ullock. It relates to the possibility of reducing the small business rate relief threshold. I take the point the Minister made about the number of properties that have already qualified for business rate relief, but I think the Government ought to look at that being increased. I thought the point made by the noble Lord, Lord Thurlow, was hugely material: business rates used to be half the rental level but have now become almost 100% of the rental level. This is simply not tenable: we cannot go on with that. As the noble Earl, Lord Lytton said, we are witnessing the continued attrition of our high streets and something has to be done about that.

The third point I make on what the Government could do urgently is not to increase business rates by the current level of inflation. I think the Government may well be willing to consider that—I hope the Chancellor would. All these things matter because business rates have got out of balance. Having said that, I beg leave to withdraw the amendment.

Amendment 5 withdrawn.

Amendments 6 and 7 not moved.

Clause 10: Disclosure of valuation information to ratepayers

Amendment 8

Moved by

8: Clause 10, page 19, leave out lines 4 and 5 and insert—

“(2) Subject to sub-paragraph (4), V must disclose the information to P if V considers it is reasonable to do so.”Member’s explanatory statement

This is to reinforce the need for a reciprocal duty of disclosure on the VO by making disclosure mandatory save for the exceptions in sub-paragraph (4).

My Lords, I shall speak also to Amendments 9, 10 and 11 at the same time. All of these cover slightly different things, and I will try and skate through fairly quickly. In each case, I am simply looking for some reassurance from the Government Bench that these matters are in focus and that certain things will be done.

The first is the question of disclosure of information between the Valuation Office and a ratepayer’s surveyor. It may well be that practices have grown up because of these rather unsatisfactory, unqualified surveyors, who have been going around for some time. There are many fewer of them than there used to be. It may well be that the Valuation Office has somehow built a defensive carapace against this, faced with representations that might not have been all they were cracked up to be. But at the end of the day, there is this question, which the noble and learned Lord, Lord Etherton, will understand, of equality of arms: there has to be some common sharing of information and data relating to the value of the hereditament, otherwise negotiations really are in a pretty pickle and, in many cases, will get into worse level of dispute than is absolutely necessary.

As my explanatory statement says, Amendment 8 would reinforce the need for a reciprocal duty of disclosure on the valuation office by making disclosure mandatory, except for the exceptions in sub-paragraph (4), which is basically a data protection exception. I would very much appreciate comment that this will happen and there will be guidance within the Valuation Office Agency to deal with this—to improve transparency and to reinforce confidence.

Amendments 9 and 10 relate to the question of an annual return or confirmation requirement on ratepayers, which is a new provision that the Government are seeking to insert. I had to check my notes from the previous stage of the Bill, but according to the information I had, this would result in some 700,000 hereditaments having to make an additional return or being at risk of making an additional return. The point that was made to me, and that I continue to make, is that this is potentially excessive. In discussions with the Bill team and the Minister, we were given reassurances that there would be piloting and that they would not roll this out unless it was running smoothly and the online system for reporting was robust. I would simply like to have reassurance on that point and that the results of the pilot will be a matter of discussion with stakeholders, so that we do not just have a one-sided arrangement on that. The truth of the matter is that many ratepayers do not understand the terminology because they are traders; they are not people who are involved in getting to understand what a “hereditament” is—as I may have said at an earlier stage of the Bill, it is not a word easily conjured with. There is a great deal that they do not understand about making returns as they are at the moment, so there is a need for a process of general simplification. That deals with Amendments 9 and 10, which are connected.

Amendment 11 relates to something slightly different, which is consequential on this whole reporting business, and that is that, when a business ratepayer advises the Valuation Office Agency that there has been a change, the matter is dealt with promptly, whether it is a reduction or an increase. An increase obviously affects the income from the rating scheme as a whole, but a reduction is something that directly affects the ratepayer. At the moment, I understand there is still quite a considerable backlog within the Valuation Office Agency. The concern is that, unless the backlog is cleared and unless there is better funding and resourcing within the Valuation Office Agency, these things will be held up. The idea here is that ratepayers in particular should not receive retrospective increases in their rating liabilities unless the valuation office acts promptly on receipt of ratepayer-provided information. This is to give an incentive to the valuation office to make a prompt approach and deal with it, but it is all to do with speed of turnaround of necessary changes. Not everything that is advised to the Valuation Office Agency will be relevant, but quite a lot of it may be. If we are going to get into this new era of reporting 60 days after an event has happened and at the end of the year, then we need some reciprocity in relation to that. That is the gist of those amendments.

I just add that, although the Minister has not spoken to them yet, I support government Amendments 12 and 13. They are necessary and appropriate. I have no real views on Amendment 20 either way; it is an administrative consequence of other amendments. I beg to move.

My Lords, I rise to support Amendment 8, moved by the noble Earl, Lord Lytton, and particularly the reciprocal duty of disclosure by the VOA apart from for data protection reasons, to which the noble Earl referred—although I object to the latter myself. However, I think it is repugnant that, in this country, where we so treasure transparency in the law and all its constituent parts, the government department responsible for non-domestic rates does not have to reveal its evidence to an applicant, which may be a small business struggling to survive, unless the rates are challenged formally. To challenge a rating assessment formally inevitably requires that small business, possibly teetering on the edge of survival, to instruct a rating specialist to advise it at a fee. Only when there has been a challenge is the valuation office required to reveal its evidence. Why on earth do we tolerate this opaque behaviour on the part of a government agency? It is fundamentally wrong, and I congratulate the noble Earl, Lord Lytton, on raising this very important issue. If it did not involve cost in this way and impact those vulnerable smaller businesses particularly—we are talking not just about shops but about businesses, offices and small industrial properties—it would be less sensitive. But I think this is very important, and I hope the Minister will be kind enough to give us a full response.

My Lords, I also support Amendment 8 in the name of the noble Earl, Lord Lytton. Ideally, it is worth avoiding appeals. Appeals can be avoided only if there is confidence that you have the material available. That presupposes a sharing of information that is open and transparent. One of the criticisms that is often made is of the time taken in appeals, the obscurity of the role adopted by the valuation office and its failure to disclose information. It seems to me that it is in everybody’s interests, economically and in terms of management time and stress, to avoid appeals by an early disclosure of information where requested.

I thank the noble Earl, Lord Lytton, and others for speaking to these quite technical amendments. As the Minister said previously, I would not say that I am an expert on these issues, but it is very important that they have been raised. It is particularly important with valuations and penalties that we properly understand the implications of the Bill.

I have one question for the Minister on government Amendment 12, which limits the daily penalties that are applicable. I wonder where the figure came from and whether the Minister thinks it will be a sufficient deterrent.

The noble Earl, Lord Lytton, has tabled a number of amendments related to the provision of valuation evidence to the Valuation Office Agency. I am grateful for the opportunity to address this again, following the earlier debate in Committee, and to explain how the Government have listened to the suggestions heard in that debate.

As has been noted previously, these reforms are essential to securing the sustainable delivery of more frequent revaluations, which I know noble Lords support. Clause 10 consists of a power to allow the VOA to share valuation information with ratepayers. Amendment 8 would make this power a duty, and I will explain why the Government cannot support this. The Government are absolutely committed to providing greater transparency about how rateable values are calculated. The VOA has recently consulted on how, in practice, they intend to use this clause. It is an important part of the reforms and a key plank of our commitment to ratepayers. However, as that consultation reflects, we cannot overstate the importance of privacy rights. The information relied on by the VOA in establishing a valuation will, in some cases, include personal and sensitive data, so it is right that we take an approach which is common among other data gateways; namely, that the gateway is permissive: it permits the VOA to disclose information rather than placing a requirement to do so. This approach safeguards the interests of ratepayers and their data, but I am clear that within the necessary constraints of the clause we are committed to the transparency of valuations.

Amendments 9 and 10 from the noble Earl, Lord Lytton, seek to remove the requirement in Clause 13 for rate- payers to submit an annual confirmation as well as a notification to the VOA when there is a notifiable change related to their property. On this amendment, the Government are mindful of those concerns. Of course, we should not burden businesses where we do not need to. However, we have a safeguard in place for that very purpose. The Bill provides that the annual confirmation can be brought into force later than the other parts of the VOA duty, and the Government have been clear that we will not bring it into force until we have ensured that it will be sufficiently straightforward for ratepayers to complete. We intend that completing the annual confirmation should be a matter of only a few minutes for those who are already up to date with the duty. Moreover, the annual confirmation will serve a valuable purpose for ratepayers, as well as the VOA. By providing a further opportunity to ensure that they have complied with the duty, the annual confirmation will act as a safety net.

Amendment 11 seeks to prevent the VOA backdating changes to the rating list after a certain period. We are aligned on the importance of the VOA acting promptly and accurately on information received about a property. The VOA takes this very seriously and is performing well—it meets its own targets for processing checks within 12 months and challenges within 18 months in 99.9% and 98% of cases respectively. Of course, as we develop these new systems for the VOA duty, we will review the VOA’s operational targets accordingly, but in light of the VOA’s performance on its existing targets we do not see the need for primary legislation in this space. Furthermore, we hope the noble Earl will recognise that the information provided under the duty may vary considerably by type of property. In the view of the Government, that does not point to a one-size-fits-all approach being appropriate. Instead, it requires effective and transparent performance monitoring, which we will continue to provide under the new system.

I shall explain the steps the Government are taking through government Amendments 12 and 13 to improve the penalties regime for the VOA duty following proposals made by the noble Earl, Lord Lytton, in Committee, for which I am grateful. Amendment 12 deals with the daily penalties which the VOA may apply where a ratepayer continues not to comply with the valuation notification requirement 30 days after being served an initial penalty notice. Its purpose is to encourage timely compliance with the duty. However, it has been noted that in the similar provision for the separate duty to provide HMRC with a taxpayer reference number, a cap on daily penalties equivalent to 30 days of the maximum penalty is applied. The Government have decided to extend this protection for ratepayers to the valuation notification duty. Of course, it is vital that the VOA can secure the information it needs to deliver more frequent revaluations, and to do this it needs effective compliance tools. Nevertheless, the Government have reflected on the points raised in Committee and accept that placing a cap on the total amount a ratepayer may be fined is appropriate. I have a note that I hope helps the noble Baroness, Lady Hayman: this is equivalent to 30 days of penalties, each being £60.

Amendment 13 alters the burden of proof that the valuation tribunal should apply when deciding whether to uphold a penalty decision. The penalty decisions with which this is concerned are for the criminal offence of knowingly or recklessly making a false statement. The Bill prescribes that, for a higher penalty to be applied, the VOA must be satisfied beyond reasonable doubt that the ratepayer has made the false statement knowingly or recklessly. That is the correct standard of proof for a criminal offence.

However, the noble Earl, Lord Lytton, identified an issue with the procedure where a ratepayer appeals such a penalty decision to the valuation tribunal. The tribunal would have to be satisfied beyond reasonable doubt that the ratepayer had not committed the offence. The Government wish to amend this to ensure that the proper burden of proof is applied, to the benefit of ratepayers.

Finally, Amendment 20 is a minor and technical change that we think we should make to the 1988 Act as a consequential effect of the provisions in this Bill concerning business rates multipliers. Clause 15 makes changes to the multiplier rules and separates the multiplier provisions relating to England and Wales. Section 140(2)(b) of the Act refers to Ministers making separate estimates of rateable value for England and Wales. As the provisions relating to England and Wales will now be separate, that section is obsolete and can be deleted. This is simply a drafting correction to improve the clarity of the statute book and the Government do not foresee any practical effect.

I thank the noble Earl, Lord Lytton, for his scrutiny of this area of the Bill, which has allowed us to make important improvements. I hope, with those reassurances and our amendments, he will be prepared to consider not pressing his amendments.

My Lords, before the noble Baroness sits down, there is something that I probably should have asked her about earlier in connection with her Amendment 12, which is the figure of £1,800. Discussions with her noble colleague and the Bill team made it clear that it is intended to be an aggregate figure. I do not know whether she referred to that but I did not hear; if she could confirm that that is so, just for the record, I would be very grateful.

What I can confirm is what I have written on my note, which says that this is 30 days of penalties, which are £60 per day, which comes to the figure of £1,800 that the noble Earl referred to.

My Lords, I thank all noble Lords who have spoken on these amendments. I am not going to add much to anything that has been said. On Amendment 8, there is clearly a significant issue in terms of transparency. I had thought that the wording

“V must disclose the information to P if V considers it is reasonable to do so”

was a sufficient get-out-of-jail-free card, but I take it that the Government do not feel able to accept that.

I am grateful to the Minister for her reassurances on how the making of returns will function, particularly her comment that one size does not fit all. We have been a bit subjected to one size fits all in some aspects of rating valuation and I am very glad to hear that that will not always be the case. With that, I beg leave to withdraw Amendment 8.

Amendment 8 withdrawn.

Clause 13: Requirements for ratepayers etc to provide information

Amendments 9 to 11 not moved.

Amendments 12 and 13

Moved by

12: Clause 13, page 27, line 24, at end insert “(but see sub-paragraph (4)).(4)P’s total liability under sub-paragraph (3) may not exceed £1,800.

P’s total liability under sub-paragraph (3) may not exceed £1,800.”Member's explanatory statement

This amendment would limit the daily penalties that a person can be liable to under new paragraph 5ZD(3) of Schedule 9 to the Local Government Finance Act 1988 (inserted by clause 13(5) of the Bill) for a continuing infringement of new paragraph 5ZC(1) of that Schedule (inserted by the same clause) to a maximum of £1,800.

13: Clause 13, page 31, leave out lines 14 to 17 and insert—

“(3A) On an appeal under this paragraph the valuation tribunal must remit a penalty arising under paragraph 5ZC(3) unless it is satisfied beyond reasonable doubt that P knowingly or recklessly made a false statement (within the meaning of that paragraph).”Member's explanatory statement

This amendment would require the valuation tribunal to remit a penalty imposed on a person under new paragraph 5ZC(3) (inserted by clause 13(5) of the Bill) unless it is satisfied beyond reasonable doubt that the person knowingly recklessly made a false statement (instead of the position under the current drafting which merely permits the tribunal to remit such a penalty in circumstances where it is satisfied beyond reasonable doubt that the person did not knowingly or recklessly make the false statement).

Amendments 12 and 13 agreed.

Clause 14: Alterations to lists: matters not to be taken into account in valuation

Amendment 14

Moved by

14: Leave out Clause 14

My Lords, I regret to say that in this amendment I am obliged to refer to a rather contentious matter. As I have made clear, I am not going to divide the House, but a serious question needs to be answered. I tabled the amendment to delete Clause 14 because of my concern that what the Government claim Clause 14 does is at material variance with the wording, as I see it, of the Bill. It is also at serious variance with what I understand to be the current assumptions regarding the, as it were, state and condition of the hereditament for valuation purposes not in terms of its individual condition as to the fabric but where it sits in its economic and practical environment.

As I understand it, the Government claim to be restoring matters to those understandings that prevailed previously, but the proof of the pudding shows that is not so or we would not have this clause before us because it would then be unnecessary. In my view, an earlier measure to remove the status of Covid as a material change of circumstances—which is what this is all about—was legitimate. It was deliberately circumstance specific and affected the whole country and so could rightly be described as a pan-national economic event. But the Government now seek to extend that principle to any change affecting the physical enjoyment of the hereditament as a consequence of what is described as an “economic” matter and that that should be disregarded as a material change of circumstances. In other words, it should not be possible if that change occurs for somebody to challenge their assessment.

I dispute that this approach has ever been the test of a material change of circumstances hitherto. Copious cases—Addis Ltd v Clement (VO) in particular—have clarified this. There is an obvious reason: where a public authority takes steps that deny or degrade the benefits of enjoyment of a hereditament, it is offensive that a tax unadjusted to reflect this fact should continue to be levied. This is not just a modern confection but goes to the heart of fair and just administration, the rule of law, confidence in government and the certainty and security of process that affect investment, productivity, and commitment to medium and long-term partnership. It is an essential part of a social and economic contract—unwritten it may be but there all the same. Any Government would be wise to observe these obvious and potent economic factors in administering the needs of the nation. We are talking about an ancient principle.

The Government make a distinction in relation to an economic matter affecting society at large but then go on to define this as any matter directly or indirectly attributable to a “relevant factor”. In fact, these are not economic matters at all but the fiat of some authority exercising powers that are not of general economic application to the nation at large or a significant part of it. The definition of “relevant factors” is set out at Clause 14(l)(d) in new paragraph 2ZA(3)—near the bottom of page 32 for those noble Lords following this astutely. In effect, it means that any legislation, regulation or advice of any country or public authority or steps to comply with these is to be disregarded in terms of what amounts to a material change of circumstances—so much for being ruled by our own laws. It also does not clarify the status of pronouncements from organisations such as the WHO, the UN or International Monetary Fund. So, in future, if a local authority alters the entire geometry of the use and enjoyment of a business premises through, let us say, planning powers, it will not count as an MCC, regardless of how severe the impacts may be. This provides a perverse incentive to disregard negative effects of sudden policy decisions which, as I say, may be nothing to do with economic choices.

I wonder whether when formulating these measures the Government ever considered the growing mistrust of their handling of the business rates regime generally and the effect, along with others no doubt, on high streets from trader and investor confidence, or ever paused to consider off balance sheet indications in any of these respects. The Government in seeking to differentiate general economic changes from direct physical enjoyment at hereditament level do not seem to be able to make a tidy distinction between the two, so they take a line of least resistance and bundle them together. That is Clause 14.

By way of further explanation, there are of course two poles to consider: first, those matters which affect the economy as a whole to be dealt with on revaluations—there is no dispute about that; we accept that as we accepted it in Covid. Then there are other more rapid and acute physical changes to the hereditament itself. Again, there is no dispute on that because they will continue to be treated as material changes of circumstances. In between, there are those immediate and localised regulatory and other measures affecting an individual property or those in a defined location and not shared with the wider economy of a town or a region.

I wanted some further clarity on this, so I sent some examples of queries to the department. I hope it received those and that, in replying, the Minister may be able to throw some light on them. The first one was where a local authority reduces the hours of operation of certain licensed premises to provide better amenity for nearby residents and as a result business is curtailed— I referred to the conflicts earlier today. Secondly, an important town centre car park is closed due to concerns about the concrete frame and as a result footfall for traders in that part of town declines substantially. Thirdly, a small corner convenience store is affected because the large residential block next door is ordered to be evacuated over fire safety concerns and the occupiers are dispersed into other accommodation elsewhere. Fourthly, an authority in a popular holiday area makes licensing of holiday let premises mandatory but then limits or conditions the licences it issues to reduce the impact on local housing availability and as a result the income to certain operators is significantly affected. Finally, a biosecurity exclusion zone is declared in a defined area due to an animal disease outbreak. The public are advised to stay away and traders in the area suffer a sharp downturn in business. As I understand it, every one of those would be ruled out as being a material change of circumstances by virtue of Clause 14. The only qualification is on the last one. Does the geographical extent of the biosecurity exclusion zone alter the degree to which the effects fall to be disregarded as an MCC or does it make no difference?

Let me give an extreme example of what the effects might be. A metropolitan mayor decides to ban all petrol and diesel sales in his or her area under some statutory or regulatory power or perhaps on the advice of health officials concerned about air pollution, but by virtue of Clause 14—and maybe for up to three years until the next revaluation—petrol filling stations in the area would have to continue paying business rates as if nothing had happened. If that is not what the Government intend, they need to revise Clause 14 because that, on the best authority I know, is what it will do. The best authority I have—Members of this House, particularly learned Members, excepted—is rating counsel Luke Wilcox, who provided me with a note which says

“my main concern with clause 14 as it is currently drafted is that its effects will be much wider than the Government’s stated intention. The Government’s intention appears to be to treat general legislation as part of the general market conditions affecting revaluations, rather than as matters capable of being MCCs”.

He goes on to say that

“the phrase ‘indirectly attributable to’, as it appears in para 2ZA(2)(a), is so wide in its scope that matters affecting an individual property or class of properties, such as a planning or licensing decision, will cease to be MCCs (because they are made under a general legislative provision). Such an effect would appear to be beyond the Government’s stated intention. If such a significant alteration is to be made to the established law of rating, then it should be made following proper deliberation, rather than as an unintended consequence of a provision aimed at a different policy effect”.

In all this, there appears to have been little or no discussion with ratepayers or their professional advisers, nor any wider consultation with that class of stakeholders. It is undoubtedly a major departure from what is known as the “reality principle”—namely, that rating should reflect the real circumstances of the hereditament in assessing it for rating purposes. The Valuation Office Agency’s own rating manual does not use the approach now suggested. Whether it is going to be amended, I do not know—I suppose it will be—but, as it clearly states the situation that has commonly been understood for many years, that rather suggests that the Government’s claim of restoring what they say were the previous understandings is unsupported.

Many will feel that this is getting us towards the realms of no-appeals regulations—in other words, “Let’s not have any appeals at all and dispense with them, and the whole thing can be dealt with through by the arbitrary exercise of power through the Valuation Office Agency”. But that would have profound implications for the rules-based system—something that I have referred to before in relation to several government Bills.

This clause cannot go unchallenged. Although I am not proposing to press the amendment, I think it warrants a detailed comment from the Government as to how they think it will work fairly and equitably in the context of the rating system. I beg to move.

My Lords, I support the point of view expressed by the noble Earl, Lord Lytton. He has raised this very issue, I think at Second Reading and certainly in Committee, and I have given him support because I have grave doubts about the definition in the Bill of a “material change of circumstance”.

The noble Earl has given a list of possible examples of where there should be a material change of circumstance because of what happens in the area as a whole—perhaps a planning change or a licensing change undertaken by a local authority. When it comes to the Minister’s reply, it would be extremely helpful if there could be a letter to all of us who have taken part in the debate, but addressed to the noble Earl, Lord Lytton, explaining the Government’s view on each of the examples that the noble Earl has given.

I have another one to add to his list. As it stands, Clause 14 means that material changes of circumstance should relate to physical changes only to a property. That is how I interpret it. However, as the noble Earl has demonstrated, there can be many ways in which that physical property can be impacted upon and have a material change of circumstance because of what somebody else does. My example is that a local authority decides that a bus route will no longer come down one road but will go down a different one. The patronage of the shop—if it is a shop—goes down as a consequence. Is that a “material change of circumstance”? I suggest that it is and that it should qualify. I do not think that Clause 14 can apply only to a physical building. That is my position.

I am glad that the noble Earl has decided not to call a vote on this matter, because we all together need to debate how we can get a better definition of the law so that properties that think they have suffered a material change of circumstance are entitled to seek redress for the position that they find themselves in. So I fully support what the noble Earl, Lord Lytton, is urging.

My Lords, I will say very little, other than to echo what the noble Lord, Lord Shipley, has said. The noble Earl raised this issue in some detail in Committee, but we have not had the answers that he asked for. He is not satisfied that Clause 14 is necessary or designed to do what it wants to do. He has great experience in this area and we need to listen carefully to the concerns that he has raised. We very much support the fact that the noble Earl has brought this back to the House’s attention and look forward to the Minister’s response.

My Lords, I thank the noble Earl, Lord Lytton, for this short debate, which has been fascinating. He has quite rightly gone into some detail on this issue, and I hope I will be able to explain part of the thinking behind our inclusion of Clause 14 in the Bill. However, as the noble Lord, Lord Shipley, suggested, once I have read Hansard I will ensure that, if we do not feel we have not gone far enough in explaining our thinking, we will write to the noble Earl, making that available to all noble Lords and placing a copy in the Library.

Amendment 14 gives us the opportunity to consider the reasons behind Clause 14, and I believe the House will have found this debate useful. Where I trust we have agreement is on the role of revaluations, as they have been the main subject of debate on the Bill. Revaluations allow us to reflect in rateable values changes in economic factors, market conditions or the general level of rents for a property. These are familiar terms for describing a revaluation, not just because we have been using them throughout the Bill but because they appear in judgments when the courts have considered this matter.

Clause 14 will therefore ensure that changes in legislation, guidance and advice from public bodies are considered among the economic factors and market conditions for a property and should be reflected at a general revaluation. The noble Earl is concerned that the clause will go further into matters that should not be left until a revaluation and do not concern the general market for a property. However, our view is that the framework of legislation and guidance within which a property is used is in fact a central part of the economic factors and market conditions for that property.

As the noble Earl remarked, he kindly sent a list of examples to the department, and I shall deal with that point now. He raised a number of examples and considered how they should be treated under Clause 14. I hope noble Lords will understand that it is not possible to provide a case-by-case analysis during this debate on these examples, as each will depend on facts. Whether a particular event would result in a material change in circumstances, under the new law in the clause, would depend on whether it was attributable to the relevant factors listed in the clause.

The Government published a technical consultation in 2021 which explained how they intended the law of material changes of circumstances to operate. We also included a section on this in the Explanatory Notes to the Bill. The Valuation Office Agency will of course publish guidance on material changes to circumstances in its rating manual and, as always, it will work closely with professional bodies, with which the noble Earl is familiar, in ensuring that the rules are explained and understood. If, as has been suggested, we allow the matters listed in Clause 14 to be assessed between revaluations as a material change in circumstances, the impact on the rating system may be considerable. It would amount to the Valuation Office Agency conducting a non-stop real-time revaluation, revising large sections of the rating list as and when there were changes in the legislation, guidance or advice concerning how properties can be used.

Such an exercise would jeopardise our objective of moving to more frequent general revaluations.  It would also mean some ratepayers benefiting from a set of more favourable economic factors in their valuations than others.  The clause will ensure that all ratepayers are assessed against the same economic considerations at a set date—the valuation date for the revaluation—and that is updated for all only at the following revaluation. Clause 14 will therefore maintain the stability of the rating system, and it is not surprising that it is supported by the Local Government Association.

As my noble friend explained in Committee, there are safeguards in the clause. I shall not repeat them but, for example, the clause does not apply to changes in the physical state of the property, which will continue to be reflected as and when they occur.

This is not a step we have taken lightly; we consulted on our intentions in the technical consultation in the business rates review. It is a necessary step, to which I hope the House will agree.

My Lords, I thank all noble Lords who have spoken in support of my amendment and the noble Earl for his response. He said that it would depend on the change of rollout of the relevant factors. Let me remind your Lordships what those are; they are in four categories in new paragraph 2ZA(3):

“(a) legislation of any country or territory;

(b) provision that is not within paragraph (a) but is made under, and given effect by, legislation of any country or territory;

(c) advice or guidance given by a public authority of any country or territory;

(d) anything done by a person with a view to compliance with anything”—

covered by the preceding paragraphs. I paraphrase, of course.

I struggle to see what actions would be taken by a municipality or authority dealing with something that makes a substantial change that would not be covered by those criteria and thereby excluded. The noble Earl referred to the difficulties of non-stop revaluation. We have a situation that everyone has been happy with for quite a number of years, and it has not resulted in non-stop revaluation. The noble Earl also referred to the equality of valuation approach, but the tone of the list—the general levels of value, to put it simply—would not be altered; it would simply be that by reference to that general pattern of values, a particular hereditament, if there was a material change of circumstances, had taken a hit. That is what we are trying to deal with.

With the greatest respect to the noble Earl, I find his explanations unconvincing, as I found the explanations of his noble friend when we met her unconvincing, and as I found the explanations of the department officials unconvincing. Although I will withdraw the amendment, I do so with a sense of profound disappointment that the Government have not been able to come up with a better narrative—a better explanation. There is a point behind what they say in getting at what we might call general economic changes, but to extend that to the microcosm of what happens in a locality stretches my credulity beyond breaking point. It does not add up, and I hope that the noble Earl will go away and make it clear to the department that that is what I believe, what a lot of ratepayers believe and what a lot of professionals believe.

For the time being, I beg to withdraw the amendment.

Amendment 14 withdrawn.

Amendments 15 to 19 not moved.

The Schedule

Amendment 20

Moved by

20: The Schedule, page 55, line 30, at end insert—

“67A In section 140(2) of the Act (separate administration in England and Wales)—(a) omit the “, and” at the end of paragraph (a);(b) omit paragraph (b).”Member's explanatory statement

This amendment would omit section 140(2)(b) of the Local Government Finance Act 1988 which is no longer needed as a result of the provision being made by clause 15 of the Bill, which makes separate provision about the calculation of multipliers for England.

Amendment 20 agreed.

Schools: RAAC

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Tuesday 19 September.

“Mr Speaker, as I said in my Statement to the House on 4 September, this Government are supporting affected schools and colleges to minimise disruption to education. I want to thank the head teachers, staff, local authorities and trusts that continue to provide face-to-face education for their pupils.

Two weeks ago, we published a list of education settings with buildings affected by RAAC. Before I provide an update, I want to reiterate that our view is that parents and children should find out from their school, not from a list on a government website, or from the media. Our approach has always prioritised this, and giving schools and colleges the space to focus on what is important—minimising disruption to education.

None the less, we of course recognise the public interest. On 6 September we published the list of 147 education settings known to be affected by RAAC. Thanks to the hard work of school and college leaders, all these settings are now offering face-to-face education, with 126 settings offering full-time face-to-face education for all pupils. We have today published an updated list, with a further 27 settings with confirmed RAAC. Of the 174 confirmed cases, 148 settings are providing full-time face-to-face education for all pupils.

As I have said before, we will do everything in our power to support schools and colleges in responding to RAAC in their buildings. Every school or college with confirmed RAAC is assigned dedicated support from our team of 80 caseworkers. A bespoke plan is put in place to ensure that they receive the support that suits their circumstances. Project delivery teams are on site to provide support, whether that is ordering or finding accommodation options or putting in place structural solutions.

We will fund these mitigations, including installing alternative classroom space. Where schools and colleges make reasonable requests for additional help with revenue costs, such as transport to locations, these will be approved. We will also fund longer-term refurbishment or rebuilding projects to permanently remove RAAC, through capital grants, or rebuilding projects through the school rebuilding programme.

I want to reassure pupils, parents and staff that this Government will do whatever it takes to support our schools and colleges to keep everybody safe, to respond to RAAC and to minimise disruption to education.”

My Lords, the number of schools known to be affected by the safety crisis is rising, but it is not just the number of schools affected by RAAC that matters: it is the lost learning, lost opportunity and disruption to pupils. Can the Minister confirm how many children’s education has been disrupted and how many of these are in their exam years? How will lost learning be made up for to ensure that children are not left behind?

My Lords, the noble Baroness has focused on exactly where the Government are focusing, namely face-to-face education. I take this opportunity to thank all the head teachers and school leaders who have worked tirelessly to make sure that children can, wherever possible, be in face-to-face education. As the noble Baroness knows, this morning we announced an updated list of schools: the number of confirmed cases of RAAC had risen from 147, reflecting the data as of 30 August, and what we published today, which reflects the data from 14 September, shows 174 schools. I am pleased to say that with the exception of one school, all children are either in full face-to-face education—in 148 settings—while 23 are in hybrid education, one is fully remote and one is a very new case which we are triaging at the moment.

In terms of lost learning, there is access to the Government’s national tutoring programme, and we will of course talk to schools and responsible bodies. There are disruptions to the school year; it is not exceptional, sadly, that children miss a few days’ learning but, happily for most of these children, it has been just a few days. If there are extended periods, we will look at that with the responsible bodies concerned.

The Minister may recall that one of the first acts of Michael Gove as Secretary of State for Education was to cancel Building Schools for the Future. I well remember the impact it had on the city where I live. Also, the Chancellor of the Exchequer—

The noble Baroness is right, to our regret. I have not been heckled before—it is quite impressive. Under the then Chancellor, there was a plan to build 200 new schools, but the funding for only 50 was provided. Parents are worried; how do we bring transparency to this issue and how do we reassure them?

Just to be clear on the Building Schools for the Future programme, there are schools today where we have found RAAC that would have been in that programme and were among those cancelled. There are also schools that got funding through it where we found RAAC, so it is not fair to say that Building Schools for the Future would have solved this problem. We are dealing with a number of cases that had funding through that programme which did not remove the RAAC and where we are now dealing with that.

The noble Lord is right that the department argued, as every department does, for as large as possible a settlement from the Treasury. We are very proud of our school rebuilding programme, but I also draw the House’s attention to the amount of capital that has been spent over the last 10 years both on condition funding and on building new school places. During this Administration, there has obviously been a bulge in pupil numbers which has led to around £2 billion a year, on average, being spent on building new places for pupils by either extending existing schools or building new ones. In the last spending review, the budget for condition funding—maintaining our schools—was increased by 28%.

My Lords, are there many leisure centres used by schoolchildren as part of the school curriculum that are impacted by RAAC?

I am not aware whether there are leisure centres. The decision that we took in relation to schools reflected a number of factors. One was, obviously, the safety of pupils being paramount. Secondly, there was the speed with which we believed we could remediate most cases and, thirdly, the capacity and capability in estate management within the education sector. I am not an expert on leisure centres, but I assume that many will have dedicated expertise or have access to it.

My Lords, can the Minister enlighten us as to whether the Government have looked at whether specialist classrooms have been taken out as a result of this, and what effect that will have on the curriculum? For instance, science labs would be an obvious example. Also, in the creative subjects, if you have lost a theatre or an arts room where you were doing ceramics, you cannot complete the course. If the Government are finding this out, what process do they have to try to get some of that information in and, if they cannot do that, what arrangements will they make for people taking those exams?

We have very good information on those issues. The noble Lord is right: it is extremely important that we establish that, and the Secretary of State was extremely clear in taking this decision that our operational response to support schools, which have been presented with a difficult decision at a difficult time in the school year, should be really well supported. For every school, we have a dedicated caseworker who co-ordinates all the strands of work that are going on to mitigate the RAAC. Then every school has a project director who is a technical expert; they will visit the school and work out with it the quickest mitigation plan. We have access to specialist classrooms and temporary classrooms for science. We have worked with the utility companies to ensure that the necessary energy, water and so on can be accessed, but there are some difficult cases. I am going on Monday to see a special school for children with profound disabilities. There are very significant requirements to make sure that those children also get access to the best education possible.

My Lords, RAAC was actually a popular building material in Europe and North America, Australia, New Zealand and Mexico, yet those areas do not seem to have had the same kind of problems. The Financial Times quoted the head of engineering at the University of Alabama, who helped to bring the product to the US in the 1980s, as saying that there seemed to be

“specific issues in the UK … with design, production and construction”.

Clearly, we are going to see a large amount of new buildings coming into schools, while there have been systemic problems in the long-term past. Is the Minister confident that the buildings coming in to replace them will be adequate and reliable for the long term? What is the Government’s standard length of building life when constructing a new school?

As the noble Baroness says, there have been suggestions—I think they are no more than suggestions and that it is a hypothesis—that what I call the recipe, which is probably not a very technical term for its technical specifications, for the RAAC that was manufactured in this country was potentially slightly different to those in other countries or that the installation of it was. There are questions about whether the overlap at the ends of the planks has been sufficient in all cases, but I would stress that those are just hypotheses as to why we face these problems.

The other issue is, genuinely, that we have been extremely proactive. We have spent the last 18 months working with schools. We were made aware in 2018 of the first plank failing at a school. Guidance was produced at that time and it has been updated regularly since. We have engaged with every school—98.6% of responsible bodies and schools in the country—to understand whether they have RAAC in their buildings, how they are managing it and whether they were mitigating the risk. It is through that proactive work that we identified these cases. On the design and production standards, we have been working closely with our chief scientific adviser in the department, who in turn has been working across government with CSAs in other departments, to ensure that our research and understanding of this building material and others is as high quality as it can be.

West Coast Main Line

Commons Urgent Question

My Lords, with the leave of the House I shall now repeat the Answer to an Urgent Question in the other place given by my right honourable friend the Minister of State for Transport Decarbonisation. The Statement is as follows:

“Thank you, Mr Deputy Speaker. As you may be aware, the Minister of State continues to represent His Majesty’s Government in Poland to support UK train companies, among others, at a major international trade fair. I will be replying on his behalf.

The department has awarded a national rail contract, an RNC, to First Trenitalia, or FTI, to continue to operate the west coast partnership, providing west coast train services as Avanti West Coast, or AWC. The NRC will have a core term of three years and a maximum possible term of nine years. After three years, the department can terminate the contract at any point with three months’ notice.

In October 2022 and March 2023, the department approved the award of short-term contracts for First Trenitalia, operating as Avanti West Coast, to continue to operate services on the west coast main line. Awarding short-term contracts allowed the department to monitor progress by AWC in improving performance, following the withdrawal of rest day working, before considering whether it would be appropriate to award a long-term contract. Avanti’s performance has improved during this time significantly and, taking into account other relevant considerations, the Secretary of State has decided to award a longer-term contract, as announced in today’s Written Ministerial Statement.

Over recent months, Avanti has made significant progress in recovering from the poor reliability and punctuality delivered in the first half of last year. In line with its recovery plan, and since the introduction of its recovery timetable in December 2022, performance has steadily improved, with cancellations attributed to Avanti West Coast falling from 13% in early January 2023 to as low as 1.1% in July 2023. Over 90% of trains now arrive within 15 minutes of their scheduled time—an improvement from 75% in December 2022”.

My Lords, I thank the Minister for her very prompt letter, which she sent today, setting out the details of this contract. But I am sure that beleaguered passengers on the failing west coast rail services must have been baffled to see the companies that run them being rewarded for that failure with lucrative government contracts.

The latest ORR rail performance stats from August 2023—only a month ago—confirmed that Avanti West Coast is the second worst performing operator in the country for punctuality of rail services, with only 48% of its services on time. It also had the most complaints of any operator. CrossCountry, which has also seen its contract extended, was the fourth worst performing operator, with only 51.4% of its services on time in August 2023, compared with the national average of 70%. Can the Minister tell us what has been built into these new contracts to ensure that Avanti and CrossCountry do not continue to fail passengers and yet see themselves and their shareholders continue to be rewarded?

Of course, there will be various elements that are set out in the contract and are a commercial matter. I felt that the noble Baroness did not give quite enough credit to Avanti for the amount of improvement we have seen since the removal of rest day working with no notice back in July 2022. But let us not look at the industry performance scores; let us ask passengers. The net advocacy scores for Avanti have improved enormously, from minus 42 in January to plus 17 in April and plus 10 in August. Passengers and the Government are seeing the improvement in Avanti and that is why we awarded it this contract.

My Lords, what is not a surprise about this is that the Urgent Question and announcements about train services have come on the last day the House of Commons is sitting before a recess; that is a pattern. My concern about these two contracts is that, although there has been an improvement with Avanti, as the Minister has said, there has been every incentive for it to improve in the short term in order to save its skin—if I can put it that way. Now it has this contract, there will be effectively no incentive for it to keep up that level of improvement, because Avanti has shown over many months that it finds it very difficult to deliver.

So what incentives are there within the contracts to these two companies, Arriva and Avanti, to maintain their improvements? These contracts seem to leave all the financial risk with the Department for Transport. Have the Government built in any additional safeguards for improvement, given the history behind this? Is there any chance that in future the Government will review the way in which they give contracts, so that we do not have this approach, which enables companies to underperform over such a long period?

I am content that the Avanti contract has gone through all the relevant processes. It has been structured such that there is an initial three-year period, which I think is right, to enable Avanti to provide the investment that is clearly needed. That investment is in driver training and rolling stock. I am sure many noble Lords have noticed the upgrade in Avanti trains when they have travelled on them recently; I find them very comfortable indeed. There is an ability after three years for the Government to give three months’ notice. Within that intervening period, senior officials from the Department for Transport will meet management on a weekly basis to make sure that the recovery plan and all the elements the new management has put in place are being followed.

There are also enormous incentives for Avanti to improve—£14.3 million-worth of incentives. That is what the performance-based fee is; if Avanti does not hit its targets, it will not get that fee. It is absolutely right that that is there, it will incentivise Avanti and we will work alongside it so that it can continue to improve its performance.

My Lords, would the Minister accept that I am one passenger on Avanti trains who is completely baffled by this decision? I do not wish to rain on the noble Baroness’s parade, but when you have been at the bottom of the league table for punctuality and cancellations for as long as Avanti trains has, the only way is up. Could the Minister tell the House which other train operating companies expressed an interest in this particular franchise? Is it the case—as I suspect—that none of them did, largely because most rail managers are fed up to the back teeth with the micromanagement by her department or, even more likely, by the Treasury?

Actually, this is exactly what this contract is trying to achieve. By giving a three-year horizon for Avanti management to properly plan, it will not be necessary to micromanage Avanti. The Department for Transport will continue to support it and, as I said in my opening Answer, the net advocacy scores show that customers are supportive of Avanti. I am sorry that the noble Lord is not, but the numbers speak for themselves—and these are customers speaking and not the Department for Transport.

My Lords, does the noble Baroness appreciate that Avanti avoided cancellations and late running on the north Wales coast to London line this summer by cancelling and changing the timetable and only running trains from Holyhead to Crewe? Will she ensure that Avanti’s performance is measured in future on a dual basis—between Holyhead and London on the one hand, and the rest of the service on the other?

I will certainly take that back to the department. I think the noble Lord will also be aware that Avanti made some timetable changes over the summer. They were very short-term and over a fixed period. That was due to industrial action—sadly—and the annual leave burden.

My Lords, does the contract place any requirement on Avanti to close station booking offices or will it be expected to take proper account of the vast opposition raised in the consultation process?

Avanti, like all train operating companies, is working with its stakeholders and Transport Focus and London TravelWatch on the responses to the consultation to its proposals. The results of that will be forthcoming soon.

My Lords, there have been many reports of quite severe overcrowding on some of the CrossCountry services to the south-west in recent months. Can the noble Baroness explain whether any extra capacity is planned? I believe quite a few of the trains have been scrapped. What kind of new rolling stock will there be and will there be more capacity? This is a very important route. It is the only intercity route that does not go to London and one begins to suspect that, because Ministers do not take much notice of it, it gets the worst rolling stock. I hope the noble Baroness can give me some comfort.

The department is well aware that there is some overcrowding on CrossCountry routes. We are considering options, with CrossCountry, on the size of its future fleet. This will be balanced with the interests of taxpayers, given the financial pressures.

My Lords, I declare my interest as chairman of the Great Western Railway stakeholder board. GWR is of course a FirstGroup member, so it is proper that I should declare it. I thank the Minister for the letter she sent earlier today. In that letter, there is no reference anywhere to Great British Railways. How does the new contract for Avanti fit in with the Government’s plans for Great British Railways, or is it the case that GBR is not going to happen?

Many national rail contracts are already in place. Eventually, in due course, the Government would like to move to a different sort of passenger service contract. There is nothing out of the ordinary with this contract. It compares well to those of other train operating companies.

My Lords, in response to questions from my noble friend Lady Taylor and other noble Lords, the Minister talked about passenger satisfaction statistics. Can she say a bit more about the datasets behind these? What is the dataset? Who collected it? What was the sample size? I find these are often very small. I appreciate that the Minister may not have the information with her, but perhaps she could write to me and to other Members of the House with these details.

I will happily write to the noble Lord and to all Members of the House with an interest in this to set out how the net advocacy scores are calculated. Unfortunately, I do not have the information to hand.

My Lords, in the other place, the Government were asked about the criteria for the contract decision. The response was that it was a commercial matter. Does the Minister acknowledge that this is a major problem with our privatised railways if we cannot know what is happening because it is all hidden behind commercial confidentiality? I have another question, which perhaps the Minister might be able to answer more positively. What consultations did the Government have with the Scottish Government, local councils and mayors of places along the routes affected? What input did they have into this decision? I should declare my position as a vice-president of the LGA.

At the end of the day, we have to be able to balance the need to get the best contract and the need for parliamentary scrutiny with the need to protect some elements of contracts because they are commercial matters. We try to publish as much as possible. We believe in transparency. Where we can, we make some information available without it being commercially sensitive. One of the best outcomes of scrutiny is performance. This has improved over time and will continue to do so. I believe this is the best way to hold the operator and the Government to account.

High Speed 2

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Monday 18 September.

“Spades are already in the ground for HS2 and we remain focused on its delivery. The Minister for Rail and HS2, the Minister of State, Department for Transport, my honourable friend the Member for Bexhill and Battle (Huw Merriman), is in the Czech Republic today to sign a memorandum of understanding with the Czech Government, and tomorrow he will be in Poland to attend TRAKO, supporting UK rail supply chain companies at a major European rail trade fair. For that reason, I am responding on behalf of the Government. Construction continues in earnest, with about 350 active construction sites, and we are getting on with delivery, with high-speed rail services between London and Birmingham Curzon Street due to commence in 2033, with the re-scoped stages following. This will specifically drive the regeneration of 1,600 acres, delivering 40,000 homes and supporting 65,000 jobs in outer London. The benefits of HS2 for Birmingham are already being realised; the area around Curzon Street station is already becoming a focal point for transformation, development and economic growth. The Government provide regular six-monthly reports on HS2 to the House, and we will continue to keep the House updated on the project.”

My Lords, is it not an unmitigated failure of Conservative rail policy that, yesterday, in the other place, its own chair of the Transport Committee commented on the false economy of what is supposed to be the fast rail network that delivers against levelling-up goals, but which will reach neither the great cities of the north or central London? He said that HS2

“would not realise the full benefits of the line and communities will have been enormously impacted for no great benefit”.—[Official Report, Commons, 18/9/23; col. 1109.]

Back in March, when reports of a delay emerged, I told the House that this chronic indecision was benefitting no one. Now, through a photograph published in the Independent, we learn that the route could be scaled back even further. Given that, in January this year, the Chancellor said that he could not see any conceivable circumstance in which HS2 would not end at London Euston, can the Minister confirm that the line will not terminate at Old Oak Common and when, if ever, it will reach Manchester?

There has been an awful lot of media speculation and hypotheticals. As noble Lords will know, the Department for Transport, and indeed every single government department, will periodically look at major infrastructure projects, which in this case includes HS2. We are committed to keeping the House updated, as we have done for many years. There will be a regular six-monthly report on HS2 to keep the House updated in due course.

My Lords, this is death by a thousand cuts for HS2, if I can be excused the pun—cuts to the route and cuts to the funding. Each time the Government shave another slice off the route, it further undermines the purpose of the whole project, and each time this happens it marginally reduces the total cost but increases the cost per mile and fatally undermines the purpose of the scheme. Earlier, the Minister conspicuously failed to confirm that Great British Rail is still in the Government’s plans. If that was a mistake, she may like to take this opportunity to put this right. Is she not embarrassed to be here, week after week, trying to defend this Government of dither and delay? Can she tell us whether the Government have done any calculation as to the adverse economic and reputational impact of their failure to deliver on HS2 on the ability of cities in the north of England to attract investment?